Document:

ex10-26.htm

    Exhibit 10.26

     

    SEVERANCE
AGREEMENT

     

    This
SEVERANCE AGREEMENT (the "Agreement"), dated as of February 18, 2009 by and
between PMA Capital Corporation, a Pennsylvania corporation, and its
subsidiaries (the "Company"), and Stephen L. Kibblehouse (the
"Executive").

     

    WITNESSETH
THAT

     

    WHEREAS,
the Executive is Executive Vice President and General Counsel of the Company or
a subsidiary of the Company;

     

    WHEREAS,
the Company wishes to encourage the Executive to continue his career and
services with the Company or a subsidiary, as the case may be;

     

    WHEREAS,
the Company has determined that it is in its best interests and the
shareholders' to assure continuity in the management of the Company's and it
subsidiaries in the event of a Change in Control by entering into this Agreement
with the Executive;

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the Company and the Executive hereby agree as follows:

     

    1. Term.  This
Agreement shall become effective on the Effective Date and shall continue in
effect throughout the Term of Employment; provided, however, the restrictive
covenants contained in section 9 of this Agreement and, as applicable, the
Company's and the Executive's obligations under the other provisions of this
Agreement shall survive the Term of Employment and shall continue in effect
through the periods provided therein and/or until the Company's and/or the
Executive's obligations, as applicable, thereunder are satisfied.

     

    2. Compensation.  Except
as otherwise expressly set forth below, the Executive's compensation shall be
determined by, and in the sole discretion of, the Board of Directors of the
Company (the "Board") or a committee of the Board.

     

    (a) Annual Base Salary
means the Executive's annual salary in effect on (i) the date of this Agreement,
as adjusted from time to time by the Board, (ii) the date in which a Change in
Control occurs, or (iii) the date preceding an occurrence which results in the
Executive's Good Reason termination of employment, whichever is
highest.

     

    (b) Annual Bonus means
the amount awarded to the Executive under the Company's Officer Annual Incentive
Compensation Plan (the "Annual Plan") in effect on (i) the date of this
Agreement, as adjusted from time to time by the Board, (ii) the date in which a
Change in Control occurs, or (iii) the date preceding an occurrence which
results in the Executive's Good Reason termination of employment, whichever is
highest.

     

    (c) Long Term Incentive
means the amount awarded to the Executive under the Company's Officer Long Term
Incentive Compensation Plan in effect on (i) the date of this 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Agreement,
as adjusted from time to time by the Board, (ii) the date on which a Change in
Control occurs, or (iii) the date preceding an occurrence which results in the
Executive's Good Reason termination of employment, whichever is
highest.

     

    (d) Employee
Benefits.  In addition to the foregoing, during the Term of
Employment,

     

    (i) to the
extent not duplicative of the specific benefits provided herein, the Executive
shall be eligible to participate in all incentive compensation, retirement,
supplemental retirement, and deferred compensation plans, policies and
arrangements that are provided generally to other executive officers of the
Company;

     

    (ii) the
Executive and, as applicable, the Executive's covered dependent(s) shall be
eligible to participate in all of the Company's health and welfare benefit plans
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended); and

     

    (iii) the
Executive shall be entitled to receive fringe benefits provided for executive
officers of the Company as determined from time to time by the
Company.

     

    (e) Reimbursements.  To
the extent required by Section 409A of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder (“409A”), with regard to
any provision of this Agreement that provides for the reimbursement of costs and
expenses, or for the provision of in-kind benefits:

     

    (i) the right
to such reimbursement or in-kind benefit shall not be subject to liquidation or
exchange for another benefit;

     

    (ii) the
amount of expenses or in kind benefits available or paid in one year shall not
affect the amount available or paid in any subsequent year; and

     

    (iii) such
payments shall be made on or before the last day of the Executive’s taxable year
which follows the year in which the expense occurred.

     

    (f) Separate
Payments.  To the extent permissible by law, each payment and
each installment described in this Agreement shall be considered a separate
payment from each other payment or installment.

     

    3. Termination of
Employment.

     

    (a) Termination of Employment
and Term of Employment.  The Company or the Executive may
terminate the Executive's employment at any time and for any reason in
accordance with subsection 3(b) below.  The Term of Employment shall
be deemed to have ended on the last day of the Executive's
employment.  The Term of Employment shall terminate upon the
Executive's death.

     

    (b) Notice of
Termination.  Any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
Notice of 

     

    
      
        
        

      

      
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    Termination
from one party hereto to the other party hereto in accordance with the notice
provisions contained in subsection 14(b) below.  For purposes of this
Agreement, a "Notice of Termination" shall mean a notice that indicates the Date
of Termination and, with respect to a termination due to Disability, Cause or
Good Reason, sets forth in reasonable detail the facts and circumstances that
are alleged to provide a basis for such termination.  A Notice of
Termination from the Company shall specify whether the termination is with or
without Cause or due to the Executive's Disability.  A Notice of
Termination from the Executive shall specify whether the termination is with or
without Good Reason and, if the termination is without Good Reason, whether the
termination is due to Executive's Disability.

     

    (c) Date of
Termination.  For purposes of this Agreement, "Date of
Termination" shall mean the date specified in the Notice of Termination (but in
no event shall such date be earlier than the 30th day following the date the
Notice of Termination is given, unless expressly agreed to by the parties hereto
or the date of the Executive's death).

     

    (d) No
Waiver.  The failure to set forth any fact or circumstance in a
Notice of Termination, which fact or circumstance was not known to the party
giving the Notice of Termination when the notice was given, shall not constitute
a waiver of the right to assert such fact or circumstance in an attempt to
enforce any right under or provision of this Agreement.

     

    (e) Cause.  For
purposes of this Agreement, the term "Cause" shall mean
Executive:  (i) commits any act of fraud, embezzlement, theft or
commission of a felony in the course of his employment; (ii) engages in knowing
and willful misconduct or gross negligence in the performance of his duties;
(iii) unlawfully appropriates a corporate opportunity of the Company or its
affiliates and subsidiaries; or (iv) knowingly and willfully breaches any of
Executive's covenants contained in this Agreement in any material
respect.  No act or failure to act directly related to Company action
or inaction that constitutes Good Reason shall constitute Cause under this
Agreement if the Executive has provided a Notice of Termination based on such
Good Reason event prior to the Company's giving of the Notice of Termination for
Cause.  The Executive's termination for Cause shall be effective when
and if a resolution is duly adopted by an affirmative vote of the Board (less
the Executive), stating that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in the Notice of Termination, and
such conduct constitutes Cause under this Agreement; provided, however, that the
Executive shall have been given the opportunity (i) to cure any act or omission
that constitutes Cause if capable of cure and (ii), together with counsel,
during the 30-day period following the receipt by the Executive of the Notice of
Termination and prior to the adoption of the Board's resolution, to be heard by
the Board.

     

    (f) Disability.  For
purposes of this Agreement, the Executive shall be deemed to have a Disability
if the Executive is entitled to long-term disability benefits under the
Company's long-term disability plan or policy, as the case may be, as in effect
on the Date of Termination.

     

    (g) Good
Reason.  For purposes of this Agreement, the term "Good Reason"
means the occurrence (without the Executive's express written consent) of any of
the following acts or failures to act by the Company:

     

    
      
        
        

      

      
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              (i)  

            	
              a
      material reduction in his duties, authority or
      responsibilities;

            

    

     

    
      	
              (ii)  

            	
              requiring
      the Executive to be based more than 50 miles away from the Company's
      headquarters in Blue Bell,
Pennsylvania;

            

    

     

    
      	
              (iii)  

            	
              the
      material breach, and failure to cure, by the Company of any of its other
      obligations under this Agreement;

            

    

     

    
      	
              (iv)  

            	
              the
      failure of the Company to obtain the assumption of this Agreement as
      contemplated in subsection 12(b) hereof;
or

            

    

     

    
      	
              (v)  

            	
              any
      reduction in the Executive's Annual Base Salary or Annual Bonus target
      that does not affect all similarly situated Executives; provided that any
      reduction in the Executive's Annual Base Salary or Annual Bonus target
      shall constitute Good Reason in connection with a Change of
      Control.

            

    

     

    The
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason
hereunder; provided, however, that no such event described above shall
constitute Good Reason unless the Executive has given a Notice of Termination to
the Company specifying the condition or event relied upon for such termination
within 90 days of the occurrence of such event, the Company has failed to cure
the condition or event constituting Good Reason within the 30 day period
following receipt of the Executive's Notice of Termination, and the Executive’s
Termination Date is within six months of the event that constitutes Good
Reason.

     

    4. Obligations of the Company
upon Termination.

     

    (a) Termination by the Company
for other than Cause or by the Executive for Good Reason.  If
the Executive's employment is terminated by the Company for any reasons other
than Cause or Disability or by the Executive for Good Reason:

     

    (i) The
Company shall pay to the Executive, within thirty business days of the Date of
Termination, any earned but unpaid Annual Base Salary;

     

    (ii) The
Company shall pay to the Executive, within thirty business days of the Date of
Termination, a prorated Annual Bonus which is the product of (A) the target
Annual Bonus opportunity in the year in which the Date of Termination occurs or
the prior year if no target Annual Bonus opportunity has yet been determined,
(B) the average payout factor of the Annual Plan for the prior three years, and
(C) the fraction of the year the Executive was employed.

     

    (iii) Upon the
execution and non-rescission of the release noted in Section 6, the Company
shall commence to pay as of the next regular Company payroll to the Executive,
in accordance with the Company's regular payroll practice for its executive
officers, payments equal to the sum of 100% of (A) the Executive's Annual Base
Salary, less any applicable deductions for taxes and/or benefits, and
(B) the product of (I) the Executive's target Annual Bonus opportunity for
the year in which the Date of Termination occurs or the prior year 

     

    
      
        
        

      

      
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    if no
target Annual Bonus opportunity has yet been determined and (II) the average
payout factor of the Annual Plan for the prior three years;

     

    (iv) For a one
(1) year period after the Date of Termination, the Company will arrange to
provide the Executive (and any covered dependents), with life, accident and
health insurance benefits substantially similar to those the Executive and any
covered dependents were receiving immediately prior to the Notice of
Termination, except for any such benefits that were waived by the Executive in
writing.  Nothing in this subsection 4(a)(iv) will affect the
Executive's right to elect COBRA continuation coverage in accordance with
applicable law or extend the COBRA continuation coverage period;
and

     

    (v) The
Executive shall have at least three (3) months (or until the last day of the
stock option term or the tenth anniversary of the date of the grant; whichever
occurs first) to exercise any then vested outstanding stock
options.  Executive's outstanding Long Term Incentive awards shall be
deemed earned as set forth in the original award, except that the amount earned
shall be prorated based on a fraction, the numerator of which is the number of
full months Executive was employed during the performance period of such award
and the denominator of which is the number of months in such performance
period.  Such awards will be payable under the terms set forth in the
award.  All of the Executive's other unvested equity-based awards
shall be forfeited.

     

    (vi) The
Company agrees to engage the services, on Executive's behalf and at the
Company's expense, the services of an outplacement company, who will assist
Executive with job search support.  Services will be available for one
year following the Date of Termination.

     

    (b) Termination in Connection
with a Change in Control.

     

    If, in
anticipation of or within the 18 month period following a Change in Control (as
defined below), the Executive's employment is terminated by the Company for any
reason other than Cause or Disability or by the Executive for Good Reason, the
Executive shall receive the payments and benefits described in subsection 4(a),
except that

     

    (i) the
payment described in section 4(a)(iii) shall be equal to 150% of the amounts
described in (A) and (B) thereof,

     

    (ii) all of
the Executive's Long Term Incentive awards shall be paid as if 100% of the
performance target(s) had been attained and shall be payable within two and one
half (2.5) months from the Date of Termination;

     

    (iii) all of
the Executive's other outstanding equity-based awards shall become fully vested
on the Date of Termination; and

     

    (iv) the
continuation period described in section 4(a)(iv) shall be for one and one half
(1.5) years.

     

    For
purposes of this Agreement, a "Section 409A Change in Control" is a "Change in
Control" as set forth in paragraph 9(b) of the PMA Capital Corporation 2007
Omnibus Incentive 

     

    
      
        
        

      

      
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    Compensation
Plan that is also a change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the assets of the Company, as
described in Section 409A(2)(A)(v) of the Code and the Treasury regulations
promulgated thereunder; or the approval by the shareholders of a plan or
proposal for the liquidation or dissolution of the Company.

     

    (c) Termination by the Company
for Cause or by the Executive without Good Reason.  If the
Executive's employment is terminated by the Company for Cause, the Company shall
pay to the Executive, within thirty business days of the Date of Termination,
any earned but unpaid Annual Base Salary and all outstanding stock options
(whether or not then exercisable) and all of the Executive's unvested
equity-based and other incentive awards shall be forfeited as of the Date of
Termination.  If the Executive's employment is terminated by the
Executive without Good Reason (and not due to death, Disability or retirement),
the Company shall pay to the Executive, within thirty business days of the Date
of Termination, any earned but unpaid Annual Base Salary, the Executive shall
have three months (or until the last day of the stock option term, whichever
occurs first) to exercise any outstanding vested stock options and all of the
Executive's unvested equity-based awards shall be forfeited as of the Date of
Termination.

     

    (d) Termination due to Death or
Disability.  If the Executive's employment is terminated due:
to death or Disability, (i) the Company shall pay to the Executive (or to the
Executive's estate or personal representative in the case of the Executive's
death), within thirty business days after the Date of Termination, (A) any
earned but unpaid Annual Base Salary and (B) a prorated Annual Bonus which is
the product of (I) the target Annual Bonus opportunity in the year in which the
Date of Termination occurs or the prior year if no target Annual Bonus
opportunity has yet been determined, (II) the average payout factor of the
Annual Plan for the prior three years, and (III) the fraction of the year the
Executive was employed, and (ii) all of the Executive's outstanding equity-based
awards shall vest on the Date of Termination and the Executive's outstanding
stock options shall remain exercisable for one year following the Date of
Termination (or until the last day of the stock option term, whichever occurs
first).

     

    (e) Specified
Employee.  To the extent necessary to avoid adverse tax
consequences, and except as described below, any payment to which the Executive
becomes entitled under the Agreement, or any arrangement or plan referenced in
this Agreement, that constitutes “deferred compensation” under 409A, and is
payable upon the Executives termination at a time when the Executive is a
“specified employee” as defined by 409A shall not be made until the earliest
of:

     

    (i) the
expiration of the six month period (the “Deferral Period”) measured from the
date of the Executive’s ‘separation from service’ under 409A; or

     

    (ii) the date
of the Executive’s death.

     

    Upon the
expiration of the Deferral Period, all payments that would have been made during
the Deferral Period (whether in a single lump sum or in installments) shall be
paid as a single lump sum to the Executive or, if applicable, his
beneficiary.  This section shall not apply to any payment which
constitutes “separation pay” as described in Internal Revenue Regulations
Section 409A-1(b)(9) (in general, payments (i) that are made on an involuntary
separation from service which (ii) do not exceed the lesser of two times (x) the
Executive’s annualized 

     

    
      
        
        

      

      
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    compensation
for the taxable year preceding the year in which the separation from service
occurs or (y) the Code Section 401(a)(17) limit on compensation for the year in
which separation from service occurs and (iii) are paid in total by the end of
the second calendar year following the calendar year in which the separation
from service occurs).

     

    5. Certain Tax
Consequences.  If the payments and benefits provided for in
this Agreement constitute "parachute payments" within the meaning of the Code,
and but for this Section 5, would be subject to the excise tax imposed by
Section 4999 of the Code, then the payments and benefits under this Agreement
will be payable as described below:

     

    (a) if the
excise tax would be avoided by reducing the payments and/or benefits by 10% or
less, the payments and/or benefits will be reduced to the extent necessary so
that the excise tax is not applicable;

     

    (b) if the
tax provisions would not be avoided by reducing the payments and/or benefits by
10% or less, an excise tax gross-up payment will be made to the Executive in an
amount so that after payment of income, employment and any other taxes imposed
on the gross-up payment (including the 20% excise tax under Section 4999), the
Executive would retain an amount equal to the 20% excise tax imposed on the
change in control related payments and benefits.  The gross-up payment
is intended to put the Executive in the same after tax position he or she would
have been in had the excise tax not been imposed.  The excise tax
gross up payment shall be paid in the taxable year in which the Executive pays
the 20% excise tax pursuant to Section 4999 of the Code.

     

    6. Release.  Notwithstanding
any provision herein to the contrary, the Company will require that, prior to
payment of any amount under section 4 of this Agreement (other than due to the
Executive's death), the Executive shall have executed a complete release of the
Company and  its affiliates and related parties in such form as is
reasonably required by the Company.  Notwithstanding the foregoing,
the Executive shall not be required to release any rights to indemnification or
insurance coverage to which he/she was entitled as an officer of the Company or
its affiliates.

     

    7. Non-Exclusivity of
Rights.  Except as otherwise provided in this Agreement,
nothing in this Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies for which the Executive may qualify
(other than severance policies).  Vested benefits and other amounts
that the Executive is otherwise entitled to receive under any other plan,
program, policy, or practice of, or any contract or agreement with, the Company
or any of its affiliated companies on or after the Date of Termination shall be
payable in accordance with the terms of each such plan, program, policy,
practice, contract or agreement, as the case may be, except as expressly
modified by this Agreement.

     

    8. Full
Settlement.  In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and, except as otherwise provided in subsections 4(a)(iv), 5 and 14(e), the
amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation earned by the Executive as the result of

     

    
      
        
        

      

      
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    employment
by another employer, by retirement benefits, by offset against any amount
claimed to be owed by the Executive to the Company, or otherwise.

     

    9. Confidential Information;
Non-Solicitation, Non-Interference and Non-Disparagement.

     

    (a) Confidential
Information.  The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge, trade secrets, methods, know-how or data relating to the Company or
its affiliates and their businesses or acquisition prospects that the Executive
obtained or obtains during the Executive's employment by the Company
("Confidential Information"), provided that "Confidential Information" shall not
include any secret or confidential information, knowledge, trade secrets,
methods, know-how or data that is or becomes generally known to the public
(other than as a result of the Executive's violation of this section
9).  Except as may be required and appropriate in connection with
carrying out his duties under this Agreement, the Executive shall not
communicate, divulge, or disseminate any material Confidential Information at
any time during or after the Executive's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal process; provided, however, that if so required, the Executive will
provide the Company with reasonable notice to contest such
disclosure.

     

    (b) Non-Solicitation.  During
the Term of Employment and for the one (1) year period following the Date of
Termination for any reason, the Executive will not, directly or indirectly,
initiate any action to solicit or recruit anyone who is then an employee of the
Company for the purpose of being employed by him or by any business, individual,
partnership, firm, corporation or other entity on whose behalf Executive is
acting as an agent, representative, employee or otherwise.

     

    (c) Non-Interference with
Customers or Producers.  During the Term of Employment and for
the one (1) year period following the Date of Termination for any reason, the
Executive will not interfere with any business relationship between the Company
and any of its customers or agents or brokers that produce business for the
Company.

     

    (d) Non-Disparagement.  The
parties agree that their professional and personal reputations are important and
should not be impaired by either party after this Agreement is
executed.  Executive therefore agrees not to disparage the
professional or personal reputation of the Company, its officers, shareholders,
directors, or management, and the Company agrees that it will not disparage
Executive's professional or personal reputation.

     

    (e) Remedies;
Severability.

     

    (i) The
parties acknowledge that money damages will not afford an adequate remedy for a
breach or threat to breach any provision of subsections 9(a) through
(d).  Therefore, if a party violates or threatens to violate the
provisions of subsections 9(a) through (d), in whole or in part, the other party
shall be entitled to specific performance and injunctive relief, without
prejudice to other remedies that it may have at law or in equity.

     

    (ii) If any
term or provision of this section 9, or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of 

     

    
      
        
        

      

      
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    this
section 9, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this section 9
shall be valid and enforceable to the fullest extent permitted by
law.  Moreover, if a court of competent jurisdiction deems any
provision of subsections 9(a) through (d) to be too broad in time, scope, or
area, it is expressly agreed that such provision shall be reformed to the
maximum degree that would not render it unenforceable.

     

    10. Attorneys'
Fees.  Each party shall pay its own legal fees, court costs,
litigation expenses and/or arbitration expenses (as applicable) in connection
with any dispute, litigation or arbitration regarding the validity or
enforceability of, or liability under or otherwise involving any provision of
this Agreement, except that if the Executive prevails on the majority of
material claims disputed, the Company shall pay all reasonable legal fees, court
cost, litigation expenses and/or arbitration expenses.

     

    11. Indemnification.  The
Executive shall be indemnified by the Company for actions taken in his position
as an officer, director, employee and agent of the Company to the greatest
extent permitted by applicable law.  The Executive shall also be
covered as an insured by a liability insurance policy secured by and maintained
by the Company covering acts of its and its affiliates' officers and members of
the Board.

     

    12. Successors.

     

    (a) Assignment of
Agreement.  This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution.

     

    (b) Successors of the
Company.  No rights or obligations of the Company under this
Agreement may be assigned or transferred except that 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.  As used in this Agreement,
"Company" shall mean the Company as herein before defined and any successor that
executes and delivers the agreement provided for in this section 12 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.

     

    13. Arbitration.  Except
for matters covered under section 9, in the event of any dispute or difference
between the Company and the Executive with respect to the subject matter of this
Agreement and the enforcement of rights hereunder, either the Executive or the
Company may, by written notice to the other, require such dispute or difference
to be submitted to arbitration.  The arbitrator or arbitrators shall
be selected by agreement of the parties or, if they cannot agree on an
arbitrator or arbitrators within 30 days after the date arbitration is required
by either party, then the arbitrator or arbitrators shall be selected by the
American Arbitration Association upon the application of the Executive or the
Company.  The determination reached in such arbitration shall be final
and binding on both parties without any right of appeal or further
dispute.  Execution of the determination by such arbitrator may be
sought in any court of competent jurisdiction.  The arbitrators shall
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    abstain
from following the strict rules of evidence and shall interpret this Agreement
as an honorable engagement and not merely as a legal
obligation.  Unless otherwise agreed by the parties, any such
arbitration shall take place in Philadelphia, Pennsylvania.

     

    14. Miscellaneous.

     

    (a) Governing
Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania without reference
to principles of conflict of laws.

     

    (b) Notices.  All
notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery, email or by facsimile (provided confirmation of
receipt of such facsimile is received) to the other party or by registered or
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other nationally-recognized overnight courier that requires signatures of
recipients upon delivery and provides tracking services, addressed as
follows:

     

    If to the
Executive:

     

    

     

    

     

    If to the
Company:

     

    PMA
Capital Corporation

    380
Sentry Parkway

    Blue
Bell, PA  19422

    Attention:  General
Counsel

    Facsimile:  610-397-5144

     

    or to
such other address as either party furnishes to the other in writing in
accordance with this subsection 14(b).  Notices and communications
shall be effective when actually received by the addressee.

     

    (c) Amendment.  This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.

     

    (d) Severability.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.  If any provision of this Agreement shall be held invalid
or unenforceable in part and if the rights and obligations of any to this
Agreement will not be materially and adversely affected thereby, the remaining
portion of such provision, together with all other provisions of this Agreement,
shallremain valid and enforceable and continue in full force and effect to the
fullest extent consistent with law.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (e) Withholding.  Notwithstanding
any other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local, and foreign taxes that
are required to be withheld by applicable laws or regulations.

     

    (f) Waiver.  The
Executive's or the Company's failure to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement (including, without
limitation, the right of the Executive to terminate employment for Good Reason)
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.

     

    (g) Entire Understanding;
Counterparts.  The Executive and the Company acknowledge that
this Agreement supersedes and terminates any other severance and/or employment
agreements between the Executive and the Company or any Company
affiliates.  This Agreement may be executed in several counterparts,
each of which shall be deemed an original and said counterparts shall constitute
but one and the same instrument.

     

    (h) Rights and Benefits
Unsecured.  The
rights and benefits of the Executive under this Agreement may not be
anticipated, assigned, alienated, or subject to attachment, garnishment, levy;
execution, or other legal or equitable process except as required by
law.  Any attempts by the Executive to anticipate, alienate, assign,
sell, transfer, pledge or encumber the same shall be void.  Payments
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.

     

    (i) Noncontravention.  The
Company represents that the Company is not prevented from entering into, or
performing this Agreement by the terms of any law, order, rule or regulation,
its by-laws or declaration of trust, or any agreement to which it is a
party.

     

    (j) Section and Subsection
Headings.  The section and subsection headings in this
Agreement are for convenience of reference only; they form no part of this
Agreement and shall not affect its interpretation.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
pursuant to the authorization of the Board, the Company has caused this
Agreement to be executed, all as of the day and year first above
written.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                	 
      	 
      	 
      
	 	
                                                                                                                        PMA
      CAPITAL CORPORATION; PENNSYLVANIA MANUFACTURERS

                                                                                                                      	 
      
	 	
                                                                                                                        ASSOCIATION
      INSURANCE COMPANY;

                                                                                                                      	 
      
	 	
                                                                                                                        MANUFACTURERS
      ALLIANCE INSURANCE

                                                                                                                      	 
      
	 	
                                                                                                                        COMPANY;
      PENNSYLVANIA

                                                                                                                      	 
      
	 	
                                                                                                                        MANUFACTURERS
      INDEMNITY COMPANY;

                                                                                                                      	 
      
	 	
                                                                                                                        AND
      PMA MANAGEMENT CORP.

                                                                                                                      	 
      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/  Vincent T.
      Donnelly	 
	 	Name:	Vincent
      T. Donnelly	 
	 	

                                                                                                                        Title:

                                                                                                                      	President
      and Chief Executive Officer	 
	 	 	Date:
      February 18, 2009	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	EXECUTIVE	 
	 	 	 	 
	 	 	 	 
	 	 	

                                                                                                                        /s/ Stephen L.
      Kibblehouse  

                                                                                                                      	 
	 	Name:	Stephen
      L. Kibblehouse	 
	 	Date:	February
      18, 2009	 
	 	 	 	 

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
 

    12exhibit101.htm

    Exhibit
10.1

    CRACKER
BARREL OLD COUNTRY STORE, INC.

    

    AMENDED
AND RESTATED STOCK OPTION PLAN

    

    (As
amended through November 25, 2008)

    

    The entire text of the Cracker Barrel
Old Country Store, Inc. Amended and Restated Stock Option Plan, as now amended
and restated (including certain conforming changes), is as follows:

    

    1.  Name and
Purpose.  The purpose of this Plan, which shall be known as the
“Cracker Barrel Old Country Store, Inc. Amended and Restated Stock Option Plan”
is to provide a means whereby the Company may, through the grant of Options to
purchase Common Stock of the Company, attract and retain qualified individuals
(including officers and directors who are also employees) and motivate those
employees to exert their best efforts on behalf of the Company and its
Subsidiaries.

    

    2.  Definitions.  For
purposes of this Plan, the following terms when capitalized shall have the
meaning designated herein unless a different meaning is plainly required by the
context.  Where applicable, the masculine pronoun shall mean or
include the feminine and the singular shall include the plural:

    

    (a)  “Board” means the
Board of Directors of the Company.

    

    (b)  “Common Stock” means
Common Stock of the Company having a par value of 01/100 ($.01)
dollars.

    

    (c)  “Disability” means
disabled within the meaning of Section 22(e)(3) of the Internal Revenue
Code.

    

    (d)  “Effective Date” means
the date on which this Plan, in its present form, was approved by the
Shareholders, November 25, 1997.

    

    (e)  “Fair Market Value” of
the Common Stock of the Company shall be the last reported sale price of the
Common Stock as reported by The Nasdaq Global Market (“Nasdaq”) on the day of
the grant of the Option, and if such date is not a trading day, then the last
reported sale price of the last trading day immediately preceding the day of the
grant of the Option.

    

    (f)  “Internal Revenue
Code” means the Internal Revenue Code of 1986, as amended.

    

    (g)  “Option” means a stock
option granted pursuant to the Plan.

    

    (h)  “Optionee” means any
employee who receives Options granted under this Plan as well as the holder of
any Options granted under this Plan prior to the Effective Date.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)  “Parent” means a
parent corporation as defined in Section 424(e) and (g) of the Internal Revenue
Code.

    

    (j)  “Plan” means the
Cracker Barrel Old Country Store, Inc. Amended and Restated Stock Option
Plan.

    

    (k)  “Retirement” means an
employee who terminates his employment relationship with the Company at such
time when such employee's age is at least 55 years, and the employee has 7 years
tenure with the Company or longer.  Retirement specifically excludes
severance agreements with the Company or termination for Just
Cause.

    

    (l)  “Shareholders” means
the holders of the outstanding shares of the Company's Common
Stock.

    

    (m)  “Subsidiary” means an
affiliated employer during any period that 50% or more of its common stock or,
in the case of a partnership, 50% or more of the capital interest thereof is
owned directly or indirectly by the Company or during any period that it is a
member with the Company in a controlled group of corporations or is otherwise
under common control with the Company within the meaning of Section 414(b) and
(c) of the Internal Revenue Code.

    

    (n)  “Just Cause” means
matters which, in the judgment of the Committee, constitute any one or more of
the following:

     

    
      
        	 	(i)  Intoxication
      while on duty.
	 	 
	 	(ii)  Theft
      or dishonesty in the conduct of the Company's business.
	 	 
	
                 
      

              	
                (iii)  Willful
      neglect or negligence in the management of the Company's
      business.

              
	 	 
	 	(iv)  Conviction
      of a crime involving moral
turpitude.

      

    

     

    3.  Administration.

    

    (a)  The Plan shall be
administered by a committee (the "Committee") appointed by the Board of
Directors of the Company (the "Board").  The Committee shall consist
of two or more non- employee directors.  Eligibility requirements for
members of the Committee shall conform with Rule 16(b)-3 promulgated pursuant to
the Securities Exchange Act of 1934, as amended, or any successor rule or
regulation.  No person, other than members of the Committee, shall
have any discretion concerning decisions regarding the Plan.

    

    (b)  The Company shall grant
to employees chosen by the Committee to participate in the Plan Options under,
and in accordance with, the provisions of the Plan.  Each Option
granted shall be evidenced by a stock option agreement in such form and
containing such provisions not inconsistent with this Plan.

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (c)  Without limiting the
generality of the foregoing, the Committee shall have full and final authority
in its discretion to interpret provisions of the Plan, to determine from time to
time the individuals in the eligible group to whom the Options shall be granted
and the number of shares to be covered by each proposed Option; to determine the
purchase price of the shares covered by each Option and the time or times at
which Options shall be granted; to interpret the Plan; to make, amend and
rescind rules and regulations relating to the Plan; to determine the terms and
provisions of the instruments by which Options shall be evidenced; and to make
all other determinations necessary or advisable for the administration of the
Plan.

    

    4.  Eligibility.  The
persons eligible to participate in the Plan as recipients of Options shall
include the employees of the Company or of any Subsidiary of the Company
(hereinafter called "employees").  The word "employees" does not
include Directors of the Company as such, but does include Directors of the
Company who are otherwise employed by the Company.  Nothing contained
in this Plan, nor in any Option granted pursuant to the Plan, shall confer upon
any employee any right to continue in the employ of the Company or any
Subsidiary nor limit in any way the right of the Company or any Subsidiary to
terminate his employment at any time.

    

    5.  Shares Subject to the
Plan.

    

    (a)  The shares to be
delivered by the Company upon exercise of options granted under this Plan are
authorized and unissued shares of Common Stock.

    

    (b)  The aggregate number of
shares of Common Stock which may be sold pursuant to options granted under this
Plan shall not exceed 17,525,702 shares; subject, however, to the adjustment
provided in Paragraph 9 in the event of stock splits, stock dividends, exchanges
of shares, or the like occurring after the Effective Date.  No Option
may be granted under this Plan which could cause such maximum limit to be
exceeded.

    

    (c)  Shares of Common Stock
covered by an option which is no longer exercisable shall again be available for
sale pursuant to a grant of Options under this Plan.

    

    6.  Terms of
Options.  The Options granted under this Plan shall contain the
following terms and conditions:

    

    (a)  Option
Price.  The Option price per share of Common Stock shall be
equal to the Fair Market Value of the Company's Common Stock on the date
specified by the Committee.

    

    (b)  Time and Issuance of
Options.  From time to time the Committee shall select from
among those who are then eligible, the individuals to whom Options shall be
granted and shall determine the number of shares to be covered by each
Option.  Each individual thus selected shall, at such time as the
Committee shall determine, be granted an Option with respect to the number of
shares of Common Stock thus determined.  The recommendation or
selection of an employee as a participant in any grant of Options under the Plan
shall not be deemed to entitle the employee to such Option prior to the time
when it shall be granted by the Committee; and the granting of any Option under
the Plan shall not be deemed either to entitle such employee to, or to
disqualify such employee from, any participation in any other grant of Options
under the Plan.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    In making
any determination as to individuals to whom Options shall be granted and as to
the number of shares to be covered by such Options, the Committee shall take
into account the duties of the respective individuals, their present and
potential contributions to the success of the Company, and such other factors as
the Committee shall deem relevant in accomplishing the purposes of the
Plan.  Notwithstanding any provision in the Plan to the contrary, the
maximum number of shares of Common Stock with respect to one or more Options
that may be granted during any one of the Company’s fiscal years under the Plan
to any one Optionee shall be 250,000.

    

    (c)  Period Within Which Option
May be Exercised.  Each Option granted under the Plan shall
specify the period for which the Option thereunder is granted and shall provide
that the Option shall expire at the end of such period.

    

    (d)  Transferability.  The
Committee shall determine whether Options granted under this Plan may be
assigned or transferred by the Optionee and, if an option is transferable, the
Committee shall be authorized to restrict transferability to certain persons or
classes of persons.  In the event of death of an Optionee, Options
shall be transferable by will by the laws of descent and
distribution.

    

    (e)  Amendment of the
Option.  Material amendments to an outstanding Option require
approval by the Committee and must be agreed upon by the Optionee.

    

    (f)  Termination of
Service.  If an Optionee's employment with the Company is
terminated, then the Optionee shall have the following time periods within which
to exercise unexercised Options or portions of the options held by that Optionee
in the following described circumstances:

    

    
      
        	
                (i)

              	
              	
                Exercise in the Event
      of Death or Disability.  If an Optionee shall die (i)
      while an employee of the Company or of a Subsidiary or (ii) within 90 days
      after termination of his employment with the Company or a Subsidiary,
      other than for termination for Just Cause, his Option may be exercised, to
      the extent that the Optionee shall have been entitled to do so at the date
      of his termination of employment, by the person or persons to whom the
      Optionee's rights under the Option pass by will or applicable law, or if
      no such person has such right, by his executors or administrators, at any
      time, or from time to time, for a period of one year after the date of the
      Optionee's death, but in no event later than the expiration
      date.  In the event an Optionee's employment with the Company is
      terminated as a result of Disability, the Optionee may exercise options,
      to the extent the Optionee was entitled to do so at the date of his
      termination of employment for a period of one year, but in no event later
      than the expiration date of the
Option.

              

      

    

    

    
      
        	
                (ii)

              	
                 

              	
                Exercise in the Event
      of Termination of Employment.  If an Optionee's
      employment by the Company or a Subsidiary shall terminate for any reason
      other than Disability, Retirement, death or Just Cause, he may exercise
      his Option, to the extent that he may be entitled to do so at the date of
      the termination of his employment, at any time, or from time to time, for
      a period of 90 days after the date of termination, but in no event
      

              

      

    

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      
        	 	later
      than the expiration date of the Option.  Whether authorized
      leave of absence for military or governmental service shall constitute
      termination of employment for purposes of this Plan shall be determined by
      the Committee.  In the event an Optionee's employment with the
      Company or any Subsidiary is terminated for Just Cause, the Option shall
      terminate as of the date of the employee's termination and will no longer
      be exercisable.
	 	 
	
                (iii)

              	
                 
      

              	
                Exercise in the Event
      of Retirement.  If an Optionee ceases to be an employee
      by reason of Retirement, the former employee may exercise Options, to the
      extent the Optionee was entitled to do so at the date of termination at
      any time during the remaining life of the Option, but in no event later
      than the expiration date of the
Option.

              

      

    

    

    (g)  Rights as a
Shareholder.  The Optionee shall have no rights as a
shareholder with respect to any shares covered by his Option until the issuance
of a stock certificate to him for such shares.  No adjustment shall be
made for dividends or other rights for which the record date is prior to the
issuance of such stock certificate, except as provided in Paragraph
9.

    

    (h)  Partial
Exercise.  Unless otherwise provided in the option agreement,
any exercise of an Option granted under this Plan may be made in whole or in
part.

    

    7.  Exercise of
Options.  The Committee expressly reserves the right to
determine the manner in which Options may be exercised pursuant to this
Plan.  The Committee, in its discretion, may determine the manner in
exercising Options as of the date of the Option grant and inform Optionees in
the written agreement required under this Plan.  The manner of
exercising Options may vary from grant to grant, within the discretion of the
Committee.

    

    An Option granted under this Plan may
be exercised by written notice to the Company, signed by the Optionee, or by
such other person as is entitled to exercise such Option.  The notice
of exercise shall be delivered to the Company at its principal office, shall
state the number of shares with respect to which the Option is being exercised,
and shall be accompanied by payment in full of the Option price for such shares
in cash, by surrender of fully-paid shares of Company Common Stock or by
certified check to the Company.  Upon the exercise of an Option and
full payment thereof, the Company shall deliver or cause to be delivered, as
soon as practicable, to the Optionee exercising his Option a certificate or
certificates for the number of shares of stock with respect to which the Option
is so exercised.  The shares of stock shall be registered in the name
of the exercising Optionee or in such name jointly with him as he may direct in
the written notice of exercise referred to in this paragraph.  It
shall be a condition to the obligation of the Company to issue or transfer
shares of stock upon exercise of an Option by delivery of shares that the
Optionee pay to the Company, upon its demand, such amount as may be requested by
the Company for the purpose of satisfying its liability to withhold Federal,
state or local income or other taxes incurred by reason of the exercise of such
Option or the transfer of shares thereupon.  If the amount requested
is not paid, the Company may refuse to issue or transfer shares of stock upon
exercise of the Option.  All shares purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    8.  Previously Granted
Options.  All Options previously granted shall remain
outstanding and effective after the Effective Date and shall be subject to all
terms and conditions of this Plan, as amended and restated, with respect to such
outstanding Options and such terms and conditions as may be set forth in the
relevant stock option agreements.  If the terms and conditions of any
stock option agreements granted prior to the Effective Date are different from
this Plan, the terms and conditions contained in such option agreements shall
remain effective.  Hereafter, the Plan and the relevant stock option
agreements granted hereunder shall govern all option grants.

    

    9.  Adjustments to Reflect
Capital Changes.  The following adjustments shall be made to
reflect changes in the capitalization of the Company:

    

    (a)  Recapitalization.  The
number and kind of shares subject to outstanding Options, the exercise price for
such shares, and the number and kind of shares available for Options
subsequently granted under the Plan shall be appropriately adjusted to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Options outstanding under the Plan.  The
Committee shall have the power to determine the amount of the adjustment to be
made in each case.

    

    (b)  Certain
Reorganizations.  After any reorganization, merger or
consolidation in which the Company is not the surviving corporation, each
Optionee shall, at no additional cost, be entitled to exercise all of his
Options, whether vested or not, and upon any exercise of an Option to receive
(subject to any required action by shareholders), in lieu of the number of
shares of the Common Stock exercisable pursuant to such Option, the number and
class of shares of stock or other securities to which such Optionee would have
been entitled pursuant to the terms of the reorganization, merger or
consolidation had such Optionee been the holder of record of a number of shares
of stock equal to the total number of shares covered by such
Option.  Comparable rights shall accrue to each Optionee in the event
of successive reorganizations, mergers or consolidations of the character
described above.

    

    (c)  Acceleration.  In
the event of change of control as defined herein, any outstanding Options shall
be immediately exercisable (without regard to any limitation imposed by the Plan
or the Board at the time the Option was granted, which permits all or any part
of the Option to be exercised only after the lapse of time), and will remain
exercisable until the expiration date of the Options.

    

    
      
        	 	
                (i)

              	
                A
      “change of control” shall be deemed to have occurred
  if:

              

      

    

    

    
      	
               
      

            	
              (1)

            	
              without
      prior approval of the Board, any "person" becomes a beneficial owner,
      directly or indirectly, of securities of the Company representing 20% or
      more of the combined voting power of the Company's then outstanding
      securities; or

            

    

    

    
      	
               
      

            	
              (2)

            	
              without
      prior approval of the Board, as a result of, or in connection with, or
      within two years following, a tender or exchange offer for the voting
      stock of the Company, a merger or other business combination to which the
      Company is a party, the sale or other disposition of all or substantially
      all of the assets of the 

            

    

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
      
        	 	 	Company,
      a reorganization of the Company, or a proxy contest in connection with the
      election of members of the Board, the persons who were directors of the
      Company immediately prior to any of such transactions cease to constitute
      a majority of the Board or of the board of directors of any successor to
      the Company (except for resignations due to death, Disability or normal
      Retirement).
	 	 	 
	
                 
      

              	
                (ii)

              	
                A
      person shall be deemed the “beneficial owner” of any
      securities:

              

      

    

    

    
      	
               
      

            	
              (1)

            	
              which
      such person or any of its Affiliates or Associates beneficially owns,
      directly or indirectly; or

            

    

    

    
      	
               
      

            	
              (2)

            	
              which
      such person or any of its Affiliates or Associates has, directly or
      indirectly, (1) the right to acquire (whether such right is exercisable
      immediately or only after the passage of time), pursuant to any agreement,
      arrangement or understanding or upon the exercise of conversion rights,
      exchange rights, warrants or options, or otherwise, or (2) the right to
      vote pursuant to any agreement, arrangement or understanding;
      or

            

    

    

    
      	
               
      

            	
              (3)

            	
              which
      are beneficially owned, directly or indirectly, by any other person with
      which such person or any of its Affiliates or Associates has any
      agreement, arrangement or understanding for the purpose of acquiring,
      holding, voting or disposing of any
securities.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              A
      “person” shall mean any individual, firm, company, partnership, other
      entity or group.

            

    

    

    
      	
               
      

            	
              (iv)

            	
              The
      terms “Affiliate” or “Associate” shall have the respective meanings
      ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
      promulgated by the Securities and Exchange Commission under the Securities
      Exchange Action of 1934, as in effect on the date the Plan is approved by
      the shareholders of the Company and becomes
  effective.

            

    

    

    10.  Amendment and Termination of
Plan.  The Board may from time to time, with respect to any
Common Stock on which Options have not been granted, suspend or discontinue the
Plan or amend it in any respect whatsoever.  This Plan is intended to
comply with all applicable requirements of Rule 16b-3 or its successors under
the 1934 Act, insofar as participants subject to Section 16 of that Act are
concerned.  To the extent any provision of the Plan does not so
comply, the provision shall, to the extent permitted by law and deemed advisable
by the Committee, be deemed null and void with respect to such
participants.

    

    11.  Indemnification of
Committee.  In addition to such other rights of indemnification
as they may have as members of the Board or as members of the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan, or any Option
granted thereunder, and against all amounts paid by them in settlement
thereof

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (provided
such settlement is approved by legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except a judgment based upon finding of bad faith.  Upon the
institution of any such action, suit or proceeding, a Committee member shall
notify the Company in writing, giving the Company an opportunity, at its own
expense, to handle and defend the same before such Committee member undertakes
to handle it on his own behalf.

    

    12.  Right to Receive
Options.  Neither the adoption of the Plan nor any action of
the Committee shall be deemed to give any person any right to be granted an
Option, or any other right under the Plan, unless and until the Committee grants
a person an Option, and then his or her rights shall be only those prescribed in
the instrument evidencing the Option.

    

    13.  Company
Responsibility.  All expenses of this Plan, including the cost
of maintaining records, shall be borne by the Company.  The Company
shall have no responsibility or liability (other than under applicable
securities laws) for any act or thing done or left undone with respect to the
price, time, quantity, or other conditions and circumstances of the purchase of
shares under the terms of the Plan, so long as the Company acts in good
faith.

    

    14.  Securities
Laws.  The Board shall take all necessary or appropriate
actions to ensure that all option issuances and all exercises thereof under this
Plan are in full compliance with all Federal and state securities
laws.

    

    15.  No Obligation to Exercise
Option.  The grant of an Option shall impose no obligation upon
any Optionee to exercise the Option.

     

    -8-

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