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    EXHIBIT
10.1

     

    Selective
Insurance Company of America

     

    Deferred
Compensation Plan (2005)

     

    As
Amended and Restated Effective as of January 1, 2010

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        	
                1.

              	
                Establishment
      and Restatement

              	
                1

              
	
                2.

              	
                Old
      Plan

              	
                1

              
	
                3.

              	
                Purpose
      and Intent

              	
                1

              
	
                4.

              	
                Definitions

              	
                1

              
	
                5.

              	
                Enrollment;
      Deferral Elections

              	
                6

              
	
                6.

              	
                Matching,
      Discretionary and Nonelective Contributions

              	
                8

              
	
                7.

              	
                Election
      of Time and Form of Payment

              	
                9

              
	
                8.

              	
                Election
      Changes

              	
                10

              
	
                9.

              	
                Vesting

              	
                11

              
	
                10.

              	
                Accounts

              	
                12

              
	
                11.

              	
                Notional
      Investment of Accounts

              	
                12

              
	
                12.

              	
                Payment
      of Benefits

              	
                13

              
	
                13.

              	
                Timing
      of Payments

              	
                14

              
	
                14.

              	
                Unforeseeable
      Emergency Distributions

              	
                15

              
	
                15.

              	
                Acceleration
      of Payments Upon Certain Events

              	
                15

              
	
                16.

              	
                Compliance
      with Code Section 162(m)

              	
                17

              
	
                17.

              	
                Administration

              	
                17

              
	
                18.

              	
                Claim
      and Appeal Procedure

              	
                18

              
	
                19.

              	
                Establishment
      of Trusts

              	
                20

              
	
                20.

              	
                Amendment
      and Termination of the Plan

              	
                20

              
	
                21.

              	
                Participating
      Employers

              	
                21

              
	
                22.

              	
                General
      Provisions

              	
                21

              
	
                APPENDIX
      A

              	
                25

              

      

    

     

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    Selective
Insurance Company of America

    Deferred
Compensation Plan (2005)

    

    As
Amended and Restated Effective as of January 1, 2010

     

    1.
          Establishment and
Restatement

     

    Selective
Insurance Company of America (the “Company”) established this Selective
Insurance Company of America Deferred Compensation Plan (2005) (the “Plan”),
effective as of January 1, 2005, and has amended the Plan from time to time
thereafter. The Company hereby further amends and restates the Plan as set forth
below, generally effective as of January 1, 2010.

     

    2.           Old
Plan

     

    Effective
as of July 1, 2002, the Company established the Selective Insurance Company of
America Deferred Compensation Plan (the “Old Plan”) in order to provide a select
group of management or highly compensated employees of the Company and certain
of its affiliates with the opportunity to elect to defer receipt of specified
portions of compensation. Effective on and after January 1, 2005, the terms of
the Old Plan have continued to apply to all amounts accrued under the Old Plan
that were earned and vested, within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), as of December 31, 2004,
including earnings on such amounts after December 31, 2004, and no further
amounts shall be deferred under the Old Plan after December 31, 2004. All
amounts accrued pursuant to the Old Plan as of December 31, 2004 which were not
deferred and vested, within the meaning of Section 409A, on or before December
31, 2004, and all amounts accrued pursuant to the Old Plan on or after January
1, 2005, and all earnings on such amounts, are deemed to have been deferred
pursuant to this Plan, and shall be governed by the terms hereof.

     

    3.           Purpose
and Intent

     

    The
purpose of the Plan is to provide a select group of management or highly
compensated employees (within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), of the Company and those of its Affiliates which adopt the Plan with
supplemental retirement income benefits through deferral of base salary and
other compensation and through additional discretionary employer
contributions.  The Plan is intended to be unfunded for the purposes
of ERISA and the Code, and to comply with the requirements of Section 409A of
the Code and the regulations and other applicable guidance
thereunder.

     

    4.           Definitions

     

    The
following terms used in the Plan shall have the meanings set forth
below:

     

    (a)           “Account” shall mean
the bookkeeping Account established in the name of each Participant to reflect
the interest of the Participant under the Plan, and which is composed of the
following:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)           “Savings Contribution
Account” shall mean an account attributable to a Participant’s Savings
Contributions, as adjusted for earnings and losses thereon;

     

    (ii)          “Matching Contribution
Account” shall mean an account attributable to Matching Contributions
made by a Participating Employer on behalf of a Participant, as adjusted for
earnings and losses thereon; and

     

    (iii)         “Discretionary Contribution
Account” shall mean an account attributable to Discretionary
Contributions made by a Participating Employer on behalf of a Participant, as
adjusted for earnings and losses thereon.

     

    A
Participant’s Account under the Plan consists only of Contributions (as adjusted
for earnings and losses thereon) made to the Plan by or on behalf of the
Participant: (1) on or after January 1, 2005; and (2) under the Old Plan prior
to January 1, 2005, to the extent that the Participant was not vested in such
amounts as of December 31, 2004.  Accounts shall be maintained solely
as bookkeeping entries by the Company to evidence unfunded obligations of the
Participating Employers.

     

    (b)          “Administrator” shall
mean the Company or the organization, committee or individual to whom it has
delegated the authority to administer the Plan, as described in Section
17.

     

    (c)          “Affiliate” shall mean
the Company and any corporation, trade, or business which is treated as a single
employer with the Company under Code Sections 414(b) or 414(c), and any other
entity designated as an “Affiliate” for purposes of the Plan by the
Administrator.

     

    (d)          “Annual Bonus” shall
mean a Participant’s annual cash incentive payment from a Participating
Employer.

     

    (e)          “Beneficiary” shall
mean the person or persons last designated in writing in accordance with
procedures established by the Administrator to receive the Participant’s
benefits under the Plan in the event of the Participant’s death.  If
there is no such designation, the Participant’s Beneficiary shall be his
surviving spouse or, if none, the Participant’s surviving children or, if none,
the Participant’s estate.

     

    (f)           “Board” shall mean the
Board of Directors of the Company.

     

    (g)          “Change of Control”
shall mean the occurrence of an event with respect to either the Company or
Selective Insurance Group, Inc. (“SIGI”) of a nature that would be required to
be reported in response to Item 5.01 of a Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Sections 13 or 15(d) of the Exchange Act;
provided, however, that a Change of Control shall, in any event, conclusively be
deemed to have occurred upon the first to occur of any one of the following
events:

     

    (i)           The
acquisition by any person or group, including, without limitation, any current
stockholder or stockholders of the Company or SIGI, of securities of the Company
or SIGI resulting in such person’s or group’s owning, of record or beneficially,
twenty-five percent (25%) or more of any class of voting securities of the
Company or SIGI;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (ii)          The
acquisition by any person or group, including, without limitation, any current
stockholder or stockholders of the Company or SIGI, of securities of the Company
or SIGI resulting in such person’s or group’s owning, of record or beneficially,
twenty percent (20%) or more, but less than twenty-five percent (25%), of any
class of voting securities of the Company or SIGI, if the Board adopts a
resolution that such acquisition constitutes a Change of Control;

     

    (iii)         The
sale or disposition of all or substantially all of the assets of the Company or
SIGI;

     

    (iv)        A
reorganization, recapitalization, merger, consolidation or other business
combination involving the Company or SIGI, the result of which is the ownership
by the stockholders of the Company or SIGI of less than eighty percent (80%) of
the voting securities of the resulting or acquired entity having the power to
elect a majority of the board of directors of such entity; or

     

    (v)         A
change in the membership of the Board of Directors of SIGI which, taken in
conjunction with any other prior or concurrent changes, results in twenty
percent (20%) or more of the membership of such Board of Directors being persons
not nominated by the Board of Directors as set forth in SIGI’s then most recent
proxy statement, excluding changes resulting from substitutions by the Board of
Directors because of retirement or death of a director or directors, removal of
a director or directors by the Board of Directors or resignation of a director
or directors due to demonstrated disability or incapacity.

     

    Notwithstanding
anything in this definition to the contrary, no Change of Control shall be
deemed to have occurred under the Plan with respect to a particular Participant
and his Account by virtue of any transaction which results in the Participant,
or a group of persons which includes the Participant, acquiring, directly or
indirectly, voting securities of the Company or SIGI.

     

    For the
purpose of this paragraph (g), the following definitions shall
apply:

     

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

     

    The terms
“person” and “beneficial owner” shall have the meanings set forth in Regulation
13D under the Exchange Act.

     

    The term
“voting security” shall include any security that has, or may have upon an event
of default or in respect to any transaction, a right to vote on any matter on
which the holder of any class of common stock of the Company or SIGI, as
applicable, would have a right to vote.

     

    The term
“group” shall have the meaning set forth in Section 13(d) of the Exchange
Act.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    The term
“substantially all of the assets of the Company or SIGI” shall mean more than
fifty percent (50%) of the assets of the Company or SIGI on a consolidated
basis, as shown in the Company’s or SIGI’s most recent audited balance
sheet.

     

    (h)         “Contribution” shall
mean the amount a Participant or a Participating Employer contributes to the
Plan, as follows:

     

    (i)           “Savings Contribution”
shall mean an amount contributed to the Plan on behalf of a Participant through
salary reduction pursuant to Section 5(b) and credited to a Participant’s
Savings Contribution Account;

     

    (ii)          “Matching
Contribution” shall mean an amount contributed to the Plan by a
Participating Employer pursuant to Section 6(a) and credited to a Participant’s
Matching Contribution Account; and

     

    (iii)         “Discretionary
Contribution” shall mean an amount contributed to the Plan by a
Participating Employer pursuant to Section 6(b) and credited to a Participant’s
Discretionary Contribution Account.

     

    (i)          “Disability” shall
mean a Participant’s inability to perform the duties of his position or any
substantially similar position due to any medically determinable physical or
mental impairment, where such impairment can be expected to result in death or
can be expected to last for a continuous period of not less than six months, as
set forth in Treasury Regulation Section 1.409A-3(j)(4)(xii).

     

    (j)         “Election Period”
shall mean the period established by the Administrator during which Participant
deferral elections must be made in accordance with the requirements of Code
Section 409A, as follows:

     

    (i)           General
Rule.  Except as provided in paragraphs (ii) and (iii) of this
Section 4(j), the Election Period shall end no later than the last day of the
Plan Year immediately preceding the Plan Year in which the compensation to which
the deferral election relates is earned.

     

    (ii)          Performance-Based
Compensation.  If an Annual Bonus or other compensation which
may be deferred under the Plan constitutes “performance-based compensation” (as
defined in Treasury Regulations Section 1.409A-1(e)) (“Performance-Based
Compensation”), then the Election Period with respect to such Performance-Based
Compensation shall end no later than six months before the end of the Plan Year
or other period during which the Performance-Based Compensation is earned;
provided, however, that the Eligible Employee is employed continuously from the
later of the beginning of the performance period or the date the relevant
performance criteria are established through to the date an election is made to
defer such Performance-Based Compensation, and the amount of such
Performance-Based Compensation has not become readily ascertainable as of the
date the election is made.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (iii)         Newly Eligible
Employees.  The Election Period with respect to the first Plan
Year in which an Eligible Employee is eligible to participate in the Plan may,
to the extent permitted under Code Section 409A, end no later than thirty (30)
days after the Eligible Employee first becomes eligible to participate in the
Plan, and shall apply only to compensation earned after the election is
made.  A former Eligible Employee who again becomes an Eligible
Employee shall be treated as newly eligible to make deferrals under the Plan
within thirty (30) days upon return to eligible status if: (A) the former
Eligible Employee has received distribution of the full amount of his Savings
Contribution Account balance and on or before the last such distribution was not
eligible to make Savings Contributions for periods after the last distribution
payment; or (B) the former Eligible Employee has not been eligible to make
Savings Contributions under the Plan at any time during the twenty-four
(24)-month period ending on the date he again becomes an Eligible
Employee.  In addition, if an Eligible Employee is or was eligible to
participate in another plan that is aggregated with the elective deferral
portion of the Plan under Code Section 409A, participation in such plan shall be
treated as participation in the Plan for purposes of determining whether the
Eligible Employee is treated as newly eligible under the Plan.

     

    (k)          “Eligible Employee”
shall mean, with respect to a Plan Year, any employee of a Participating
Employer who: (i) is paid on a United States payroll and is subject to taxation
in the United States; (ii) is part of a select group of management or highly
compensated employees of the Selective Group, within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA; and (iii) is designated by the
Administrator as eligible to participate in the Plan with respect to the Plan
Year.

     

    (l)           “In-Service
Distribution” shall mean a distribution from a Participant’s Savings
Contribution Account on a fixed date selected by the Participant which is prior
to the Participant’s Separation from Service.

     

    (m)         “Investment Fund”
shall mean an investment fund, index or vehicle designated by the Administrator
from time to time for the notional investment of Participant Accounts under the
Plan.

     

    (n)    
     “Participant” shall
mean an Eligible Employee who elects to defer his compensation to the Plan, and
any Eligible Employee or former Eligible Employee on whose behalf an Account
balance is maintained under the Plan.

     

    (o)          “Participating
Employer” shall mean the Company and any of its Affiliates which adopts
the Plan pursuant to Section 21 hereof, subject to any conditions imposed by the
Company.

     

    (p)          “Plan Year” shall mean
the calendar year.

     

    (q)          “Recordkeeper” shall
mean Merrill Lynch, Pierce, Fenner & Smith Incorporated, or such other
entity selected by the Administrator from time to time to provide day-to-day
recordkeeping and administrative services to the Plan.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (r)           “RSP” shall mean the
Selective Insurance Retirement Savings Plan, as amended from time to time, or
any successor plan of the Company intended to qualify under Code Section 401(a)
and containing a cash or deferred arrangement qualified under Code Section
401(k).

     

    (s)           “Selective Group”
shall mean the Company and all of its Affiliates.

     

    (t)           “Separation from
Service” shall mean a Participant’s Separation from Service, as defined
in Code Section 409A(a)(2)(A)(i) and Treasury Regulations Section 1.409A-1(h),
from his Participating Employer.

     

    (u)           “Separation
Distribution” shall mean a distribution from a Participant’s Account upon
or following the Participant’s Separation from Service.

     

    (v)           “Specified Employee”
shall have the meaning set forth in Code Section 409A(a)(2)(B)(i) and Treasury
Regulations Section 1.409A-1(i).  The determination of whether a
Participant is a Specified Employee shall be made by the Administrator from time
to time.

     

    (w)           “Trust” shall mean any
grantor trust or trusts established by the Company in connection with the Plan;
provided, however, that the assets of the Trust contributed by each
Participating Employer shall remain subject to the claims of the general
creditors of such Participating Employer.

     

    (x)           “Unforeseeable
Emergency” shall have the meaning set forth in Code Section
409A(a)(2)(B)(ii) and Treasury Regulations Section 1.409A-3(i)(3).

     

    (y)           “Valuation Date” shall
mean each regular business day.

     

    5.           Enrollment;
Deferral Elections

     

    (a)           Enrollment.  An
Eligible Employee may become a Participant with respect to a Plan Year by filing
an enrollment package with the Administrator for such Plan Year. An enrollment
package shall include a compensation deferral election, a Beneficiary
designation, an election as to the commencement date and form of distribution
for Contributions made under the Plan, and such other forms as may be required
by the Administrator.

     

    (b)           Deferral
Elections.  Subject to the limitations of paragraphs (d) and
(e) of this Section 5, a Participant may elect to defer the receipt of his base
salary, Annual Bonus, and/or all such other compensation as the Administrator
shall determine, and to have such amounts contributed to the Plan as a Savings
Contribution.  For each Plan Year, a Participant shall make separate
deferral elections with respect to his base salary and with respect to his
Annual Bonus.  Each deferral election shall be made during the
applicable Election Period, and subject to paragraph (c) of this Section 5,
shall become irrevocable as of the last day of the applicable Election
Period.  If the Administrator so determines, a Participant’s deferral
elections shall remain in effect for subsequent Plan Years unless a new deferral
election is timely filed with the Administrator on or before the last day of a
subsequent applicable Election Period.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (c)         Changing
Elections.  A Participant may not revoke or change a deferral
election during a Plan Year to which it applies.  However, an election
with respect to a Plan Year shall automatically be terminated in the event that
a Participant receives a distribution from the Plan during such Plan Year on
account of an Unforeseeable Emergency.  In addition, the Administrator
may in its sole discretion cancel a Participant’s deferral election for a Plan
Year, to the extent permitted under Code Section 409A, in connection with a
hardship distribution to the Participant under the RSP or upon the Participant’s
Disability.

     

    (d)         Limits on Amounts
Deferred.  An Eligible Employee may authorize the Company to
reduce his compensation from his Participating Employer for any Plan Year and to
have such amount(s) contributed to the Plan as a Savings Contribution as
follows:

     

    (i)           up
to fifty percent (50%) of his base salary for the Plan Year;

     

    (ii)          up
to one hundred percent (100%) of his Annual Bonus, if any, earned in that Plan
Year; and/or

     

    (iii)         all
or a portion of such other compensation as may be designated by the
Administrator.

     

    (e)         Additional Conditions and
Limitations.  An Eligible Employee’s right to make a deferral
election pursuant to this Section 5 shall be subject to the following additional
limitations:

     

    (i)           The
aggregate minimum deferral amount for any Plan Year in which an Eligible
Employee elects to participate in the Plan shall be $2,500, or such other amount
as may be determined by the Administrator.  If the total amount
deferred is in fact less than the applicable minimum amount for the Plan Year,
then no portion of the Eligible Employee’s compensation shall be deferred for
that Plan Year.

     

    (ii)          Unless
otherwise determined by the Administrator, an Eligible Employee may defer
receipt of only that portion of his compensation that exceeds the amount
necessary to satisfy Medicare and all other applicable payroll taxes imposed on
the wages of the Eligible Employee, any deductions authorized by the Eligible
Employee, including deductions made to the RSP and pursuant to Code Section 125,
and any garnishment of wages or other deductions required by law.

     

    (iii)         Subject
to Section 409A of the Code and the regulations thereunder, the Administrator
may impose the following additional limitations: (A) limitations on the amounts
permitted to be deferred; (B) limitations on the sources, timing and form of
deferrals; (C) limitations on amounts and sources of deferrals for particular
Participants; and (D) terms and conditions regarding all deferrals under the
Plan.  Any such limitations, and other terms and conditions of
deferral, shall be set forth in the rules relating to the Plan or election
forms, other forms, or instructions of the Administrator, which may be, but need
not be, set forth in writing.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (f)          Withholding of Deferred
Amounts.  The amounts that an Eligible Employee elects to
contribute to the Plan as Savings Contributions for any Plan Year shall be
withheld from the Eligible Employee’s compensation as follows:

     

    (i)           Base
salary deferrals shall be withheld proportionately each payroll period during
the Plan Year or in such other manner as may be administratively
feasible.

     

    (ii)          Withholdings
with respect to a Participant’s Annual Bonus or other compensation shall be made
as soon as practicable after the compensation would have been payable to the
Participant if he did not elect to make a deferral with respect to such
compensation.

     

    6.           Matching,  Discretionary
and Nonelective Contributions

     

    (a)          Matching
Contributions.  For any Plan Year, a Participating Employer
may, in its discretion, make a Matching Contribution to the Account of any
Participant.  The amount of any such Matching Contribution shall be
equal to the sum
of (A) and (B), reduced
by (C), where:

     

    
      	
               
      

            	
              A

            	
              is
      the sum of the Participant’s total Savings Contributions to the Plan
      during the Plan Year and the Participant’s total elective deferrals,
      including Roth elective deferrals, to the RSP for the Plan Year, such
      total not to exceed three percent (3%) of the Participant’s Compensation
      for the Plan Year;

            

    

     

    
      	
               
      

            	
              B

            	
              is
      fifty percent (50%) of the sum of (i) the Participant’s total Savings
      Contributions to the Plan, plus (ii) the Participant’s total elective
      deferrals, including Roth elective deferrals, to the RSP for the Plan
      Year, but only to the extent that such total amount exceeds three percent
      (3%) of the Participant’s Compensation for the Plan Year but does not
      exceed six percent (6%) of the Participant’s Compensation for the Plan
      Year; and

            

    

     

    
      	
               
      

            	
              C

            	
              is
      any matching contribution made on behalf of the Participant to the RSP for
      the Plan Year.

            

    

     

    For
purposes of this Section 6(a), “Compensation” shall mean the Participant’s base
salary that is actually paid to the Participant during the Plan Year, or that
would have been paid to the Participant during the Plan Year had the Participant
not made any Savings Contributions to the Plan or any elective contributions,
after-tax contributions or Roth contributions to the RSP in such Plan
Year.

     

    (b)         Discretionary
Contributions.  A Participating Employer may, in its
discretion, make a Discretionary Contribution to the Account of any
Participant(s) at any time.  Any such Discretionary Contribution need
not be uniform among Participants and may be made irrespective of any
contributions made by the Participating Employer or the Participant under the
Plan or under the RSP.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (c)          Nonelective Contributions
for Certain Participants.  For each Plan Year beginning on or
after January 1, 2010, a Participating Employer shall make a nonelective
contribution to the Accounts of certain Participants as follows:

     

    (i)           A
Participant shall be eligible to receive a nonelective contribution pursuant to
this Section 6(c) if: (A) he is not eligible to participate in the Retirement
Income Plan for Selective Insurance Company of America; and (B) he has completed
one year of service for eligibility purposes, as determined under the
RSP.

     

    (ii)          A
nonelective contribution shall be in an amount equal to four percent (4%) of the
Participant's Compensation for the Plan Year which exceeds the limitation under
Section 401(a)(17) of the Code with respect to such Plan Year.  For
purposes of this Section 6(c), “Compensation” shall mean the amount of the
Participant’s base salary that is actually paid to the Participant during the
Plan Year on or after the later of: (A) the date on which the Participant
becomes a Participant in the Plan; and (B) the first day of the payroll period
coincident with or next following the date on which the Participant completes
one year of eligibility service, as described in clause (i) B)
above.  Compensation shall include amounts that would have been paid
to the Participant during the Plan Year during the period described in the
foregoing sentence had the Participant not made any Savings Contributions to the
Plan or any elective contributions, after-tax contributions or Roth
contributions to the RSP in such period.

     

    (iii)         A
Participant shall be fully vested in any nonelective contributions made pursuant
to this Section 6(c) at all times.

     

    (iv)         A
nonelective contribution shall be credited to a Participant’s Discretionary
Contribution Account on such date as the Administrator shall determine, but no
later than April 30 of the year following the Plan Year to which such
nonelective contribution relates.

     

    (v)          Except
as expressly set forth in this Section 6(c), a nonelective contribution shall be
treated for all purposes of the Plan as a Discretionary
Contribution.

     

    (vi)         A
Participant who receives a nonelective contribution pursuant to this Section
6(c) with respect to the 2010 Plan Year shall not be entitled to make any
initial election under Section 7 as to the time or form of payment of his
Discretionary Contribution Account balance attributable thereto, and such
portion of his Discretionary Contribution Account balance shall, subject to any
election change made pursuant to Section 8, be distributed to the Participant as
a Separation Distribution in one lump sum.

     

    7.           Election
of Time and Form of Payment

     

    Each
Participant shall elect during the applicable Election Period to have his vested
Account balance with respect to such Plan Year distributed as either: (i) an
In-Service Distribution; or (ii) a Separation Distribution, subject to the
following limitations:

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (a)           Separation
Distributions.  A Participant may elect to receive his Account
with respect to a Plan Year as a Separation Distribution, either in a lump sum
or in annual installments over a period of five (5), ten (10) or fifteen (15)
years.  A Participant may elect a different time and form of payment
for distribution of his Account upon a Separation of Service resulting from
death.  If the Participant does not make a separate election
designating the time and form of payment of his Account upon a Separation of
Service resulting from death, then, upon the Participant’s Separation from
Service resulting from death, his Account shall be distributed to his
Beneficiary in a single lump sum.

     

    (b)           In-Service
Distributions.  A Participant may elect to receive his Savings
Contribution Account for a Plan Year as an In-Service Distribution, either: (i)
in a lump sum in a Plan Year selected by the Participant; or (ii) in annual
installments over a period of two (2) to five (5) years, commencing in a Plan
Year selected by the Participant.  Notwithstanding the foregoing
sentence, the Plan Year selected by the Participant for an In-Service
Distribution, or for the commencement of an In-Service Distribution payable in
annual installments, shall not be earlier than the third year following the Plan
Year to which such deferral election relates.

     

    (c)           Matching and Discretionary
Contributions.  A Participant’s Matching Contributions and
Discretionary Contributions, if any, shall not be distributed as In-Service
Distributions and shall be distributed pursuant to the Participant’s Separation
Distribution election for the applicable Plan Year.

     

    (d)           Separate
Elections.  To the extent permitted by the Administrator, a
Participant may make separate elections as to the time and form of distribution
for base salary, Annual Bonus and any other compensation to be deferred with
respect to each Plan Year, and for Matching Contributions and Discretionary
Contributions to be made on behalf of the Participant for such Plan
Year.

     

    (e)           Absence of
Election.  If a Participant fails to make an election with
respect to the time or form of distributions for any Plan Year, the amount
deferred by or on behalf of the Participant during such Plan Year shall be
distributed in accordance with the most recent corresponding distribution
election filed by the Participant with the Administrator.  If no such
election has been filed, a Participant’s entire vested Account balance for such
Plan Year shall be distributed to the Participant as a Separation Distribution
in one lump sum.

     

    8.           Election
Changes

     

    (a)           General.  A
Participant may change the commencement date or form of a scheduled In-Service
Distribution or Separation Distribution by filing an election change form with
the Administrator, provided that: (i) the election change is made at least
twelve (12) months before the scheduled payment date; (ii) the election change
will not take effect until at least twelve (12) months after the election is
made; and (iii) the payment to which the change applies is postponed to a date
at least five (5) years later than previously scheduled.  A
Participant may not change the scheduled commencement date of an In-Service
Distribution with respect to any Plan Year more than two (2)
times.  For purposes of the Plan, if a Participant elects to receive a
distribution in installments, each installment payment shall be treated as a
separate payment, as described in Treasury Regulations Section
1.409A-2(b)(2).

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (b)           Changes During Section 409A
Transition Period.  Notwithstanding anything in the Plan to the
contrary, pursuant to transition relief promulgated under Section 409A of the
Code, including Internal Revenue Service Notices 2005-1, 2006-79 and 2007-86, at
any time prior to January 1, 2009, if and to the extent permitted by the
Administrator, a Participant may change the commencement date or form of a
scheduled In-Service Distribution or Separation Distribution by filing with the
Administrator an election change in such form as may be prescribed by the
Administrator; provided, however, that such election may only apply to amounts
that would not otherwise be payable in the calendar year in which the election
change is made, and may not cause an amount to be paid in the calendar year in
which the election change is made that would not otherwise be payable in such
calendar year.

     

    9.           Vesting

     

    (a)           Savings Contribution
Account.  A Participant shall be fully vested in his Savings
Contribution Account at all times.

     

    (b)           Matching Contribution
Account.  A Participant shall become vested in his Matching
Contribution Account in accordance with the following schedule (where the
vesting period commences on the Participant’s date of hire), provided that he
has not incurred a Separation from Service before the applicable vesting
date:

     

    
      
        
          
            	
                    Years of Service

                  	 	
                    Vested Percentage

                  	 
	
                    1

                  	 	 	0	%
	
                    2

                  	 	 	20	%
	
                    3

                  	 	 	40	%
	
                    4

                  	 	 	60	%
	
                    5

                  	 	 	80	%
	
                    6

                  	 	 	100	%

          

        

      

    

    

    Notwithstanding
the foregoing, effective as of January 1, 2007, any unvested portion of a
Participant’s Matching Contribution Account will become fully vested in the
event of the occurrence of any of the following events before the Participant’s
Separation from Service: (i) a Change of Control; (ii) the attainment by the
Participant of age sixty-five (65); (iii) the Participant’s incurring a
Disability; or (iv) the death of the Participant.  Notwithstanding the
foregoing: (i) a Participant who is employed by a Participating Employer on
January 1, 2011 shall be fully vested in his Matching Contribution Account
attributable to Plan Years ending on or prior to December 31, 2010; and (ii) a
Participant shall at all times be fully vested in the portion of his Matching
Contribution Account attributable to Matching Contributions made by a
Participating Employer with respect to Plan Years commencing on or after January
1, 2011.

    

    (c)           Discretionary Contribution
Account.  Discretionary Contributions will be subject to a
vesting schedule established by the Administrator at the time of the
Contribution.

     

    (d)           Forfeitures.  Any
portion of an Account in which a Participant is not fully vested as of the date
of his Separation from Service shall be forfeited.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    10.         Accounts

     

    (a)          Establishment and Crediting
of Accounts.  The Company shall establish and maintain an
Account for each Participant for each Plan Year and shall credit Contributions
made on behalf of the Participant with respect to each Plan Year as
follows:

     

    (i)           Savings
Contributions shall be credited to a separate Savings Contribution Account
maintained on behalf of the Participant on the books and records of the
Company.

     

    (ii)          Matching
Contributions shall be credited to a separate Matching Contribution Account
maintained on behalf of the Participant on the books and records of the
Company.

     

    (iii)         Discretionary
Contributions shall be credited to a separate Discretionary Contribution Account
maintained on behalf of the Participant on the books and records of the
Company.

     

    (b)          Timing of Crediting of
Accounts.  The amount of each Participant’s Savings
Contribution shall be credited to the Participant’s Savings Contribution Account
within five (5) business days of the date on which such amount would have been
paid to the Participant but for the Participant’s election to defer receipt
thereof.  The amount of each Participant’s Matching Contributions and
Discretionary Contributions, if any, shall be credited to the Participant’s
Account at such times as designated by the Administrator.  Unless
otherwise determined by the Administrator, an amount credited to a Participant’s
Account shall be deemed invested in the Investment Options as described in
Section 11 as of the date on which such amount would have been paid to the
Participant but for the Participant’s election to defer receipt
thereof.

     

    11.         Notional
Investment of Accounts

     

    (a)          Investment
Options.  Amounts credited to a Participant’s Account shall be
deemed to be invested, at the Participant’s direction, in one or more Investment
Options specified from time to time by the Administrator.  The
Administrator may change or discontinue any Investment Option available under
the Plan in its discretion, and may disregard any Participant’s investment
directions.  The Administrator shall credit or debit each
Participant’s Account to the extent notionally invested in each Investment Fund
with earnings or losses by multiplying the relevant portion of the Account
balance as of the previous Valuation Date by the net investment return for such
Investment Fund for the period.  The amounts of hypothetical income
and appreciation and depreciation in the value of a Participant’s Account shall
be credited and debited to such Account on a daily basis or as otherwise
determined by the Administrator.

     

    (b)          Allocation and Reallocation
of Investments.  A Participant may allocate or reallocate
amounts credited to his Account to one or more of the Investment Options
authorized under the Plan in a manner determined by the
Administrator.  Changes to a Participant’s investment elections shall
be effective as of the next Valuation Date.  The Administrator may, in
its discretion, restrict allocation or reallocation by specified Participants
into or out of specified Investment Options or specify minimum amounts that may
be allocated or reallocated by Participants.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (c)          Default Investment
Options.  The Administrator may from time to time designate one
or more Investment Options as “default” Investment Options for the notional
investment of the Account balances of Participants who fail to make an
investment direction pursuant to Section 11(a).

     

    12.         Payment
of Benefits

     

    (a)          In-Service
Distributions.  In-Service Distributions of a Participant’s
Savings Contribution Account shall be made in accordance with the Participant’s
election, subject to the following:

     

    (i)           If
a Participant has elected to receive an In-Service Distribution in installments,
the distribution will be made in installments only if the Participant’s
aggregate Savings Contribution Account under the Plan, valued as of the first
such distribution date, when aggregated with the Participant’s total account
balance under the Old Plan that is attributable to the Participant’s
compensation deferrals, is not less than $25,000.  If the
Participant’s total Savings Contribution Account as of such date is less than
$25,000, such In-Service Distribution shall be made in a single lump sum on the
date of the first scheduled In-Service Distribution.

     

    (ii)          No
In-Service Distribution shall be made to a Participant if the amount of the
distribution is less than $5,000 as of the scheduled In-Service Distribution
date.  Any such amount shall be distributed to the Participant in
accordance with the Participant’s Separation Payment election for such Plan Year
or, if none, in a single lump sum upon the Participant’s Separation from
Service.

     

    (b)          Separation
Distributions.  A Participant’s vested Account balance shall be
distributed in accordance with his Separation Distribution elections upon the
Participant’s Separation from Service; provided however that Separation
Distributions shall be made in a single lump sum and not in the form of
installment payments elected by the Participant if (1) the Participant’s total
vested Account balance under the Plan as of the date of his Separation from
Service (excluding any amounts which the Participant has elected to be paid as
In-Service Distributions), when aggregated with his total vested account balance
under the Old Plan, is less than $50,000; or (2) the Participant dies prior to
his Separation from Service without having made a separate election designating
the time and form of payment for distribution of his Account upon his
death.

     

    (c)          Acceleration of Certain
In-Service Distributions.  If a Participant who has elected to
receive an In-Service Distribution of all or a portion of his Savings
Contribution Account incurs a Separation from Service for any reason prior to
payment of all scheduled In-Service Distributions, all remaining scheduled
In-Service Distributions shall be made to the Participant (or to his Beneficiary
in the event of his death) in a single lump sum.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    (d)          Delayed Distributions to
Specified Employees.  Notwithstanding anything in the Plan to
the contrary, except where a Participant incurs a Separation from Service by
reason of death, no distribution of a Participant’s vested Account balance shall
be made upon the Participant’s Separation from Service (including any
accelerated distribution of scheduled but unpaid In-Service Distributions in
accordance with Section 12(c)) if he is a Specified Employee as of the date of
his Separation from Service until the first business day of the seventh month
after the date of the Specified Employee’s Separation from Service (or, if
earlier, upon the date of his death).  On such date, any amounts that
would otherwise have been paid to the Participant during the period between the
Participant’s Separation from Service and such date shall be aggregated and,
after adjustment pursuant to Section 11 for notional investment earnings or
losses during the period of the delay, shall be paid in full to the Participant,
and any succeeding payments shall continue as scheduled.

     

    13.         Timing
of Payments

     

    Subject
to Section 12(d) with respect to Specified Employees, payments due to a
Participant under the Plan shall be made as follows:

     

    (a)          Lump Sum
Payments.

     

    (i)           In-Service
Distributions.  Lump sum In-Service Distributions will be paid
in the calendar year specified by the Participant, on or about March 1 of such
year, and shall have a Valuation Date of the February 28 immediately preceding
such payment date.

     

    (ii)          Separation
Distributions.  Lump sum Separation Distributions (including
those made upon a Participant’s death) shall be made as soon as practicable in
the calendar quarter following the calendar quarter in which the Participant’s
Separation from Service occurs, or, if the Participant has elected to defer the
payment of a Separation Distribution in accordance with Section 8, on the date
selected by the Participant.  Such lump sum payments shall have a
Valuation Date as of the last day of the calendar quarter ending prior to the
calendar quarter in which the distribution is paid.

     

    (b)          Installment
Payments.

     

    (i)           In-Service
Distributions.  If a Participant elects to have an In-Service
Distribution made to him in annual installments, each installment payment shall
be made in the scheduled year, on or about March 1 of such year, and shall have
a Valuation Date of the February 28 immediately preceding the installment
payment date.

     

    (ii)          Separation
Distributions.  If a Participant elects to have a Separation
Distribution (including a Separation Distribution made upon the Participant’s
death) made to him in annual installments, the first installment shall be
payable as soon as administratively practicable in the calendar quarter
following the calendar quarter in which the Participant’s Separation from
Service occurs, or, if the Participant has elected to defer the commencement
date of his Separation Distributions in accordance with Section 8, upon the date
selected.  Such first installment shall have a Valuation Date as of
the last day of the calendar quarter ending prior to the calendar quarter in
which the distribution is paid.  Subsequent installments shall be
payable annually, on or about each March 1, and shall have a Valuation Date of
the immediately preceding February 28.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    14.         Unforeseeable
Emergency Distributions

     

    (a)           If,
upon the written application of a Participant, the Administrator determines that
the Participant has suffered an Unforeseeable Emergency, then the Administrator
may authorize a distribution from the Participant’s vested Account
balance.  No payments shall be made pursuant to this Section 14 in the
event that such Unforeseeable Emergency is or may be relieved through
reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s assets, to the extent that liquidation of such assets would
not itself cause severe financial hardship, as determined by the
Administrator.  Distributions pursuant to this Section 14 shall be no
less than $5,000, or the Participant’s total remaining vested Account balance,
if less than $5,000.

     

    (b)           The
amount of any distribution made on account of an Unforeseeable Emergency shall
not exceed the amount reasonably necessary to satisfy the financial need,
including amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution, as determined
by the Administrator.

     

    (c)           Distributions
on account of an Unforeseeable Emergency will be paid in a single lump sum as
soon as administratively practicable following approval of the Administrator,
and shall have a Valuation Date as of the last day of the month prior to the
month in which the distribution is paid.

     

    (d)           If
a Participant receives a distribution on account of an Unforeseeable Emergency,
the Participant may make no further Savings Contributions to the Plan for the
balance of the Plan Year or the following Plan Year.

     

    15.         Acceleration
of Payments Upon Certain Events

     

     

    Notwithstanding
anything in this Plan to the contrary, the Administrator, in its sole
discretion, may accelerate payment of all or any portion of a Participant’s
vested Account balance upon the occurrence of any of the events described in
this Section 15.  A determination of whether a payment qualifies for
acceleration under this Section 15 shall be made by the Administrator, in its
sole discretion, in accordance with Section 1.409-3(j)(4) of the Treasury
Regulations.

     

    (a)           Domestic Relations
Order.  The Administrator may in its sole discretion accelerate
payment of all or any portion of a Participant’s vested Account balance to the
extent necessary to comply with a domestic relations order (as defined in Code
Section 414(p)(1)(B)) which requires any payments otherwise due to the
Participant under the Plan to be made to an individual other than the
Participant.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (b)           Limited
Cashouts.  The Administrator may in its sole discretion
accelerate payment of all or any portion of a Participant’s vested Account
balance to the extent that: (1) the aggregate amount of the Participant’s vested
Account that remains unpaid under the Plan does not exceed the applicable dollar
amount under Code Section 402(g)(1)(B); (2) the accelerated payment results in
the termination of the entirety of the Participant’s interest under the Plan and
all other agreements, plans and arrangements aggregated with the Plan under
Treasury Regulations Section 1.409A-1(c)(2); and (3) the Administrator’s
decision to cash out the Participant’s remaining interest under the Plan
pursuant to this paragraph (b) is evidenced in writing no later than the cashout
date.

     

    (c)           Payment of Employment
Taxes.  The Administrator may in its sole discretion accelerate
payment of all or any portion of a Participant’s vested Account balance to pay:
(i) the Federal Insurance Contributions Act (FICA) tax imposed under Code
Sections 3101 and 3121(a) and (v)(2) on compensation deferred under the Plan
(the “FICA Amount”); and/or (ii) income tax at source on wages imposed under
Code Section 3401 or the corresponding withholding provisions of applicable
state, local, or foreign tax laws as a result of the payment of the FICA Amount,
and the additional income tax at source on wages attributable to the pyramiding
Code Section 3401 wages and taxes; provided, however, that the total payment
under this paragraph (c) shall not exceed the aggregate of the FICA Amount and
the income tax withholding related to such FICA Amount.

     

    (d)           Payment Upon Income
Inclusion Under Section 409A.  The Administrator may in its
sole discretion accelerate payment of all or any portion of a Participant’s
vested Account balance if the Plan fails to meet the requirements of Section
409A of the Code and the applicable regulations; provided that any payment made
pursuant to this paragraph (d) may not exceed the amount required to be included
by the Participant in income as a result of the failure to comply with the
requirements of Code Section 409A.

     

    (e)           Termination of the
Plan.  The Administrator may in its sole discretion accelerate
payment of all or any portion of a Participant’s vested Account balance upon
termination of the Plan in accordance with Treasury Regulations Section
1.409A-3(j)(4)(ix).

     

    (f)   
        Payment of State, Local or
Foreign Taxes.  The Administrator may in its sole discretion
accelerate payment of all or any portion of a Participant’s vested Account
balance for payment of: (i) state, local, or foreign tax obligations of the
Participant arising from payments under the Plan which apply to any such amounts
before they are paid or made available to the Participant; and/or (ii) the
income tax at source on wages imposed under Code Section 3401 as a result of
such payment, and the additional income tax at source on wages imposed under
Code Section 3401 attributable to such additional Code Section 3401 wages and
taxes.  The total payment under this paragraph (f) shall not exceed
the aggregate of the state, local, and foreign tax amount and the income tax
withholding related to such state, local, and foreign tax amount.  Any
such payment shall be made, in the Administrator’s discretion, either by (X)
distributions to the Participant in the form of withholding pursuant to
provisions of applicable state, local, or foreign law; or (Y) distribution
directly to the Participant.

     

    (g)           Certain
Offsets.  To the extent permitted by applicable law, the
Administrator may in its sole discretion accelerate payment of all or any
portion of a Participant’s vested Account balance in satisfaction of a debt of
the Participant to a Participating Employer, where such debt is incurred in the
ordinary course of the service relationship between the Participant and the
Participating Employer; provided, however, that (i) the entire amount of any
such accelerated payment in any of the Participant’s taxable years does not
exceed $5,000; and (ii) the reduction is made at the same time and in the same
amount as the debt otherwise would have been due and collected from the
Participant.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (h)           Bona Fide Disputes as to a
Right to a Payment.  The Administrator may in its sole
discretion accelerate payment of all or any portion of a Participant’s vested
Account balance to the extent that the accelerated payment is made as part of a
settlement between the Participant and a Participating Employer of an arm’s
length, bona fide dispute as to the Participant’s right to the
payment.

     

    16.        Compliance
with Code Section 162(m)

     

    It is the
intent of the Company that any compensation deferred under the Plan by a
Participant who is, with respect to the year of payout, deemed by the
Administrator to be a “covered employee” within the meaning of Code Section
162(m) and regulations thereunder, which compensation constitutes “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder, shall not, as a result of deferral under the Plan,
become nondeductible by the Company as a result of the application of Code
Section 162(m).  If the Administrator reasonably anticipates that any
payment otherwise required to be made to a Participant under the Plan would not
be deductible in the year of the payment by reason of the application of Code
Section 162(m), such payment shall be deferred until the Participant’s first
taxable year in which the Administrator reasonably anticipates that the
deduction of the payment will not be limited or eliminated by application of
Code Section 162(m), or (subject to Section 12(d)), until the period beginning
with the date of the Participant’s Separation from Service and ending with the
later of the last day of the calendar year in which the Separation from Service
occurs and the fifteenth day of the third month following such Separation from
Service.  Notwithstanding the foregoing, no payment under the Plan may
be deferred in accordance with this Section 16 unless all scheduled payments to
the Participant that could be delayed in accordance with Treasury Regulations
Section 1.409A-2(b)(7)(i) are also delayed.

     

    17.         Administration

     

    (a)          Administrator.  The
Company, or such other organization, committee or individual as may be
designated by the Company from time to time, shall be the
Administrator.

     

    (b)          Powers of
Administrator.  The Administrator shall be charged with the
general administration of the Plan and shall have all powers necessary or
appropriate to accomplish its duties under the Plan.  The
Administrator shall administer the Plan in accordance with its
terms.  Any determination by the Administrator shall be made in its
sole and absolute discretion and shall be conclusive and binding upon all
persons.  The powers and responsibilities of the Administrator shall
include, without limitation, the following:

     

    (i)           Determining
all questions relating to the eligibility of an employee to participate in the
Plan or remain a Participant;

     

    (ii)  
       Computing and certifying the amount
and the kind of benefits to which any Participant may be
entitled;

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (iii)         Establishing
procedures, correcting defects, supplying information, and reconciling
inconsistencies in any manner and to whatever extent is deemed necessary or
advisable to carry out the purpose of this Plan;

     

    (iv)        Authorizing
and directing disbursements from the Trust;

     

    (v)         Determining
all questions arising in connection with the administration, interpretation and
application of the Plan;

     

    (vi)        Maintaining
all necessary records for the administration of the Plan;

     

    (vii)       Making
and publishing rules and regulations that are consistent with the terms
hereof;

     

    (viii)      Determining
the short and long-term liquidity needs of the Plan; and

     

    (ix)         Assisting
any Participant regarding his rights, benefits, or elections available under the
Plan.

     

    (c)          Limitation of
Liability.  The Administrator shall be entitled to, in good
faith, rely or act upon any report or other information furnished to it by any
officer or other employee of the Company or any subsidiary or affiliated entity,
the Company’s independent certified public accountants, or any executive
compensation consultant, legal counsel, or other professional retained by the
Company to assist in the administration of the Plan.  To the maximum
extent permitted by law, no member of any committee appointed as Administrator
and no person to whom ministerial duties have been delegated shall be liable to
any person for any action taken or omitted in connection with the interpretation
and administration of the Plan.  The Company agrees to indemnify and
hold harmless each person who serves as a member of any committee acting as
Administrator to the fullest extent permitted by law for all acts done in good
faith and without gross negligence, including defense of all litigation,
including legal fees.

     

    18.        Claim
and Appeal Procedure

     

    (a)          Any
Participant or other person claiming an interest in the Plan (the “Claimant”)
may file a claim in writing with the Administrator.

     

    (b)          The
denial of any claim under the Plan shall be communicated in writing or in
electronic form by the Administrator to the Claimant (or the Claimant’s
authorized representative) within ninety (90) days of receipt of the claim,
unless the Administrator determines that special circumstances beyond the
control of the Plan require an extension of time, in which case the
Administrator may have up to an additional ninety (90) days to process the
application.  If the Administrator determines that an extension of
time for processing is required, the Administrator shall furnish written or
electronic notice of the extension to the Claimant before the end of the initial
ninety (90) day period.  Any notice of extension shall describe the
special circumstances necessitating the additional time and the date by which
the Administrator expects to render its decision on the
application.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    (c)           The
written or electronic notice of denial shall be set forth in a manner designed
to be understood by the Claimant, and shall include specific reasons for the
denial, specific references to the Plan provision(s) upon which the denial is
based, a description of any information or material necessary for the Claimant
to perfect his claim, an explanation of why such material or information is
necessary, and an explanation of the Plan’s review procedures and the time
limits applicable to such procedures, including a statement of the Claimant’s
right to bring a civil action under ERISA following an adverse determination on
review.  If a Claimant has not received notification of the
Administrator’s determination within ninety (90) days (or such extended period
as may be applicable), the Claimant shall be entitled to pursue any remedies
available to him under ERISA.

     

    (d)           Any
Claimant whose claim is denied in accordance with paragraph (c) shall have the
right to request the review of such denial within seventy-five (75) days of
receipt of written or electronic notice of the denial.  Such request
for review must be in writing and directed to the Administrator.

     

    (e)           The
Administrator shall have sixty (60) days to process the application for review
unless the Administrator determines that special circumstances beyond the
control of the Plan require an extension of time, in which case the
Administrator may have up to an additional sixty (60) days to process the
application.  If the Administrator determines that an extension of
time for processing is required, the Administrator shall furnish written or
electronic notice of the extension to the Claimant before the end of the initial
sixty (60) day period.  Any notice of extension shall describe the
special circumstances necessitating the additional time and the date by which
the Administrator expects to render its decision on the
application.

     

    (f)  
         The Claimant will have the
right to be represented at such review, to review all documents relevant to the
claim, and to submit written comments, documents, records and other information
relating to the claim.  The Claimant will be provided upon request and
free of charge reasonable access to and copies of all documents, records and
other information relevant to the Claimant’s claim.  Any review
requested by the Claimant of a determination by the Administrator will take into
account all comments, documents, records and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.  The
Administrator shall respond electronically or in writing within sixty (60) days
(or such extended period as may be applicable) after the receipt of the request
for such review.  The decision on review shall include specific
reasons for the decision, written in a manner calculated to be understood by the
Claimant and with specific references to the relevant Plan provisions on which
the decision is based.

     

    (g)           Any
person submitting a claim in accordance with this section may withdraw the claim
at any time or, with the consent of the Administrator, defer the date on which
such claim shall be deemed filed for purposes of this Section 18.

     

    (h)           For
purposes of this Section 18, a document, record or other information is
considered “relevant” to the Claimant’s claim if such document, record or other
information (i) was relied upon by the Administrator in making the benefit
determination; (ii) was submitted, considered or generated in the course of
making the benefit determination, without regard to whether such document,
record or other information was relied upon in making the benefit determination;
or (iii) demonstrates compliance with the administrative processes and
safeguards designed to ensure and to verify that that benefit claim
determinations are made in accordance with governing Plan documents and that,
where appropriate, the Plan provisions have been applied consistently with
respect to similarly situated Claimants.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    (i)           The
internal claims procedures under this Section 18 are mandatory.  If a
Claimant fails to follow these claims procedures, or to timely file a request
for review in accordance with this Section 18, the denial of the claim shall
become final and binding on all persons for all purposes.

     

    (j)           The
determination whether to grant or to deny any claim under this Plan shall be
made by the Administrator, in its sole and absolute discretion.  All
determinations, constructions and interpretations made by the Administrator
shall be conclusive and binding on all persons to the maximum extent permitted
by law.

     

    19.         Establishment
of Trusts

     

    The
Company may, in its discretion, establish one or more grantor Trusts (including
sub-accounts under such Trusts), and deposit therein amounts of cash or other
property not exceeding the amount of the obligations of the Company and all
other Participating Employers with respect to the Participants’ Accounts
established under the Plan.  Other provisions of the Plan
notwithstanding, the timing of allocations and reallocations of assets in the
Participants’ Accounts, and the Investment Options available with respect to
such Accounts, may reflect the timing of actual investments of the assets of
such Trust(s) and the actual investments available to such Trust(s), all as
determined in the sole discretion of the Administrator.  The
investments of the Trust(s) may include life insurance (including, but not
limited to, variable life insurance), and such other assets as may be selected
from time to time by the Administrator.

     

    20.         Amendment
and Termination of the Plan

     

    (a)           Amendment.  The
Company, or its delegee, may at any time make such modifications of the Plan as
it shall deem advisable.  All such amendments shall be in
writing.  Except for amendments which the Company reasonably believes
necessary or appropriate to avoid adverse tax consequences to Participants,
including amendments designed to avoid the penalties and interest imposed by
Section 409A of the Code, no amendment of the Plan may, without the consent of
the Participant who has an Account balance under the Plan, adversely affect the
rights of such Participant under the Plan.

     

    (b)           Termination.  Notwithstanding
anything in the Plan to the contrary, subject to the terms of Section 409A of
the Code, the Company may suspend, freeze or terminate the Plan at any time in
its sole discretion by written action of the Company or its
delegee.

     

    (c)           Effect of Change of
Control.  Notwithstanding the foregoing, upon the occurrence of
a Change of Control, the Plan may not be amended in any way (except to the
extent required by law) or terminated prior to the payment of amounts credited
to Participants’ Accounts as of the date of the Change of Control, pursuant to
the terms of the Plan and the Participants’ elections with respect
thereto.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    21.        Participating
Employers

     

    (a)           Adoption of
Plan.  Any member of the Selective Group may, by action of its
board of directors, adopt this Plan for all or a portion of its eligible
employees, provided that the Company approves such adoption.  The
administrative powers and control of the Company as provided in the Plan shall
not be deemed diminished under the Plan by reason of the participation of any
member of the Selective Group in the Plan.

     

    (b)           Withdrawal from
Plan.  A Participating Employer may withdraw at any time from
the Plan without affecting the other Participating Employers.  The
Board of Directors of the Company may, in its discretion, terminate a
Participating Employer’s participation in the Plan at any time when, in its
judgment, such Participating Employer fails or refuses to discharge its
obligations under the Plan.

     

    22.        General
Provisions

     

    (a)           Limits on Transfer of Plan
Benefits.  Except as otherwise provided herein, other than by
will or the laws of descent and distribution, no right, title or interest of any
kind in the Plan shall be transferable or assignable by a Participant or his
Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment,
attachment, levy, execution or other legal or equitable process, nor subject to
the debts, contracts, liabilities, engagements, or torts of any Participant or
his Beneficiary.  Any attempt to alienate, sell, transfer, assign,
pledge, garnish, attach or take any other action subject to legal or equitable
process or encumber or dispose of any interest in the Plan shall be
void.  No loans shall be issued by the Plan against a Participant’s
Account.

     

    (b)           Receipt and
Release.  Payments (in any form) to any Participant or
Beneficiary in accordance with the provisions of the Plan shall be in full
satisfaction of all claims for the compensation or awards deferred and relating
to the Participant’s Account against the Company, all of its Affiliates, their
respective boards of directors, officers, employees, and the Administrator, and
the Administrator may require such Participant or Beneficiary, as a condition to
such payments, to execute a receipt and release to such effect.

     

    (c)           Unfunded Status of
Accounts.  The Plan shall be maintained as an unfunded plan
which meets the requirements of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, and Participants shall rely solely on the unsecured promise of the
Company or other applicable Participating Employer for payment
hereunder.  Nothing contained in the Plan shall give a Participant any
rights that are greater than those of a general unsecured creditor of the
Company or other applicable Participating Employer; provided, however, that the
Administrator may authorize the creation of Trusts referred to in Section 19, or
make other arrangements to meet the obligations of the Participating Employers
under the Plan, which Trusts or other arrangements shall be consistent with the
“unfunded” status of the Plan.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (d)           Compliance.  A
Participant in the Plan shall have no right to receive payment (in any form)
with respect to his Account until legal and contractual obligations of the
Company relating to establishment and maintenance of the Plan and the making of
such payments shall have been complied with in full.  In addition, the
Company shall impose such restrictions on any interest constituting a security
as it may deem advisable in order to comply with the Securities Act of 1933, as
amended, the requirements of NASDAQ or any applicable stock exchange or
automated quotation system, any state securities laws applicable to such a
transfer, any provision of the Company’s Certificate of Incorporation or
By-laws, or any other law, regulation, or binding contract to which the Company
is a party.

     

    (e)           No Employment
Rights.  No provision of the Plan or transaction hereunder
shall confer upon any Participant any right to be employed by the Company or
any  subsidiary or affiliate thereof, or to interfere in any way with
the right of any Participating Employer to increase or decrease the amount of
any compensation payable to such Participant.  Subject to the
limitations set forth in Section 22(a) hereof, the Plan shall inure to the
benefit of, and be binding upon, the Company and Participants and their
successors and assigns.

     

    (f)            Legal Fees and
Expenses.  On or after a Change of Control, the Company (or a
successor who purchases substantially all of the assets of the Company) shall
pay all reasonable legal fees and expenses which a Participant may incur in
respect of obtaining from the Company (or such successor) any benefit to which
he is entitled under the Plan.

     

    (g)           Governing
Law.  The Plan shall be construed, administered and enforced in
accordance with the laws of the State of New Jersey to the extent that State law
shall not have been preempted by the provisions of ERISA, or any other laws of
the United States heretofore or hereafter enacted.

     

    (h)           Tax
Withholding.  The Company and each other Participating Employer
shall have the right to deduct from amounts otherwise payable in settlement of a
Participant’s Account under the Plan any sums that federal, state, local, social
security or foreign tax law requires to be withheld with respect to such
payment.

     

    (i)   
        Limitation.  A
Participant and his Beneficiary shall assume all risk in connection with any
decrease in value of the Participant’s Account, and neither the Company nor any
Participating Employer nor the Administrator shall be liable or responsible
therefor.

     

    (j)  
         Gender and
Number.  Where the context admits, words in the masculine
gender shall include the feminine and the neuter genders, the singular shall
include the plural, and the plural shall include the singular.

     

    (k)  
        Severability.  In
the event that any provision of the Plan shall be declared illegal or invalid
for any reason, such illegality or invalidity shall not affect the remaining
provisions of the Plan but shall be fully severable, and the Plan shall be
construed and enforced as if such illegal or invalid provision had never been a
part of the Plan.

     

    (l)     
      Creditors’
Rights.  The maintenance of the Plan by the Company is not
intended to, shall not, and shall not be deemed to, confer upon the Company, any
other Participating Employer or any of their subsidiaries or affiliates any
ownership or other legal or beneficial interest of any kind or nature in any
Contributions (or any earnings thereon) actually contributed by any other party
to the Plan, and no creditor, receiver, trustee, successor or assign or other
party claiming any interest in the property or assets of any Participating
Employer or any of its subsidiaries or affiliates shall recover from, or claim
any interest in, the Plan or Trust, if any, in excess of the Contributions (and
any earnings thereon) actually contributed by the party to the Plan through or
against whom such entity asserts its claim or interest.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    (m)         Required Notification to
Administrator.  Each Participant or his Beneficiary entitled to
payments hereunder shall file with the Administrator from time to time in
writing his post office address and each change of post office
address.  Any check representing payment hereunder and any
communication addressed to a Participant, or his Beneficiary at the last address
filed with the Administrator, or if no such address has been filed, then at his
last address as indicated on the records of the Company, shall be binding on
such person for all purposes of the Plan.

     

    (n)         Facility of
Payment.  Whenever and as often as any person entitled to
payments hereunder shall be under a legal disability, or in the sole judgment of
the Administrator shall otherwise be unable to apply such payments to his own
best interest and advantage, the Administrator, in the exercise of its
discretion, may, but is not required to, direct all or any portion of such
payments to be made in any one or more of the following ways:

     

    (i)           directly
to such person;

     

    (ii)          to
his legal curator, guardian, or conservator, or other court-appointed or
court-recognized representatives; or

     

    (iii)         to
his spouse, to another member of his family, or to any other person, to be
expended for his benefit.

     

    (o)         Notices and Other
Communications.  Except as determined by the Administrator with
respect to elections, any notice or other communication to be provided under any
provision of the Plan shall be in writing and shall be personally delivered,
sent by overnight courier, sent by telecopier or facsimile transmission, or
mailed by first class, registered or certified mail, postage prepaid, return
receipt requested.  Any such notice shall be deemed to have been duly
given if personally delivered when delivered, if mailed five days after mailing,
if sent by telecopier when confirmed, and if sent by overnight courier one
business day after delivery to such courier.  All notices to be given
to the Company shall be addressed to it at its principal office in care of the
Company’s Corporate Secretary, or at such other address(es) as it may designate
by like notice.  All notices to be given to a Participant (or a
Beneficiary) shall be addressed to the Participant at the most recent business
or home address appearing in the Company’s records.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, this Selective Insurance Company of America Deferred
Compensation Plan (2005), As Amended and Restated Effective as of January 1,
2010, has been duly executed on this 25th day of October, 2010.

     

    
      
        
          	
                  SELECTIVE
      INSURANCE COMPANY OF AMERICA

                
	 
      	 
      
	
                  By:

                	
                  /s/ Michael H. Lanza

                
	
                  Name:  Michael
      H. Lanza

                
	
                  Title:  Executive
      Vice President and General
Counsel

                

        

      

    

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    APPENDIX
A

     

    VESTING
OF ACCOUNTS FOR PARTICIPANTS

    AFFECTED
BY 2008 TRANSITION PROGRAM

    

    Notwithstanding
anything in Section 9 of the Plan to the contrary, if a Participant incurs a
Separation from Service as the result of an involuntary termination of the
Participant’s employment with the Selective Group in connection with the 2008
Transition Program, any unvested portion of the Participant’s Matching
Contribution Account shall become fully vested as of the date of the
Participant’s Separation from Service.

    
      
         

      

      
        25Unassociated Document

    AGREEMENT

     

    THIS AGREEMENT, with Effective
Date of October 22, 2010, is made by and amongst Patient Safety Technologies,
Inc., a Delaware Corporation, (the “Company”), having its principal offices at
43460 Ridge Park Drive, Suite 140, Temecula, CA 92590, and David Dreyer
(“Executive”).

    

    WHEREAS,
Executive and the Company desire to set forth the terms and conditions of
Executive’s employment with the Company by entering into this Agreement
regarding each parties’ respective rights and obligations as set forth herein;
and

     

    NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree as
follows:

     

    1.           Definitions.  For
purposes of this Agreement, the following terms shall have the meanings set
forth below:

     

    (a)           “Annual Base Salary” shall mean
Executive’s rate of regular base annual compensation prior to any reduction
under (i) a salary reduction agreement pursuant to Section 401(k) or
Section 125 of the Code or (ii) any plan or arrangement deferring any
base salary.

     

    (b)           “Board” shall mean the Board of
Directors of the Company.  The Board may delegate its authority to
a  committee of the Board (the “Committee”), including without
limitation a remuneration committee, which shall consist of outside directors as
defined under Section 162(m) of the Code, and related Treasury regulations,
and “non-employee directors” as defined under Rule-16b-3 under the Securities
Exchange Act of 1934 (the “Exchange Act”).  Unless otherwise specified
in the Agreement, the term “Board” shall include any Committee (or
sub-committee) to which the Board’s authority has been delegated
to.

     

    (c)           “Cause” any of the following
(i) conviction of Executive by a court of competent jurisdiction of any
felony or a crime involving moral turpitude; (ii) Executive’s knowing
failure or refusal to follow reasonable instructions of the Board or reasonable
policies, standards and regulations of the Company or its affiliates;
(iii) Executive’s failure or refusal to faithfully and diligently perform
the usual, customary duties of his employment with the Company or its
affiliates; (iv) fraudulent conduct by Executive; (v) conduct by Executive
that materially discredits the Company or any affiliate or is materially
detrimental to the reputation, character and standing of the Company or any
affiliate, or (vi) a material breach of the terms of this Agreement, including
any of the provisions in Section 5 of this Agreement.

     

    (d)           “Change in Control” shall be
deemed to have occurred as of the first day, (i) any person or entity (other
than an entity or person in control of the Company as of the date of this
Agreement, or other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or a company owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company) becomes the beneficial
owner, directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities, (ii) there is a sale, license or disposition of all or
substantially all of the Company’s assets, or (iii) the consummation of a
merger, consolidation or reorganization of the Company with or involving any
other company, other than a merger, consolidation or reorganization that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the combined voting power of the voting securities of the Company (or
such surviving entity) outstanding immediately after such merger, consolidation
or reorganization.

    

    (e)           
“Code” shall mean the
Internal Revenue Code of 1986, as amended, and, as applicable, Treasury
Regulations promulgated thereunder.

     

    (f)           “Company” shall mean Patient
Safety Technologies, Inc. and any successor to its business and/or assets which
assumes (either expressly, by operation of law or otherwise) and/or agrees to
perform this Agreement by operation of law or otherwise (except in determining,
under subsection (d) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).

     

    
      
         

      

      
        - 1
-

        
          

        

      

      
         

      

    

     

    (g)           “Date of Termination” shall
mean with respect to any purported termination of Executive’s employment,
(i) if Executive’s employment is terminated by his death, the date of his
death, (ii) if Executive’s employment is terminated for Cause or without
Cause by the Company, the date specified in the Company’s notice of termination,
(iii) if Executive’s employment is terminated as a result of a Disability,
the date on which it is finally determined that Executive is Disabled, and
(iv) if Executive terminates his employment for Good Reason or otherwise
voluntarily terminates his employment, the date specified in Executive’s notice
of termination.

     

    (h)           “Disability” shall mean
Executive’s inability for medical reasons to perform the essential duties of
Executive’s position for either ninety (90) consecutive calendar days or one
hundred twenty (120) business days in a twelve month period by reason of any
medically determined physical or mental impairment as determined by a medical
doctor selected by written agreement of the Company and Executive upon the
request of either party by notice to the other.

     

    (i)           “Good Reason” shall mean a
termination of employment by the Executive within three (3) months of any of the
following events:

     

    (i)           a
material diminution in the character or scope of Executive’s duties, Annual Base
Salary, responsibilities, or authority; or

     

    (ii)           the
Company’s material breach of the Agreement; provided, however, that the Company
shall be provided written notice of, and thirty (30) days thereafter to cure,
any such purported breach.

    

    (iii)           a
material change in the geographic location of Executive’s regular office
location (for purposes of this Section 1.I.(iii), a relocation of
Executive’s regular office by more than fifty (50) miles shall be deemed to
be a material change in the geographic location);

    

     

    (j)           “Person” shall have the meaning
ascribed thereto in Section 3(a)(9) of the Exchange Act, as modified,
applied and used in Sections 13(d) and 14(d) thereof; provided, however, a Person
shall not include (i) the Company or any of its respective subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its respective subsidiaries (in its
capacity as such), or (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities.

     

    (k)           “Positive Operating Income
Determination” means a determination that the Company’s total operating
income, as determined under GAAP, disregarding (a) the effect of all non-cash
charges and (b) the contribution to operating income from Forward Purchase
Revenue, for any period after the date hereof of two (2) consecutive fiscal
quarters, is zero or greater.  A Positive Operating Income
Determination shall be made by the Company’s compensation committee acting
reasonably, and after consultation with the Executive, based on and consistent
with (subject to the adjustments required by this definition) the reported GAAP
financial results in the Company’s publicly filed SEC reports for the applicable
fiscal quarters or, in the absence of a timely SEC report or any failure of an
SEC report to be filed, based on and consistent with the Company’s financial
statements for the applicable fiscal quarters.  For purposes of this
definition, “Forward Purchase Revenue” shall be the amount of revenue that would
otherwise have positively affected operating income attributable to the line
item “Deferred Revenue” on the Company’s balance sheet (or any other title or
line item which may hereafter be assigned to substantively the same matter and
underlying transaction).  In the event of any disagreement regarding
the definition of Positive Operating Income Determination, the matter may, at
the option of any party, be submitted to a mutually agreeable third party with
the experience necessary to make a determination, which written determination
will be final and binding.

    

    (l)           “Release” shall mean a general
release of the Company and Executive containing a mutual non-disparagement
clause and mutually agreed to by the parties hereto.  The Release must
be signed by Executive and returned to the Company by no later than the fifth
day after the date any applicable review period has expired or if no review
period applies, by no later than the twenty-sixth day after the date the Release
is provided to Executive.

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    (m)           “Stock Option Plan” shall mean
the Patient Safety Technologies, Inc. Employee Stock Option Plan.

     

    2.           Term of this
Agreement.  The term of this Agreement shall commence upon the
date of this Agreement set forth above and shall continue until the third
anniversary of the date of this Agreement unless terminated on an earlier date
pursuant to the terms of this Agreement; provided however, that the term of this
Agreement shall automatically be extended for an additional term of one year on
each anniversary (the “Term”) unless either party to this Agreement delivers a
written notice of non-extension to the other party by at least ninety (90) days
prior to the expiration of the Term.

     

    3.           Duties; Scope of Employment;
Compensation and Benefits.

     

    (a)           Position and
Duties.  The Company shall employ Executive in the position of
Chief Financial Officer and Vice President of the Company.  During the
Term, beginning as of the Effective Date, Executive will devote substantially
all of Executive’s business efforts and time to the Company.  With the
exception of the Company’s acknowledgement that Executive shall be permitted to
be a member of the board of directors of two other companies (one of which being
InfuSystem Inc.), executive agrees not to actively engage in any other material
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior written approval of the Board, which shall not be
unreasonably withheld or delayed.

     

    (b)           Annual Base
Salary.  Executive’s Annual Base Salary shall initially equal
Two Hundred Thousand Dollars ($200,000). This amount shall be reviewed annually
in January of each year by the Board and, in the sole discretion of the Board,
may be adjusted upward with such adjustments effective January 1 of the
respective year.  In addition, effective upon a Positive Operating
Income Determination, the Annual Base Salary will automatically be increased to
$240,000 for the balance of the year in which such event takes place and
thereafter during the Term (i.e., for clarity, this is not a retroactive
increase, but a go-forward increase), subject to any other adjustments to Annual
Base Salary that are made in accordance with the second sentence of this Section
3(b).

     

    (c)           Bonus.  Executive
shall be eligible to participate in the Company’s executive bonus plan in
accordance with the terms of the executive bonus plan adopted by the Board or
Committee, in its discretion, for the Company’s most senior executives, covering
the applicable bonus period; provided, however, that the minimum target bonus
opportunity provided under such executive bonus plan shall not be less than twenty five percent 25%
of Executive’s Annual Base Salary.  The target amount for Executive’s
first bonus shall be prorated based on the number of calendar days during which
Executive is employed by the Company during the bonus year divided by three
hundred sixty-five (365).

     

    (d)           Pension and Welfare
Plans.  During the Term, Executive and Executive’s dependents,
if applicable, shall be entitled to participate in all incentive, savings and
retirement plans, health and welfare benefit plans, practices, policies and
programs (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and dismemberment and
travel accident insurance plans and programs) sponsored by the Company or its
affiliates on the same terms and conditions generally applicable to executives
of the Company generally.

     

    (e)           Equity Compensation Grants and
Plans.

     

    (i)           Initial Stock Option Grant.
The Company agrees to grant Executive a stock option under the Stock
Option Plan (the “Option”) for Four Hundred and Fifty Thousand (450,000) shares
of common stock of the Company (“Shares”).    In addition,
upon the six month anniversary of the Effective Date of this Agreement, One
Hundred Thousand (100,000) Shares subject to the Option shall vest and become
exercisable and thereafter the remaining Shares shall vest over a forty-two
month period at the rate of 1/48th of the
total Shares subject to the Option per month with 100% of the Option becoming
exercisable on the forty-eight month anniversary of the Effective Date of this
Agreement.  The Option price will be set at the weighted average
trading price of the Company’s stock on the Executive’s first day of employment,
but not less than Seventy Five cents ($.75) per share.

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

     

    (ii)           Equity Compensation
Plans.  Executive shall be entitled to continue to participate
in any stock option, restricted stock, stock appreciation rights, or any other
equity compensation plan or program sponsored by the Company or its affiliates
on the same terms and conditions generally applicable to executives of the
Company.  Any equity interests or rights to purchase equity interests
in the Company held by Executive and issued pursuant to an equity compensation
plan shall be administered and subject to the terms of the plan and any
amendments thereto.

     

    (f)           Designation as Qualified
Performance-Based Compensation.  The Company may determine that
any bonus or equity awards issued under Sections 3(c) or 3(e) of this
Agreement (“Awards”) shall be considered “qualified performance-based
compensation” under Section 162(m) of the Code.  Any Awards shall
be administered by the Committee in accordance with this
Section 3(f).

     

    (g)           Fringe Benefits and
Prerequisites.  Executive shall be entitled to fringe benefits
and prerequisites available to similarly situated executives of the Company in
accordance with the plans, practices, programs and policies of the Company from
time to time.

     

    (h)           Expenses.  Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by Executive in accordance with the applicable policy of the Company
and its affiliated companies.

     

    (i)           Vacation.  
Executive shall be entitled to an annual vacation allotment to be used for
vacations, during each twelve (12) month period of full employment, exclusive of
legal holidays.  The scheduling of Executive’s vacation should not
interfere with the Company’s normal business operations and should be consistent
with the Company’s policies.  Executive shall accrue 10.00 hours of
vacation per month, totaling one hundred twenty (120) hours or fifteen (15) days
per year.  The Company strongly encourages Executive to utilize all
vacation during the year in which it is accrued.  Executive shall
cease accruing vacation once accrued and unused vacation equals 180 hours in the
aggregate, and shall not accrue additional vacation until the amount of accrued
and unused vacation is less than 180 hours.

     

    (j)           Change in
Control.  Upon Change in Control, one hundred percent of all
then unvested stock options and unvested deferred compensation will immediately
vest with suitable opportunity for Executive to exercise such
options.

    

    4.           Termination.  If
Executive’s employment shall terminate upon the occurrence of any of the events
listed below after the Effective Date of this Agreement, the following
provisions shall apply:

     

    (a)           Termination Without Cause;
Resignation for Good Reason.

     

    (i)           The
Company may remove Executive at any time without Cause from the position in
which Executive is employed hereunder upon not less than thirty (30) days’
prior written notice of termination to Executive; provided, however, that, in
the event that such notice is given, Executive shall be under no obligation to
render any additional services to the Company and shall be allowed to seek other
employment.  Should the Company provide Executive with such notice,
Executive may elect to resign under this Section 4(a) for Good Reason during the
thirty (30) day period.  In addition, Executive may initiate
termination of employment by resigning under this Section 4(a) for Good
Reason.  Executive shall give the Company not less than thirty (30)
days’ prior written notice of such resignation provided, however, that in the
event that such notice is given, and upon written request from the Company,
Executive shall cease to render any additional services to the
Company.

     

    (ii)           Upon
any removal or resignation described in Section 4(a)(i) above, but subject
to Section 4(e) below, the Executive shall be entitled to receive, upon
execution of the Release, for a period of six (6) months a monthly cash payment
equal to the monthly portion of the Executive’s Annual Base Salary in effect
immediately before the Executive’s separation from service (“Termination Annual
Base Salary”).  This six (6) month benefit shall accrue during the
first six (6) months of Executive’s employment as follows: The Executive shall
be deemed to have accrued three (3) months of benefit as of the date hereof; at
the end of the fourth (4th) month of employment Executive shall accrue an
additional month of benefit (i.e., total of four months of benefit); at the end
of the fifth (5th) month of benefit the Executive shall accrue an additional
month of benefit (i.e., total of five months of benefit); and at the end of the
sixth (6th) month of employment the Executive shall accrue an additional month
of benefit, for a total and maximum of not more than six (6) months of benefit
in the aggregate (the “Accrued Period”).

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    

    (iii)           Upon
any removal or resignation described in Section 4(a)(i) above, the
Executive shall also receive:

      

    (1)           The
Executive shall continue to receive the medical coverage and other health and
welfare benefits in effect at the Date of Termination (or generally comparable
coverage) for himself and, where applicable, his spouse and dependents, as the
same may be changed from time to time for employees generally, for the Accrued
Period from the Date of Termination.  As an alternative to the
foregoing, the Company may elect to pay the Executive cash in lieu of such
coverage in an amount equal to the Executive’s after-tax cost of continuing such
coverage, where such coverage may not be continued (or where such continuation
would adversely affect the tax status of the plan pursuant to which the coverage
is provided).  The COBRA health care continuation coverage period
under Section 4980B of the Code, as amended, shall run concurrently with
the foregoing benefit period.

     

    (2)           The
Executive’s stock options will continue to vest for the Accrued Period from the
Date of Termination.

     

    (iv) Notwithstanding anything set
forth herein to the contrary, in the event that Executive violates the
provisions of Section 5(a) of this Agreement after his separation from service,
the payments and benefits provided under this Section 4(a) shall cease and all
obligations of the Company under this Section 4(a) shall terminate.

     

    (b)           Termination for Cause; Voluntary
Resignation Without Good Reason.  In the event that Executive
voluntarily terminates his employment for any reason other than Good Reason or
in the event that Company terminates Executive for Cause no further payments
shall be due under this Agreement, except that Executive shall be entitled to
any amounts earned, accrued or owing but not yet paid under Section 3 above
and any benefits accrued or earned under the Company’s benefit plans and
programs.

     

    (c)           Disability.  In the
event that Executive’s employment is terminated due to Disability, Executive
shall be entitled to receive all of the benefits described in Section 4(a)
above upon execution of a Release except that the monthly payments described in
subparagraph (a)(ii)(1) shall be paid for a period of three (3) months
beginning after Executive’s separation from service.

     

    (d)           Death.  If Executive
dies while employed by the Company, the Company shall upon receiving a Release
from Executive’s executor, legal representative, administrator or designated
beneficiary (the “Heir(s)”) pay to the Heir(s), the
following:   The Heirs shall receive (1) any amounts earned,
accrued or owing but not yet paid under Section 3 above, accelerated
vesting of the next three (3) months stock options held by Executive, and any
benefits accrued or earned under the Company’s benefit plans and programs and
(2) a lump sum cash payment equal to three (3) months of Executive’s
monthly Annual Base Salary at the rate in effect immediately before Executive’s
termination of employment.

     

    (e)           Compliance with Section 409A of
the Code.  Notwithstanding any other provision of this
Agreement, to the extent that (i) any amount paid pursuant to Section 4 of the
Agreement is treated as nonqualified deferred compensation pursuant to Section
409A of the Code and (ii) Executive is a “specified employee” pursuant to
Section 409A(2)(B) of the Code, then such payments shall be made on the date
which is six (6) months after the date of Executive’s separation from service,
such payment to be in a lump sum.

     

    
      
         

      

      
        - 5
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    5.           Non-Solicitation and
Non-Disclosure.  In consideration of the promises of the
Company made herein, Executive agrees to the following:

     

    (a)           Non-Solicitation.  Except
for the furtherance of the interests of the Company, Executive agrees that he or
she will not, during the term of Executive’s employment and for a period
of  one (1) year following the date of termination of employment (such
period, the “Restricted Period”) do any of the following directly or indirectly
within the continental United States, without the prior written consent of the
Company: solicit or call upon, either directly or indirectly, any employee or
independent contractor of the Company to attempt to persuade or induce the
employee or independent contractor to terminate employment with the Company and
commence employment with another entity.

    

    (b)           Non-Disclosure.  Executive
agrees not to use or disclose at any time, except with the prior written consent
of the Company, any proprietary, trade secret, or confidential information
relating to the business of the Company, including, without limitation,
information relating to formulas, designs, processes, suppliers, machines,
compositions, improvements, inventions, operations, manufacturing, processing,
marketing, distributing, selling, cost and pricing data, master files, or
customer lists utilized by the Company and all other similar information
material to the conduct of the business of the Company, which is not presently
generally known to the public and which is or was obtained or acquired by
Executive while an employee of the Employer; provided, however, that this
Subsection (b) shall not preclude Executive from (i) the use or disclosure of
such information that presently is known to the public generally or that
subsequently comes into the public domain, other than by way of disclosure in
violation of the Agreement or in any other unauthorized fashion, or (ii)
disclosure of such information required by law or court order, provided that
prior to such disclosure required by law or court order, Executive shall give
the Company three (3) business days’ written notice (or, if disclosure is
required to be made in less than three (3) business days, such notice shall be
given as promptly as practicable after determination that disclosure may be
required) of the nature of the law or order requiring disclosure and the
disclosure to be made in accordance therewith.

     

    (c)           Inventions.  Executive
hereby sells, transfers, and assigns to the Company all of the entire right,
title, and interest of Executive in and to all inventions, ideas, disclosures,
and improvements, whether patented or unpatented, and copyrightable material,
made or conceived by Executive, solely or jointly, during his or her employment
by the Employer that directly relate to methods, apparatus, designs, products,
processes, or devices, sold, leased, used, or under development by the Company,
or that otherwise directly relate or pertain to the business, functions, or
operations of the Company or that arise from the efforts of Executive during the
course of his or her employment with the Employer (the
“Inventions”).  Executive shall communicate promptly and disclose to
the Company, in such form as the Company requests, all information, details, and
data pertaining to the Inventions.  Executive shall execute and
deliver to the Company such formal transfers and assignments and such other
papers and documents as may be necessary or required of Executive to permit the
Company or any person or entity designated by the Company to file and prosecute
the patent applications and, as to copyrightable material, to obtain copyright
thereof.  Any Invention relating to the business of the Company and
disclosed or utilized by Executive within one (1) year following the date of
Executive’s termination of employment shall be deemed to fall within the
provisions of this Subsection (c).  Nothing in this Subsection (c)
shall be deemed to require any assignment of an Invention to the extent such
assignment would be inconsistent with Section 2870 of the California Labor Code,
and by signing this Agreement, Executive acknowledges that he has received
written notice of the provisions of Section 2870, which provides:

    

    (a)           Any
provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either:

     

    (1)           Relate
at the time of conception or reduction to practice of the invention to the
employer’s business, or actual or demonstrably anticipated research or
development of the employer; or

     

    (2)           Result
from any work performed by the employee for the employer.

    

    (b)           To
the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.

     

    
      
         

      

      
        - 6
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    (d)           Acknowledgement.  Executive
acknowledges and agrees that the restrictions contained in the foregoing
covenants are necessary to protect legitimate interests of the Company and
acknowledges that remedies for damages in the event of their violation or
potential violation would be inadequate.  Accordingly, Executive
agrees that the Company shall be entitled to injunctive relief, without the
necessity of posting a bond, in the event of any violation by Executive of any
provisions of this Section 5.  Such right to an injunction shall be in
addition to, and not in limitation of, any other rights or remedies that the
Company may have.  The period of time during which the provisions of
this Section 5 will be in effect shall be extended by the length of time during
which Executive is in breach of the terms hereof as determined by any court of
competent jurisdiction where the injunctive relief is sought.

     

    (e)           Enforceability and
Understanding.  If any provision of this Section 5 shall be
deemed invalid or unenforceable, either in whole or in part, the Agreement shall
be deemed amended to delete or modify, as necessary, the offending provision and
to reform the terms thereof to render it valid and enforceable.  This
Section 5 contains all the understandings between Executive and the Company
pertaining to the matters referred to herein, and supersedes any other
undertakings and agreements, whether oral or in writing, previously entered into
by them with respect thereto.  Executive represents that, in executing
the Agreement, Executive does not rely and has not relied upon any
representation or statement made by the Company not set forth herein with regard
to the subject matter or effect of this Section 5 or otherwise.

    

    (f)           Non-Violation of Current Contractual
Obligations.  Executive hereby represents and warrants to
Company that (i) Executive is fully authorized and empowered to enter into this
Agreement and that the performance of Executive’s obligations hereunder will not
violate any agreement between Executive and any other person, firm, organization
or other entity; and (ii) Executive is not bound by the terms of any agreement
with any previous employer or other party to refrain from competing, directly or
indirectly, with the business of such previous employer or other party that
would be violated by Executive’s entering into this Agreement and/or providing
services to Company pursuant to the terms of this Agreement.

    

    (g)           No Disclosure of Confidential
Information.  Executive hereby represents and warrants to
Company that Executive’s performance of Executive’s duties under this Agreement
will not require Executive to and Executive will not, whether voluntarily or
involuntarily, rely on in the performance of Executive’s duties or disclose to
Company or any other person or entity or induce Company in any way to use or
rely on any trade secret or other confidential or proprietary information or
material belonging to any previous employer of Executive or other third party to
whom Executives owes a duty of confidentiality. 

      

    6.           Miscellaneous.

     

    (a)           Indemnification.  Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company’s bylaws, including any directors and officers
insurance policies, on terms no less favorable than any other executive officer
or Director of the Company.

     

    (b)           Legal Costs.   The
Company will reimburse Executive for reasonable legal fees and expenses directly
relating to the negotiation of this Agreement up to $2500.

     

    (c)           Arbitration.  

    

    a.           Any
dispute or controversy arising out of or relating to any interpretation,
construction, performance, termination or breach of this Agreement or arising
out of Executive’s employment with or termination from the Company, will be
settled by final and binding arbitration by a single arbitrator to be held in
Los Angeles County, California, in accordance with the rules applicable to
employment disputes of  the Judicial Arbitration and Mediation
Services, Inc. (“JAMS”) then in effect (“JAMS Rules”).  The arbitrator
selected shall have the authority to grant Executive or the Company or both all
remedies otherwise available by law, including injunctions.

     

    
      
         

      

      
        - 7
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    b.           Notwithstanding
anything to the contrary in the JAMS Rules, the arbitration shall provide (i)
for written discovery and depositions adequate to give the parties access to
documents and witnesses that are essential to the dispute and (ii) for a written
decision by the arbitrator that includes the essential findings and conclusions
upon which the decision is based.  Consistent with applicable law,
Executive and the Company shall each bear his/her or its own costs and
attorneys’ fees incurred in conducting the arbitration and, except in such
disputes where Executive asserts a claim otherwise under a state or federal
statute prohibiting discrimination in employment (“a Statutory Discrimination
Claim”), shall split equally the fees and administrative costs charged by the
arbitrator and JAMS.  In disputes where Executive asserts a Statutory
Discrimination Claim against the Company, Executive shall be required to pay
only the JAMS filing fee to the extent such filing fee does not exceed the fee
to file a complaint in state or federal court.  The Company shall pay
the balance of the arbitrator’s fees and administrative costs.

     

    c.           The
decision of the arbitrators will be final, conclusive and binding on the parties
to the arbitration.  In disputes where Executive asserts a Statutory
Discrimination Claim, reasonable attorneys’ fees shall be awarded by the
arbitrator based on the same standard as such fees would be awarded if the
Statutory Discrimination Claim had been asserted in state or federal
court.  Judgment may be entered on the arbitrator's decision in any
court having jurisdiction.

     

    (d)           No Mitigation.  The
Company agrees that, if Executive’s employment is terminated during the Term,
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to Executive by the Company pursuant to this
Agreement.

     

    (e)           Successors.  In
addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  Failure
of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from the Company in the same amount and
on the same terms as Executive would be entitled to hereunder if Executive were
to terminate Executive’s employment for Good Reason, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

     

    (f)           Binding
Agreement.  This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.  If Executive shall die while any amount would still be
payable to Executive hereunder (other than amounts which, by their terms,
terminate upon the death of Executive) if Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of Executive’s estate.

     

    (g)           Notices.  For the
purpose of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when hand delivered, mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below, or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon actual receipt.

     

    (h)           Amendments.  No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by
Executive and such officer as may be specifically designated by the
Company.  No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

     

    (i)           Entire
Agreement.  Except as otherwise provided, this Agreement
contains the entire agreement between the parties concerning the subject matter
hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, express or implied,
between the parties with respect thereto.

     

    
      
         

      

      
        - 8
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    (j)           Applicable Law.  The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California without regard to the
principles of conflict of laws thereof.

     

    (k)           Captions.  The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.

     

    (l)           Withholding.  Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to
which Executive has agreed.

     

    (m)          Survivorship.  The
rights and obligations of the Company and Executive under this Agreement shall
survive the expiration of the Term.

    

    (n)           Mutual Intent.  All
parties participated in the drafting of the Agreement, and the language used in
this Agreement is the language chosen by Executive and the Company to express
their mutual intent.  The parties agree that in the event that any
language, section, clause, phrase or word used in the Agreement is determined to
be ambiguous, no presumption shall arise against or in favor of either party and
that no rule of strict construction shall be applied against either party with
respect to such ambiguity.

     

    (o)           Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

     

    (p)           Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.

     

     

     

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on October 22, 2010.

     

     

    
      
        
          	 
      	
                  PATIENT
      SAFETY TECHNOLOGIES, INC.

                
	 
      	 
      
	 
      	
                  By:    /s/
      Brian E. Stewart

                
	 
      	
                  Name:   Brian
      E. Stewart

                
	 
      	
                  Title:     Chief
      Executive Officer

                
	 
      	 
      
	 
      	
                   

                   

                  EXECUTIVE

                
	 
      	 
      
	 
      	
                  /s/
       David
      Dreyer

                
	 
      	
                  Name:  David
      Dreyer

                

        

      

    

    
 

    
      
         

      

      
        - 9
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