Document:

Exhibit 10b

     

     

     

     

     

     

     

    
 

    OLD
      REPUBLIC INTERNATIONAL CORPORATION

    2005
      KEY EMPLOYEES PERFORMANCE RECOGNITION PLAN

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    OLD
      REPUBLIC INTERNATIONAL CORPORATION

    2005
      KEY EMPLOYEES PERFORMANCE RECOGNITION PLAN

    (Effective
      as of January 1, 2005)

     

    
      
        

      

       

    

                                    ARTICLE
      ONE

     

                                  
      PURPOSE AND EFFECTIVE DATE

     

    1.1  The
      Purpose of this Plan is to further the long-term growth in earnings of Old
      Republic International Corporation by offering long-term incentives in addition
      to current compensation to those officers and key employees of Old Republic
      International Corporation and its subsidiaries who have been or are expected
      to
      be largely responsible for such growth.

     

    1.2  This
      Plan
      is effective as of January 1, 2005, and shall apply to calculations and
      awards made in 2005 and subsequent years. In addition, this Plan shall apply
      to
      any credits transferred to this Plan from the Old Republic International
      Corporation Amended and Restated Key Employees Performance Recognition Plan,
      dated March 21, 2002, as amended (the “2002 Plan”), which were not yet
      vested as of December 31, 2004.

     

    1.3  The
      Company intends that this Plan comply with the provisions of Section 409A
      of the Internal Revenue Code of 1986, as amended (the “Code”), and the
      Department of Treasury regulations and other guidance promulgated thereunder.
      This Plan shall be administered in a manner that will comply with
      Section 409A of the Code. Any provision of this Plan that is not in
      compliance with Section 409A shall have no force and effect, and no action
      shall be taken with respect to this Plan that would violate any provisions
      of
      Section 409A.

     

    ARTICLE
      TWO

     

    DEFINITIONS

     

    2.1  “Plan”
      and “2005 Plan” shall mean this Old Republic International Corporation 2005 Key
      Employees Performance Recognition Plan.

     

    2.2  “Company”
      shall mean Old Republic International Corporation, a corporation organized
      under
      the laws of the State of Delaware.

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    2.3  “Employer”
      and “Employers” shall mean the Company and each other corporation or
      organization which is wholly or partially owned by the Company, either directly
      or indirectly, and is designated by the Committee as an Employer under this
      Plan. 

     

    2.4  “Chief
      Executive Officer” or “CEO” shall mean the chief executive officer of the
      Company.

     

    2.5  “Committee”
      shall mean the Compensation Committee of the Board of Directors of the
      Company.

     

    2.6  “Employee”
      shall mean any person who is employed by the Employer on a full-time basis
      and
      who is compensated for such employment by a regular salary. “Employee” shall
      include officers of an Employer but shall not include directors who are not
      otherwise officers or employees.

     

    2.7  “Eligible
      Employee” shall mean an Employee who pursuant to Section 5.1 hereof has been
      selected to share in the allocation of the Performance Recognition Pool for
      any
      given year.

     

    2.8  “Year
      of
      Service” shall mean each year of continuous employment with an Employer after
      first being designated as an Eligible Employee pursuant to Section 5.1
      hereof.

     

    2.9  “2005
      Plan Account” shall mean with respect to any Employee, unless otherwise
      specified, the record of:

     

    (a)  credits
      in connection with the allocations and interest credited to such account
      pursuant to Articles Five and Six of this Plan,

     

    (b)  payments
      to him or her under the Plan pursuant to Article Six of this Plan,
      and

     

    (c)  forfeitures,
      if any, pursuant to Articles Six and Seven of this Plan.

     

    2.10  “2002
      Plan Account” shall mean the total credits which were granted to an Employee’s
      account under the 2002 Plan, including, unless otherwise specified, those
      which were vested as well as those which were not vested as of December 31,
      2004.

     

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    2.11  “Unvested
      2002 Plan and/or Performance Multiplier Account” shall mean only those 2002 Plan
      Account credits which were not
      vested
      as of December 31, 2004, together with any Performance Multiplier credits
      calculated pursuant to paragraph (a) of Section 5.2 of this Plan, or,
      if all 2002 Plan Account credits were vested as of December 31, 2004,
      then the term shall mean just the Performance Multiplier credits calculated
      pursuant to paragraph (a) of Section 5.2 of this Plan.

     

    2.12  “Calculation
      Year” shall mean the Company’s fiscal year immediately preceding the year for
      which the Performance Recognition Pool is being calculated.

     

    If
      there
      is an operating loss in the year prior to the Calculation Year, the “prior year”
to be used in the following definitions and for Section 4.1 calculations is
      the first year prior to the Calculation Year in which there was an operating
      profit.

     

    2.13  “Minimum
      Return on Equity” shall mean a percentage applied to the Company’s average
      consolidated and combined shareholders’ equity (i.e., mean of beginning and
      ending balances, adjusted for unrealized investment gains or losses, net of
      applicable income taxes, if any) for the Calculation Year. The percentage shall
      be that percentage, obtained from public information, equal to two times the
      mean of the five year average post-tax yield on 10-year and 30-year U.S.
      Treasury Securities. The Committee shall annually compute and announce this
      value as it pertains to a Calculation Year.

     

    2.14  “Excess
      Return on Equity” shall mean the Calculation Year’s Consolidated Net Operating
      Income in excess of the Minimum Return on Equity all calculated in accordance
      with generally accepted accounting principles (GAAP). Net operating income
      shall
      exclude realized gains or losses on sales of investment securities or any other
      assets (irrespective of the treatment of such amounts under GAAP) and
      extraordinary credits or charges.

     

    2.15  “Minimum
      Annual Income” shall mean one hundred twelve percent (112%) of the prior year’s
      Consolidated Net Operating Income adjusted for dividend requirements on
      preferred stock issued and outstanding during each year.

     

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    2.16  “Excess
      Earnings Growth” shall mean the Calculation Year’s Consolidated Net Operating
      Income adjusted for dividend requirements on preferred stock issued and
      outstanding during such year in excess of the Minimum Annual
      Income.

     

    2.17  “Base
      Salary” shall mean the Employee’s basic salary at the rate in effect at the end
      of the Calculation Year, excluding bonuses, overtime, extraordinary compensation
      and contributions to the Old Republic International Corporation Employees
      Savings and Stock Ownership Plan.

     

    2.18  “Consolidated
      Net Operating Income” shall mean the Company’s and its subsidiaries’ and
      branches’ consolidated and combined income determined in accordance with GAAP
      and adjusted for payment of income taxes and for the income of subsidiaries
      and
      affiliates carried on an equity basis. Net operating income shall exclude
      realized gains or losses on sales of investment securities or any other assets
      (irrespective of the treatment of such amounts under GAAP) and extraordinary
      credits or charges.

     

    2.19  If
      in any
      Calculation Year the Company acquires any other business accounted for as a
      purchase whose earnings contribute five percent (5%) or more to such Year’s
      Consolidated Net Operating Income, the earnings of the acquired Company for
      the
      year of acquisition and the next succeeding year shall be eliminated (together
      with related purchase accounting adjustments) in order to calculate the
      performance data described in Sections 2.13 through 2.25 herein. No
      elimination from any year shall be made when the acquired company has been
      owned
      by the Company for two consecutive calendar years. Net operating income shall
      exclude realized gains or losses on sales of investment securities or any other
      assets (irrespective of the treatment of such amounts under GAAP) and
      extraordinary credits or charges.

     

    2.20  “Earnings
      Per Share” shall mean fully diluted earnings per share (net of any paid or
      accrued dividends on preferred stock) calculated in accordance with AICPA
      Accounting Principles Board Opinion No. 15 or any later superseding
      opinions.

     

    2.21  “Performance
      Multiplier” shall mean the number of percentage points by which the Earnings Per
      Share for the Calculation Year exceeds one hundred twelve percent (112%) of
      the
      Earnings Per Share for the prior year.

     

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    2.22  “Composite
      Investment Income Yield” shall mean the composite investment income yield on the
      Company’s consolidated investment portfolio for the Calculation
      Year.

     

    2.23  “Profit
      Sharing Base” shall mean the sum of:

     

    (a)  Earnings
      Growth multiplied by the Earnings Per Share Multiplier; and

     

    (b)  One
      and
      one-half percent (1.5%) of Excess Return on Equity.

     

    2.24  “Earnings
      Per Share Multiplier” shall mean a percentage of the increase in the fully
      diluted Earnings Per Share in the Calculation Year over the preceding year
      as
      set forth in the following schedule:

     

    Percentage
      Increase   Earnings

    In
      Earnings Per Share  Per
      Share Multiplier

     

    0-6%                                  
                               
      0%

    6.01
      to
      10.00%                  
                     
2.5%

    10.01
      to
      15%                    
                      
      5.0%

    15.01
      to
      20.00%               
          7.5%

    Over
      20%                                              
10.0%

     

    2.25  “Earnings
      Growth” shall mean the Calculation Year’s Consolidated Net Operating Income
      adjusted for dividend requirements on preferred stock issued and outstanding
      during such year in excess of the prior year’s Consolidated Net Operating
      Income.

     

    2.26  “Change
      of Control” shall mean any one of the following events that constitutes a
“change in the ownership or effectiveness control of the corporation, or in
      the
      ownership of a substantial portion of the assets of the corporation” under
      Section 409A of the Code:

     

    (a)  Any
      one
      person, or more than one person acting as a group (within the meaning of
      Section 409A of the Code and the applicable regulations and guidance
      promulgated thereunder), other than the Old Republic International Corporation
      Employees Savings and Stock Ownership Trust or any other trust established
      by or
      contributed to by the Company or any of its subsidiaries
      for the benefit of employees of the Company or its subsidiaries, acquires
      ownership of stock of the Company that, together with stock held by such person
      or group, constitutes more than fifty percent (50%) of the total fair market
      value or total voting power of the stock of the Company; provided that, if
      any
      one person or more than one person acting as a group, is considered to own
      more
      than fifty percent (50%) of the total fair market value or total voting power
      of
      the stock of the Company, the acquisition of additional stock by the same person
      or persons is not considered to cause a “Change of Control;” and provided
      further that, an increase in the percentage of stock owned by any one person,
      or
      persons acting as a group, as a result of a transaction in which the Company
      acquires its stock in exchange for property will be treated as an acquisition
      of
      stock for purposes of this paragraph.

     

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       (b)  Any
      one
      person, or more than one person acting as a group (within the meaning of
      Section 409A of the Code and the applicable regulations and guidance
      promulgated thereunder), other than the Old Republic International Corporation
      Employees Savings and Stock Ownership Trust or any other trust established
      by or
      contributed to by the Company or any of its subsidiaries for the benefit of
      employees of the Company or its subsidiaries, acquires (or has acquired during
      the 12-month period ending on the date of the most recent acquisition by such
      person or persons) ownership of stock of the Company possessing thirty-five
      percent (35%) or more of the total voting power of the stock of the
      Company.

     

    (c)  The
      date,
      during any period of twelve (12) consecutive months, on which individuals
      who at the beginning of such period constitute the entire Board of Directors
      of
      the Company shall cease for any reason to constitute a majority thereof, unless
      the election of each new director comprising the majority was approved by a
      vote
      of at least a majority of the Continuing Directors, as hereinafter defined,
      in
      office on the date immediately prior to the date of such election. For purposes
      hereof, a “Continuing Director” shall mean:

     

    (i)  
      any
      member of the Board of Directors of the Company at the close of business on
      January 1, 2005;

     

     

     

     

     

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    (ii)  
      any
      member of the Board of Directors of the Company who succeeded any Continuing
      Director described in subparagraph (a) above if such successor was elected,
      or
      nominated for election by the Company’s stockholders, by a majority of the
      Continuing Directors then still in office; or

     

    (iii)  
      any
      director elected, or nominated for election by the Company’s stockholders, to
      fill any vacancy or newly-created directorship on the Board of Directors of
      the
      Parent Company by a majority of the Continuing Directors then still in
      office.

     

    (d)  Any
      one
      person, or more than one person acting as a group (within the meaning of
      Section 409A of the Code and the applicable regulations and guidance
      promulgated thereunder), acquires (or has acquired during the twelve-month
      period ending on the date of the most recent acquisition by such person or
      persons) assets from the Company that have a total gross fair market value
      equal
      to or more than forty percent (40%) of the total gross fair market value of
      all
      the assets of the Company immediately prior to such acquisition or acquisitions.
      For the purposes of this paragraph, “gross fair market value” means the value of
      the assets of the Company, or the value of the assets being disposed of,
      determined without regard to any liabilities associated with such assets. In
      addition, a transfer of assets by the Company under this paragraph shall not
      be
      considered a “Change of Control” if the assets are transferred to:

     

    (i)  
      A
      shareholder of the Company (immediately before the asset transfer) in exchange
      for or with respect to the Company’s stock;

     

    (ii)  
      An
      entity, fifty percent (50%) or more of the total value or voting power of which
      is owned, directly or indirectly, by the Company;

     

    (iii)  
      A
      person, or more than one person acting as a group, that owns, directly or
      indirectly, fifty percent (50%) or more of the total value or voting power
      of
      all the outstanding stock of the Company; or

     

    (iv)  
      An
      entity, at least fifty percent (50%) of the total value or voting power of
      which
      is owned, directly or indirectly, by a person described in paragraph (c)
      above.

     

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      ARTICLE THREE

     

                                                                                    
      ADMINISTRATION

     

    3.1  The
      Plan
      shall be administered by the Committee which shall be appointed by the Board
      of
      Directors of the Company from its own members. The membership of the Committee
      may be reduced, changed, or increased from time to time in the absolute
      discretion of the Board of Directors of the Company. The Committee shall not
      include any Eligible Employee under this Plan.

     

    3.2  The
      Committee shall have the authority to interpret the Plan, to establish and
      revise rules and regulations relating to the Plan, and to make the
      determinations which it believes necessary or advisable for the administration
      of the Plan.

     

    3.3  Notwithstanding
      any contrary provision herein, an account separate from any 2005 Plan Account
      shall be created under this Plan as of January 1, 2005 for each Employee
      for whom an account had been maintained under the 2002 Plan (the Employee’s
“Unvested 2002 Plan and/or Performance Multiplier Account”). Such account shall
      commence in the amount of any 2002 Plan Account credits which were not yet
      vested as of December 31, 2004, if any. If all of the Employee’s 2002 Plan
      Account credits were fully vested as of such date, then the account created
      hereunder shall be strictly for any Performance Multiplier Credits calculated
      under paragraph (a) of Section 5.2 below. Except as otherwise
      specifically provided herein, each Unvested 2002 Plan and/or Performance
      Multiplier Account balance shall be administered under and subject to the
      provisions of this Plan.

     

     

     

     

     

     

                                                                                               
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    ARTICLE
      FOUR  

     

    CALCULATION
      OF THE PERFORMANCE RECOGNITION POOL

     

    4.1  Prior
      to
      May 31, but not before March 15 of each year, the Committee shall determine
      the amount of the Performance Recognition Pool available for that Calculation
      Year. The Performance Recognition Pool for any Calculation Year shall ordinarily
      be equal to the lesser of:

     

    (a)  the
      Profit Sharing Base for the Calculation Year; or

     

    (b)  one
      and
      one-half percent (1.5%) of the Company’s Consolidated Net Operating Income
      (after deductions of preferred stock dividends, if any) for the Calculation
      Year; or

     

    (c)  a
      percentage of the Eligible Employees’ Base Salaries, ranging from five percent
      (5%) to one hundred fifty percent (150%), inclusive, determined on the basis
      of
      the following scale:

     

     

     

     

     

     

     

     

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      Column A                            Column
      B

    

    Percent
      by Which Current Year’s 

    Return
      on
      Equity Exceeds ROE

        Target
      For
      the Year                  Salary
      Cap/Spread  

     

     
      0 - 10                5%
      + 0.5%
      for each full 1% 

                            exceeding
      1% (Max. 7.5%)

    

    10 - 20                10.0%
      +
      0.5% for each full 1%

    exceeding
      10% (Max. 15.0%)

    

    20 - 30                17.5%
      +
      0.5% for each full 1%

    exceeding
      20% (Max. 22.55%)

    

    30 - 40                20.0%
      +
      0.5% for each full 1%

    exceeding
      30% (Max. 25.0%)

    

    40 - 50                22.5%
      +
      0.5% for each full 1%

    exceeding
      40% (Max. 27.5%)

    

    50 - 60                27.5%
      +
      0.5% for each full 1%

    exceeding
      50% (Max. 32.5%)

    

    60 - 70                32.5%
      +
      0.5% for each full 1%

    exceeding
      60% (Max. 37.5%)

    

    70 - 90                37.5%
      +
      0.5% for each full 1%

    exceeding
      70% (Max. 50.0%)

    

    95
      and
      Over                        50.0%
      +
      1% for each full 1%

    exceeding
      95% (Max. 150.0%)

    

    In
      the
      event, however, of an occurrence or circumstance becoming known to or reasonably
      anticipated by the Committee following the end of the Calculation Year, but
      before any awards have been determined, where such occurrence or circumstance
      has or is reasonably likely to have a material effect on the Company’s financial
      condition or the results of operations either for the Calculation Year or the
      fiscal year thereafter, whether adverse or beneficial, then the Committee may
      make such adjustment in the amount of the available Performance Recognition
      Pool
      as it deems necessary or advisable in the exercise of its
      discretion.

     

    4.2  Notwithstanding
      any provision herein to the contrary, the Performance Recognition Pool shall
      be
      zero for any Calculation Year if the Company incurred a net operating loss
      or a
      net loss for the Calculation Year.

     

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    ARTICLE
      FIVE

     

    ALLOCATION
      OF THE PERFORMANCE REOCGNITION POOL

     

    5.1  Prior
      to
      May 1 of each year, the CEO shall, in consultation with the Committee, designate
      the Employees employed by the Employer during any part of such Calculation
      Year
      who will be eligible to share in the Performance Recognition Pool for that
      Calculation Year.

     

    5.2  On
      or
      before June 30, the Performance Recognition Pool for that Calculation Year
      shall
      be allocated among and credited to the accounts of the Employees on the
      following basis, provided, however, that no member of the Committee shall be
      able to share in the Performance Recognition Pool for any year:

     

    (a)  First,
      the Performance Multiplier shall be calculated for all 2002 Plan Accounts,
      including the balances that were vested as well as unvested as of
      December 31, 2004, of those Employees who have 2002 Plan Account
      balances on the allocation date and were eligible and actively employed by
      the
      Employer during such Calculation Year. Each such 2002 Plan Account at the
      beginning of the Calculation Year shall be multiplied by the Performance
      Multiplier. The result, however, shall be credited strictly to the Employee’s
      Unvested 2002 Plan and/or Performance Multiplier Account balance. In no
      event, however, shall the aggregate amount so credited exceed the lesser of
      seven and one-half percent (7.5%) of the aggregate 2002 Plan Account
      balances on the allocation date or ten percent (10%) of the Performance
      Recognition Pool for that Calculation Year.

     

    (b)  Secondly,
      the remaining portion of the Performance Pool shall be allocated among and
      credited to the 2005 Plan Accounts of Eligible Employees for the year as the
      Committee in consultation with the CEO deems appropriate in its sole discretion,
      provided, however, the Committee may, in its discretion, reserve up to fifty
      percent (50%) of any one year’s Pool which will not be allocated currently. The
      Committee may carry forward the unallocated portion of the Performance
      Recognition Pool and allocate all or a portion of it pursuant to this paragraph
      (b) during one or more of the next succeeding three years; provided however,
      that the total amount of any one year’s carry forward must be allocated by the
      end of the third year. 

     

     

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    5.3  With
      respect to the amounts to be allocated in the current year, the Committee shall
      make such allocation to the CEO and to such other senior Eligible Employees
      selected in consultation with the CEO as it deems appropriate. Remaining amounts
      allocable for the year to less senior Eligible Employees shall be distributed
      by
      the CEO based on total allocations approved by the Committee. In designating
      Eligible Employees and allocating the Performance Recognition Pool among the
      Accounts of the Eligible Employees for any Year pursuant to this Article, the
      CEO and the Committee shall consider the positions and responsibilities of
      Employees, their accomplishments during the year, the value of such
      accomplishments to the Company, the CEO’s expectations as to the future
      contributions of individual Employees to the continued success of the Company
      and such other factors as the CEO and the Committee shall, in their discretion
      and judgment, deem appropriate.

     

    ARTICLE
      SIX

     

    DISTRIBUTIONS

     

    6.1  Within
      ninety (90) days of the date the Committee and/or CEO make such awards, an
      Eligible Employee shall automatically receive in cash one hundred percent (100%)
      of any Performance Recognition Pool award up to Twenty-five Thousand Dollars
      ($25,000) and fifty percent (50%) of any excess above that. The remaining fifty
      percent (50%) of the excess of any such award shall be credited to the
      Employee’s 2005 Plan Account balance as of such year and shall become
      vested in accordance with the vesting schedule set forth in
      Section 6.3.

     

    6.2  The
      2005
      Plan Account balance of each Employee who was either actively employed by the
      Employer throughout the Calculation Year or whose employment had terminated
      by
      reason of retirement in good standing or disability or death shall be credited
      with interest for that Calculation Year, provided that the Company had positive
      Consolidated Net Operating Income for that Calculation Year. The rate of
      interest shall be equal to sixty-five percent (65%) of the Calculation Year’s
      Composite Investment Income Yield, which shall be calculated by the Committee
      at
      the same time as it calculates the Performance Recognition Pool for the
      Calculation Year. The balance to which such interest is credited shall be the
      Employee’s 2005 Plan Account balance as of the date the Committee
      calculates the Performance Recognition Pool for that Calculation Year and shall
      include all interest previously credited hereunder. No such interest shall
      be
      credited to any Unvested 2002 Plan and/or Performance Multiplier Account
      balance, or to any Performance Multiplier credits awarded under this Plan,
      or to
      any 2005 Plan Account which has a zero balance at the end of the
      Calculation Year.

     

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    6.3  A
      portion
      of the amount of the credit in the 2005 Plan Account and any Unvested 2002
      Plan Account of an Employee as of the date he or she terminates his or her
      service for any reason, including death, retirement for age or disability,
      shall
      be paid to the person or persons entitled thereto at the times and in the manner
      provided by Section 6.4 hereof. The amounts to be paid shall be known as a
“vested interest,” and shall be equal to the following percentage of his or her
      2005 Plan Account and, if applicable, Unvested 2002 Plan and/or Performance
      Multiplier Account balance credits:

     

                                 
 Completed
      Years  
      To Be
      Paid

                                     of
      Service   (Vested
      Interest)

    

                                    Less
      than
      One   
      0%

                    One  
          
      10%

                    Two 
          
      20%

                    Three    
      30%

                    Four 
          
      40%

                    Five 
          
      50%

                    Six    
          
      60%

                    Seven          
          
      70%

                    Eight                                          
      80%

                    Nine                                           
      90%

                    Ten                                          
      100%

     

    
      Any
        credits in either the 2005 Plan Account or the Unvested 2002 Plan and/or
        Performance Multiplier Account of an Employee which have not vested by the
        date
        of termination of the Employee’s service shall be forfeited. All such
        forfeitures shall be allocated at the end of the Calculation Year in which
        they
        occur to the combined 2005 Plan Accounts and Unvested 2002 Plan and/or
        Performance Multiplier Accounts of all Employees who were actively employed
        by
        an Employer on December 31 of that year. The allocation shall be made in
        the
        ratio that the combined account balances of each such Employee on January
        1 of
        that year bears to the total combined account balances of all such
        Employees.

       

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    6.4  The
      vested interest of an Employee shall begin to be paid in substantially equal
      quarterly installments over a period of five (5) years, with the first such
      payment to be made on the later of:

    
(a)  the
      date
      of the Employee’s termination of employment for any reason, including death or
      disability, or the six-month anniversary of the date of termination if the
      Employee is a “specified employee” at the time of termination within the meaning
      of Code Section 409A; or

     

    (b)  the
      date
      on which the Employee attains (or would have attained if he or she had lived)
      age 55.

    

    For
      purposes of this Section, specified employee status will be determined based
      on
      the twelve (12) months ended December 31 of each year and will be effective
      for the twelve-month period commencing on April 1 of the following
      year.

     

    6.5  Notwithstanding
      the foregoing Sections of this Article, an Employee’s entire 2005 Plan Account
      balance and entire Unvested 2002 Plan and/or Performance Multiplier Account
      balance, if any, shall become fully vested and non-forfeitable and shall be
      paid
      to him or her in a lump sum on the first day of the calendar quarter following
      the date on which any Change of Control occurs. If there is a carry forward
      balance not allocated pursuant to Section 5.3 when a Change of Control occurs,
      such carry forward balance shall be immediately allocated among the 2005 Plan
      Accounts of all Employees in the ratio that each such Employee’s 2005 Plan
      Account balance bears to the total of all such 2005 Plan Account balances.
      Said
      additional amounts shall be one hundred percent (100%) vested and paid in
      accordance with the provisions of this Article. Any subsequent contributions
      allocated to an Employee’s 2005 Plan Account or Unvested 2002 Plan and/or
      Performance Multiplier Account balance during the two (2) years following the
      occurrence of a Change of Control because the Plan is continued in accordance
      with Section 8.2 hereof shall be non-forfeitable and shall be distributed
      immediately after such allocation.

     

    6.6  An
      Employee may designate in writing, on forms prescribed by and filed with the
      Committee, a beneficiary or beneficiaries to receive any payments payable after
      his or her death. If an Employee dies while employed by an Employer or after
      he
      or she has begun to receive his or her benefits under this Plan, the 2005 Plan
      Account and any Unvested 2002 Plan and/or Performance Multiplier Account
      balances (or the remainder thereof if the payment of benefits had already
      commenced) shall be paid to the beneficiary or beneficiaries designated by
      the
      Employee or, in the absence of such designation, to his or her legal
      representative.

     

    -14-

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    6.7  Notwithstanding
      any other provisions of this Plan to the contrary, the Committee may deduct
      from
      any payment under the Plan any taxes required to be withheld by the Federal
      or
      any state or local government for the account of such Employee.

     

    ARTICLE
      SEVEN

     

    FORFEITURE

     

    7.1  As
      a
      condition to the continued receipt of benefits hereunder each
      Employee:

     

    
      (a)  shall
        be required for a period of three (3) years after his or her termination
        of
        employment with an Employer hereunder to hold himself or herself available
        to
        the  Company and his or her  Employer for reasonable consultation
        inasfar as his or her health permits;

       

    

    (b)  shall
      not
      for a period of three (3) years after his or her termination of employment
      with an Employer hereunder, either as an individual on his or her own account,
      as a partner, joint venturer, employee, agent, salesman for any person; as
      an
      officer, director or stockholder (other than a beneficial holder of not more
      than one percent (1%) of the outstanding voting stock of a company having at
      least 500 holders of voting stock) of a corporation, or otherwise directly
      or
      indirectly,

     

    (i)  
      enter
      into or engage in any business competitive with that carried on by the Company
      or his or her Employer within any area of the United States in which his or
      her
      Employer or the Company is then doing business, providing Employee has had
      access to any of the Company’s or his or her Employer’s trade secrets, secret
      underwriting or business information, programs, plans, data, processes,
      techniques, or customer information; or

     

    -15-

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    (ii)  
      solicit
      or attempt to solicit any of his or her Employer’s or the Company’s customers
      with whom Employee has had contact as an Employee in the exercise of his or
      her
      duties and responsibilities hereunder with the intent or purpose to perform
      for
      such customer the same or similar services or to sell to such customer the
      same
      or similar products or policies which Employee performed for or sold to such
      customer during the term of his or her employment.

    

      If
        the
        Committee determines that an Employee has refused to make himself or herself
        available for consultation or violated his or her agreement, the Committee
        may,
        by written notice to such Employee, cause his or her benefits to be immediately
        suspended for the duration of such refusal or competition or if payment of
        benefits had not yet commenced, notify the Employee that such continued conduct
        will cause a forfeiture of his or her 2005 Plan Account and any Unvested
        2002 Plan and/or Performance Multiplier Account balance. If after the sending
        of
        such notice the Committee finds that the Employee has continued to refuse
        to
        consult or continue to compete with the Company or his or her Employer for
        a
        period of 30 days following such notice, the Committee may permanently cancel
        the Employee’s 2005 Plan Account and any Unvested 2002 Plan and/or Performance
        Multiplier Account hereunder, and thereupon all rights of such Employee under
        this Plan shall terminate. The foregoing forfeiture provisions shall be
        inoperative following a Change of Control.

    

     

    7.2  Any
      amounts forfeited pursuant to Section 7.1 hereof shall be allocated as a
      forfeiture in accordance with Section 6.3 hereof. 

     

    ARTICLE
      EIGHT

     

    AMENDMENT
      AND TERMINATION

     

    8.1  The
      Company shall have the power at any time and from time to time, to amend this
      Plan by resolution of its Board of Directors provided, however, that no
      amendment under any circumstances may be adopted the effect of which would
      be to
      deprive any Participant of his or her then vested interest, if any, in this
      Plan.

     

    -16-

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    8.2  The
      Company reserves the right to terminate this Plan by resolution of its Board
      of
      Directors. Upon termination of this Plan, the credits in the 2005 Plan Accounts
      and any Unvested 2002 Plan and/or Performance Multiplier Accounts of Employees
      shall become one hundred percent (100%) vested and non-forfeitable. Distribution
      of the balances shall be made in accordance with Section 6.4 or 6.5 hereof
      upon
      the Employee’s subsequent retirement or termination of service. There shall be
      no increase in a 2005 Plan Account or Unvested 2002 Plan and/or Performance
      Multiplier Account balance of an Employee between the date the Plan is
      terminated and the date such balances are distributed. If a Change of Control
      occurs, the Plan as it then exists must be continued, with interest credited
      to
      2005 Plan Account balances, and any available Performance Multiplier
      credited to Unvested 2002 Plan and/or Performance Multiplier Account balances
      as
      provided in Sections 6.2 and 5.2, for two (2) years before it can be
      terminated. Any unallocated balance carried forward shall be similarly allocated
      prior to the expiration of such two-year period. All balances shall be fully
      vested and distribution shall be made in accordance with Section 6.4
      hereof.

     

    ARTICLE
      NINE

     

    MISCELLANEOUS

     

    9.1  No
      Employee or any other person shall have any interest in any fund or reserve
      account or in any specific asset or assets of the Company or any Employer by
      reason of any credit to his 2005 Plan Account or Unvested 2002 Plan and/or
      Performance Multiplier Account under this Plan, nor have the right to receive
      any distribution under this Plan except as and to the extent expressly provided
      for in the Plan.

     

    9.2  Nothing
      in the Plan shall be construed to:

     

    (a)  give
      any
      Employee any right to participate in the Plan, except in accordance with the
      provisions of the Plan;

     

    (b)  limit
      in
      any way the right of an Employer to terminate an Employee’s employment;
      or

     

     

    -17-

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    (c)  be
      evidence of any agreement or understanding, express or implied, that an Employer
      will employ an Employee in any particular position or at any particular rate
      of
      remuneration.

     

    9.3  No
      benefits under this Plan shall be pledged, assigned, transferred, sold, or
      in
      any manner whatsoever anticipated, charged, or encumbered by an Employee, former
      Employee, or their beneficiaries, or in any manner be liable for the debts,
      contracts, obligations or engagements of any person having a possible interest
      in the Plan, voluntary or involuntary, or for any claims, legal or equitable,
      against any such person, including claims for alimony or the support of any
      spouse. Notwithstanding the foregoing, benefits under this Plan may be assigned
      to or made subject of a valid living trust.

     

    9.4  Notwithstanding
      any contrary provision herein, in the case of any assets set aside (directly
      or
      indirectly) in a trust (or other arrangement as provided under regulations
      issued by the Department of Treasury) for purposes of paying deferred
      compensation under this Plan, no such assets (or trust) shall ever be located
      or
      transferred outside the United States.

     

    9.5  No
      acceleration of the time or schedule of any distribution or payment under this
      Plan shall be permitted, except to the extent provided in regulations or other
      guidance issued by the Department of the Treasury under Code
      Section 409A.

     

    9.6  Notwithstanding
      any contrary provision herein, no transfer of assets shall be made under or
      in
      connection with the Plan, or any compensation deferred under the Plan, that
      would result in such assets becoming restricted to the provision of benefits
      under the Plan in connection with a change in the Company’s financial health, as
      provided under Code Section 409A and the regulations or other guidance issued
      by
      the Department of the Treasury thereunder.

     

    9.7  This
      Plan
      shall be construed in accordance with the laws of the State of Illinois in
      every
      respect, including, without limitation, validity in its interpretation and
      performance.

     

    9.8  Article
      headings and numbers herein are included for the convenience or reference only,
      and this Plan is to be construed without any reference thereto. If there be
      any
      conflict between such numbers and headings and the text hereof, the text shall
      control.

     

    -18-

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    9.9  Wherever
      appropriate, words used in this Plan in the singular includes the plural and
      the
      masculine includes the feminine.

     

    
      IN
        WITNESS WHEREOF, the Company has caused this Plan to be signed by its duly
        qualified officers and caused its corporate seal to be hereunto affixed on
        this
        14th
        day of
        December, 2006.

      
 

    

         
          
Old
      Republic
      International Corporation

    
                                
      By: /s/ Aldo C. Zucaro

                
Title:
Chairman
      and CEO    

    

    

    

    Attest:

    

    By:
      /s/ Spencer LeRoy III       

    

    Title:
      Secretary

     

     

     

     

    -19-Exhibit 10(J) - Material Contract - RMIC 2005 Key Employees Performance Recognition
      Plan

     

     

     

     

     

     

     

     

     

    
 

    RMIC
      CORPORATION/REPUBLIC MORTGAGE INSURANCE COMPANY

    2005
      KEY EMPLOYEES PERFORMANCE RECOGNITION PLAN

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    RMIC
      CORPORATION/REPUBLIC MORTGAGE INSURANCE COMPANY

    2005
      KEY EMPLOYEES PERFORMANCE RECOGNITION PLAN

    (Effective
      as of January 1, 2005) 

      

    

     

    ARTICLE
      ONE

     

    PURPOSE
      AND EFFECTIVE DATE

     

    1.1  The
      Purpose of this Plan is to further the long-term growth in earnings of RMIC
      Corporation and Republic Mortgage Insurance Company by offering long-term
      incentives in addition to current compensation to those of their officers and
      key employees who have been or are expected to be largely responsible for such
      growth.

     

    1.2  This
      Plan
      is effective as of January 1, 2005, and shall apply to calculations and
      awards made in 2005 and subsequent years. In addition, this Plan shall apply
      to
      any amounts transferred to this Plan from the RMIC Corporation/Republic Mortgage
      Insurance Company Amended and Restated Key Employees Performance Recognition
      Plan, dated August 21, 2004, as amended (the “2004 Plan”).

     

    1.3  The
      Company intends that this Plan comply with the provisions of Section 409A of
      the
      Internal Revenue Code of 1986, as amended (the “Code”), and the Department of
      Treasury regulations and other guidance promulgated thereunder. This Plan shall
      be administered in a manner that will comply with Section 409A of the Code.
      Any
      provision of this Plan that is not in compliance with Section 409A shall have
      no
      force and effect, and no action shall be taken with respect to this Plan that
      would violate any provisions of Section 409A.

     

     

    ARTICLE
      TWO

     

    DEFINITIONS

     

    2.1  “Plan”
      shall mean this RMIC Corporation/Republic Mortgage Insurance Company 2005 Key
      Employees Performance Recognition Plan.

     

    2.2  “Company”
      shall mean jointly RMIC Corporation and Republic Mortgage Insurance
      Company.

     

    2.3  “Employer”
      and “Employers” shall mean the Company and each other corporation or
      organization which is wholly or partially owned by the Company, either directly
      or indirectly, and is designated by the Committee as an Employer under this
      Plan. 

     

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    2.4  “President”
      shall mean the President of the Company.

     

    2.5  “Committee”
      shall mean the Compensation Committee of the Board of Directors of the
      Company.

     

    2.6  “Employee”
      shall mean any person who is employed by the Employer on a full-time basis
      and
      who is compensated for such employment by a regular salary. “Employee” shall
      include officers of an Employer but shall not include directors who are not
      otherwise officers or employees.

     

    2.7  “Eligible
      Employee” shall mean an Employee who pursuant to Section 5.1 hereof has been
      selected to share in the allocation of the Performance Recognition Pool for
      any
      given year.

     

    2.8  “Year
      of
      Service” shall mean each year of continuous employment with an Employer after
      first being designated as an Eligible Employee pursuant to Section 5.1
      hereof.

     

    2.9  “2005
      Plan Account” shall mean with respect to any Employee, unless otherwise
      specified, the record of:

     

    (a)  credits
      in connection with the allocation and interest credited to such account for
      Calculation Years 2005 and thereafter pursuant to Articles Five and Six of
      this
      Plan, and

     

    (b)  payments
      to him or her under the Plan pursuant to Article Six of this Plan,
      and

     

    (c)  forfeitures,
      if any, pursuant to Articles Six and Seven of this Plan.

     

    2.10  “2004
      Plan Account” shall mean the total credits which were granted to an Employee’s
      account under the 2004 Plan, including, unless otherwise specified, those which
      were vested as well as those which were not vested as of December 31,
      2004.

     

     

    
      
        
        

      

      
        -2-

        
        

      

      
        
        

      

    

    2.11  “Unvested
      2004 Plan and/or Performance Multiplier Account” shall mean those 2004 Plan
      Account credits which were not
      vested
      as of December 31, 2004, together with any Performance Multiplier credits
      calculated pursuant to paragraph (a) of Section 5.2 of this Plan, or, if
      all 2004 Plan Account credits were vested as of December 31, 2004, then,
      the term shall mean just the Performance Multiplier credits calculated pursuant
      to paragraph (a) of Section 5.2 of this Plan.

     

    2.12  “Calculation
      Year” shall mean the Company’s fiscal year immediately preceding the year in
      which the Performance Recognition Pool is being calculated.

     

    If
      there
      is an operating loss in the year prior to the Calculation Year, the “prior year”
to be used in the following definitions and for Section 4.1 calculations is
      the
      first year prior to the Calculation Year in which there was an operating
      profit.

    2.13  “Target
      Return on Equity” shall be a percentage equal to two times the mean of the
      five-year average post-tax yield on 10-year and 30-year U.S. Treasury
      Securities, where such yields are obtained from public information. The
      Committee shall annually compute and announce this value as it pertains to
      a
      Calculation Year.

     

    2.14  “Excess
      Return on Equity” shall mean the Calculation Year’s Consolidated Net Operating
      Income divided by the average equity of Old Republic Mortgage Guaranty Group
      (“ORMGG”) and Old Republic Insured Credit Services, Inc. (“ORICS”) and such
      amount is divided by the Target Return on Equity. The average equity of ORMGG
      and ORICS shall be computed by averaging the consolidated equity of ORMGG and
      ORICS, excluding unrealized gains and losses, at the beginning of each quarter
      of the Calculation Year.

     

    2.15  “Base
      Salary” shall mean the Eligible Employee’s basic salary earned during the
      Calculation Year, excluding bonuses, overtime, extraordinary compensation and
      contributions to the Old Republic International Corporation Employees Savings
      and Stock Ownership Plan.

     

    2.16  “Consolidated
      Net Operating Income” shall mean the net income of ORMGG and ORICS combined,
      determined in accordance with GAAP, excluding realized gains or losses on sales
      of investment securities or any other assets (irrespective of the treatment
      of
      such amounts under GAAP) and extraordinary credits or charges.

     

     

    
      
        
        

      

      
        -3-

        
        

      

      
        
        

      

    

    2.17  If
      in any
      Calculation Year the Company acquires any other business accounted for as a
      purchase whose earnings contribute five percent (5%) or more to such Year’s
      Consolidated Net Operating Income, the earnings of the acquired Company for
      the
      year of acquisition and the next succeeding year shall be eliminated (together
      with related purchase accounting adjustments) in order to calculate the
      performance data described in Sections 2.13 through 2.24 herein. No
      elimination from any year shall be made when the acquired company has been
      owned
      by the Company for two consecutive calendar years. Net operating income shall
      exclude realized gains or losses on sales of investment securities or any other
      assets (irrespective of the treatment of such amounts under GAAP) and
      extraordinary credits or charges.

     

    2.18  “Earnings
      Per Share” shall mean the Consolidated Net Operating Income, divided by 3,369
      shares as of December 31, 2005, with the number of such shares being
      adjusted in subsequent Calculation Years by any capital contributions made
      by
      the Parent Company and any reductions of capital computed as dividends in excess
      of 30% of Consolidated Net Operating Income in the Calculation Year. Adjustments
      in shares shall be made on the basis of the book value of ORMGG shares at the
      beginning of the Calculation Year.

     

    2.19  “Performance
      Multiplier” shall mean the number of percentage points by which the Earnings Per
      Share for the Calculation Year exceeds one hundred twelve percent (112%) of
      the
      Earnings Per Share for the prior year.

     

    2.20  “Composite
      Investment Income Yield” shall mean the composite investment income yield on Old
      Republic International Corporation’s consolidated investment portfolio for the
      Calculation Year.

     

    2.21  “Parent
      Company” shall mean Old Republic International Corporation.

     

    2.22  “Change
      of Control” shall mean any one of the following events that constitutes a
“change in the ownership or effectiveness control of the corporation, or in
      the
      ownership of a substantial portion of the assets of the corporation” under
      Section 409A of the Code:

     

     

    
      
        
        

      

      
        -4-

        
        

      

      
        
        

      

    

    (a)  Any
      one
      person, or more than one person acting as a group (within the meaning of Section
      409A of the Code and the applicable regulations and guidance promulgated
      thereunder), other than the Old Republic International Corporation Employees
      Savings and Stock Ownership Trust or any other trust established by or
      contributed to by the Parent Company or any of its subsidiaries for the benefit
      of employees of the Parent Company or its subsidiaries, acquires ownership
      of
      stock of the Parent Company that, together with stock held by such person or
      group, constitutes more than fifty percent (50%) of the total fair market value
      or total voting power of the stock of the Parent Company; provided that, if
      any
      one person or more than one person acting as a group, is considered to own
      more
      than fifty percent (50%) of the total fair market value or total voting power
      of
      the stock of the Parent Company, the acquisition of additional stock by the
      same
      person or persons is not considered to cause a “Change of Control;” and provided
      further that, an increase in the percentage of stock owned by any one person,
      or
      persons acting as a group, as a result of a transaction in which the Parent
      Company acquires its stock in exchange for property will be treated as an
      acquisition of stock for purposes of this paragraph.

     

    (b)  Any
      one
      person, or more than one person acting as a group (within the meaning of Section
      409A of the Code and the applicable regulations and guidance promulgated
      thereunder), other than the Old Republic International Corporation Employees
      Savings and Stock Ownership Trust or any other trust established by or
      contributed to by the Parent Company or any of its subsidiaries for the benefit
      of employees of the Parent Company or its subsidiaries, acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such person or persons) ownership of stock of the Parent Company
      possessing thirty-five percent (35%) or more of the total voting power of the
      stock of the Parent Company.

     

     

    
      
        
        

      

      
        -5-

        
        

      

      
        
        

      

    

    (c)  The
      date,
      during any period of twelve (12) consecutive months, on which individuals
      who at the beginning of such period constitute the entire Board of Directors
      of
      the Parent Company shall cease for any reason to constitute a majority thereof,
      unless the election of each new director comprising the majority was approved
      by
      a vote of at least a majority of the Continuing Directors, as hereinafter
      defined, in office on the date immediately prior to the date of such election.
      For purposes hereof, a “Continuing Director” shall mean:

     

    (i)  
      any
      member of the Board of Directors of the Parent Company at the close of business
      on January 1, 2005;

     

    (ii)  
      any
      member of the Board of Directors of the Parent Company who succeeded any
      Continuing Director described in subparagraph (a) above if such successor was
      elected, or nominated for election by the Parent Company’s stockholders, by a
      majority of the Continuing Directors then still in office; or

     

    (iii)  
      any
      director elected, or nominated for election by the Parent Company’s
      stockholders, to fill any vacancy or newly-created directorship on the Board
      of
      Directors of the Parent Company by a majority of the Continuing Directors then
      still in office.

     

    (d)  Any
      one
      person, or more than one person acting as a group (within the meaning of Section
      409A of the Code and the applicable regulations and guidance promulgated
      thereunder), acquires (or has acquired during the twelve-month period ending
      on
      the date of the most recent acquisition by such person or persons) assets from
      the Parent Company that have a total gross fair market value equal to or more
      than forty percent (40%) of the total gross fair market value of all the assets
      of the Parent Company immediately prior to such acquisition or acquisitions.
      For
      the purposes of this paragraph, “gross fair market value” means the value of the
      assets of the Parent Company, or the value of the assets being disposed of,
      determined without regard to any liabilities associated with such assets. In
      addition, a transfer of assets by the Parent Company under this paragraph shall
      not be considered a “Change of Control” if the assets are transferred
      to:

     

     

    
      
        
        

      

      
        -6-

        
        

      

      
        
        

      

    

    (i)  
      A
      shareholder of the Parent Company (immediately before the asset transfer) in
      exchange for or with respect to the Parent Company’s stock;

     

    (ii)  
      An
      entity, fifty percent (50%) or more of the total value or voting power of which
      is owned, directly or indirectly, by the Parent Company;

     

    (iii)  
      A
      person, or more than one person acting as a group, that owns, directly or
      indirectly, fifty percent (50%) or more of the total value or voting power
      of
      all the outstanding stock of the Parent Company; or

     

    (iv)  
      An
      entity, at least fifty percent (50%) of the total value or voting power of
      which
      is owned, directly or indirectly, by a person described in paragraph (c)
      above.

     

    ARTICLE
      THREE

     

    ADMINISTRATION

     

    3.1  The
      Plan
      shall be administered by the Committee which shall be appointed by the Board
      of
      Directors of the Company from its own independent members. The Committee shall
      not include any Eligible Employee under this Plan.

     

    3.2  Authority
      to interpret the Plan, to establish and revise rules and regulations relating
      to
      the Plan, and to make the determinations which it believes necessary or
      advisable for the administration of the Plan shall reside with the
      Committee.

     

    3.3  Notwithstanding
      any contrary provision herein, an account separate from any 2005 Plan Account
      shall be created under this Plan as of January 1, 2005 for each Employee
      for whom an account had been maintained under the 2004 Plan (the Employee’s
“Unvested 2004 Plan and/or Performance Multiplier Account”). Such account shall
      commence in the amount of any 2004 Plan Account credits which were not yet
      vested as of December 31, 2004, if any. If all of the Employee’s 2004 Plan
      Account credits were fully vested as of such date, then the account created
      hereunder shall be strictly for any Performance Multiplier credits calculated
      under paragraph (a) of Section 5.2 below. Except as otherwise specifically
      provided herein, each Unvested 2004 Plan and/or Performance Multiplier Account
      balance shall be administered under and subject to the provisions of this
      Plan.

     

     

     

    
      
        
        

      

      
        -7-

        
        

      

      
        
        

      

    

    ARTICLE
      FOUR

     

    CALCULATION
      OF THE PERFORMANCE RECOGNITION POOL

     

    4.1  For
      Calculation Years 2005 and 2006, the calculation of the Performance Recognition
      Pool shall be made in accordance with the provisions of the 2004 Plan.
      Calculations for 2007 and thereafter shall be made in accordance with
      Section 4.2 through 4.4 hereof.

     

    4.2  Prior
      to
      May 31 of the following year, a calculation of the Performance Recognition
      Pool
      for each Calculation Year shall be submitted to the Committee for review and
      approval. The provisional Performance Recognition Pool for a Calculation Year
      shall be equal to the lesser of:

     

    (a)  the
      aggregate Base Salaries of the Eligible Employees, times the percentage
      indicated in Table 1 annexed hereto which is based upon the Excess Return
      on Equity and the percentage change in (i) the average Earnings Per Share for
      the three-year period comprised of the Calculation Year and the two immediately
      preceding fiscal years, over (ii) the average Earnings Per Share for the
      three-year period comprised of the three fiscal years immediately preceding
      the
      Calculation Year; or

     

    (b)  two
      percent (2.0%) of the Company’s Consolidated Net Operating Income (after
      deductions of preferred stock dividends, if any) for the Calculation
      Year.

     

    4.3  If
      the
      resulting provisional Performance Recognition Pool is (i) greater than one
      hundred seventy-five percent (175%) of the aggregate Eligible Employees’ Base
      Salaries, or (ii) significantly lower than that of the immediately
      preceding fiscal year, then the Committee may, in the exercise of its sole
      discretion, (x) create an unallocated positive balance for the entire excess
      or
      a portion thereof or (y) create an unallocated negative balance for the entire
      shortfall or a portion thereof. Any such unallocated positive balance must,
      however, be carried forward and fully allocated to the Performance Recognition
      Pools for one or more of the immediately succeeding three Calculation Years,
      notwithstanding any other provisions or limitations in this Plan. Any such
      unallocated negative balance shall be carried forward to one or more of all
      succeeding Calculation Years without limitation. The President shall participate
      in any future allocation or deduction of such positive or negative balances
      as
      may be approved by the Committee.

     

     

     

    
      
        
        

      

      
        -8-

        
        

      

      
        
        

      

    

    4.4  Notwithstanding
      any provision herein to the contrary, the Performance Recognition Pool shall
      be
      zero for any Calculation Year if the Company incurred a net operating loss
      or a
      net loss for the Calculation Year.

     

    ARTICLE
      FIVE

     

    ALLOCATION
      OF THE PERFORMANCE RECOGNITION POOL

     

    5.1  Prior
      to
      each March 31, the President shall, in consultation with the Committee,
      designate the Employees employed by the Employers during any part of such
      Calculation Year who will be eligible to share in the Performance Recognition
      Pool for that Calculation Year.

     

    5.2  Prior
      to
      June 1 each year, the President shall recommend to the ORI CEO and to the
      Committee allocations of any Performance Recognition Pool. In designating
      Eligible Employees and allocating the Performance Recognition Pool among the
      Accounts of the Eligible Employees for any Year pursuant to this Article, the
      President shall consider the positions and responsibilities of Employees, their
      accomplishments during the year, the value of such accomplishments to the
      Company, the President’s expectations as to the future contributions of
      individual Employees to the continued success of the Company and such other
      factors as the Committee shall, in their discretion and judgment, deem
      appropriate.

     

    (a)  First,
      the Performance Multiplier shall be calculated for all 2004 Plan Accounts,
      including both the balances that were vested as well as unvested as of
      December 31, 2004, of those Employees who have 2004 Plan Account balances
      in excess of $35,000 on the allocation date and were eligible and actively
      employed by the Employer during that Calculation Year. Each such 2004 Plan
      Account at the beginning of the Calculation Year shall be multiplied by the
      Performance Multiplier. The result, however, shall be credited strictly to
      the
      Employee’s Unvested 2004 Plan and or Performance Multiplier Account balance. In
      no event, however, shall the aggregate amount so credited exceed the lesser
      of
      fifteen percent (15%) of the aggregate 2004 Plan Account balances on the
      allocation date or twenty percent (20%) of the Performance Recognition Pool
      for
      that Calculation Year.

     

     

    
      
        
        

      

      
        -9-

        
        

      

      
        
        

      

    

    (b)  Following
      the allocation in paragraph (a) above, if any, the Committee shall allocate
      for the account of the President of the Company and to such other senior
      Eligible Employees selected in consultation with the President as it deems
      appropriate such individual award, if any, as the Committee shall
      determine.

     

    (c)  Finally,
      the Committee shall review and approve recommendations of the President, for
      the
      allocation of the available balance, if any, of the current Performance
      Recognition Pool to the remaining Eligible Employees.

     

    ARTICLE
      SIX

     

    DISTRIBUTIONS

     

    6.1  Within
      ninety (90) days of the date the Committee makes such awards, an Eligible
      Employee shall automatically receive in cash one hundred percent (100%) of
      any
      Performance Recognition Pool award up to Twenty-five Thousand Dollars
      ($25,000.00) and fifty percent (50%) of any excess above that. The remaining
      fifty percent (50%) of the excess of any such award shall be credited to the
      Employee’s 2005 Plan Account balance as of such year and shall become vested in
      accordance with the vesting schedule set forth in Section 6.3.

     

    6.2  The
      2005
      Plan Account balance of each Employee who was either actively employed by the
      Employer throughout the Calculation Year or whose employment had terminated
      by
      reason of retirement in good standing or disability or death shall be credited
      with interest for that Calculation Year, provided that the Company had positive
      Consolidated Net Operating Income for that Calculation Year. The rate of
      interest shall be equal to sixty-five percent (65%) of the Calculation Year’s
      Composite Investment Income Yield, which shall be calculated by the Committee
      at
      the same time as it calculates the Performance Recognition Pool for the
      Calculation Year. The Account balance to which such interest is credited shall
      be the Employee’s 2005 Plan Account balance as of the date the Compensation
      Committee calculates the Performance Recognition Pool for that Calculation
      Year
      and shall include all interest previously credited hereunder. No such interest
      shall be credited to any Unvested 2004 Plan and/or Performance Multiplier
      Account balance or to any Performance Multiplier credits awarded under this
      Plan, or to any 2005 Plan Account which has a zero balance at the end of the
      Calculation Year.

     

     

     

    
      
        
        

      

      
        -10-

        
        

      

      
        
        

      

    

    6.3  A
      portion
      of the amount of the credit in the 2005 Plan Account and in any Unvested 2004
      Plan and/or Performance Multiplier Account of an Employee as of the date he
      or
      she terminates his or her service for any reason, including death, retirement
      for age or disability, shall be paid to the person or persons entitled thereto
      at the times and in the manner provided by Section 6.4 hereof. The amounts
      to be
      paid shall be known as a “vested interest,” and shall be equal to the following
      percentage of the balance of his or her 2005 Plan Account and, if applicable,
      Unvested 2004 Plan and/or Performance Multiplier Account balance
      credits:

     

       
Completed
      Years             
      To Be Paid

         
      of  Service      
(Vested
      Interest)

    Less
      than
      One  
 0%

     One   
      10%

    Two   
      20%

    Three             
      30%

    Four   
      40%

    Five   
      50%

    Six                               
      60%

    Seven                          70%

    Eight                           
      80%

    Nine                            
      90%

    Ten                           
      100%

    

    Any
      credits in either the 2005 Plan Account or the Unvested 2004 Plan and/or
      Performance Multiplier Account of an Employee which have not vested by the
      date
      of termination of the Employee’s service shall be forfeited. All such
      forfeitures shall be allocated at the end of the Calculation Year in which
      they
      occur to the combined 2005 Plan Accounts and Unvested 2004 Plan and/or
      Performance Multiplier Accounts of all Employees who were actively employed
      by
      an Employer on December 31 of that year. The allocation shall be made in the
      ratio that the combined account balances of each such Employee on January 1
      of
      that year bears to the total combined account balances of all such
      Employees.

     

     

    
      
        
        

      

      
        -11-

        
        

      

      
        
        

      

    

    6.4  The
      vested interest of an Employee shall begin to be paid in substantially equal
      quarterly installments over a period of five (5) years, with the first such
      payment to be made on the later of:

     

    (a)  the
      date
      of the Employee’s termination of employment for any reason, including death or
      disability, or the six-month anniversary of the date of termination if the
      Employee is a “specified employee” at the time of termination within the meaning
      of Code Section 409A; or

     

    (b)  the
      date
      on which the Employee attains (or would have attained if he or she had lived)
      age 55.

     

    For
      purposes of this Section, specified employee status will be determined based
      on
      the twelve (12) months ended December 31 of each year and will be effective
      for the twelve-month period commencing on April 1 of the following
      year.

    

    6.5  Notwithstanding
      the foregoing Sections of this Article, an Employee’s entire 2005 Plan Account
      balance and entire Unvested 2004 Plan and/or Performance Multiplier Account
      balance, if any, shall become fully vested and non-forfeitable and shall be
      paid
      to him or her in a lump sum on the first day of the calendar quarter following
      the date on which any Change of Control occurs. If there is a carry forward
      balance not allocated pursuant to Section 5.3 when a Change of Control occurs,
      such carry forward balance shall be immediately allocated among the 2005 Plan
      Accounts of all Employees in the ratio that each such Employee’s 2005 Plan
      Account balance bears to the total of all such 2005 Plan Account balances.
      Said
      additional amounts shall be one hundred percent (100%) vested and paid in
      accordance with the provisions of this Article. Any subsequent contributions
      allocated to an Employee’s 2005 Plan Account or Unvested 2004 Plan and/or
      Performance Multiplier Account during the two (2) years following the occurrence
      of a Change of Control because the Plan is continued in accordance with
      Section 8.2 hereof shall be non-forfeitable and shall be distributed
      immediately after such allocation.

     

     

     

    
      
        
        

      

      
        -12-

        
        

      

      
        
        

      

    

    6.6  An
      Employee may designate in writing, on forms prescribed by and filed with the
      Committee, a beneficiary or beneficiaries to receive any payments payable after
      his or her death. If an Employee dies while employed by an Employer or after
      he
      or she has begun to receive his or her benefits under this Plan, the 2005 Plan
      Account and any Unvested 2004 Plan and/or Performance Multiplier Account
      balances (or the remainder thereof if the payment of benefits had already
      commenced) shall be paid to the beneficiary or beneficiaries designated by
      the
      Employee (or, in the absence of such designation, to his or her legal
      representative).

     

    6.7  Notwithstanding
      any other provisions of this Plan to the contrary, the Committee may deduct
      from
      any payment under the Plan any taxes required to be withheld by the Federal
      or
      any state or local government for the account of such Employee.

     

    ARTICLE
      SEVEN

     

    FORFEITURE

     

    7.1  As
      a
      condition to the continued receipt of benefits hereunder each
      Employee:

     

    (a)  shall
      be
      required for a period of three (3) years after his or her termination of
      employment with an Employer hereunder to hold himself or herself available
      to
      the Company and his or her Employer for reasonable consultation inasfar as
      his
      or her health permits;

     

    (b)  shall
      not
      for a period of three (3) years after his or her termination of employment
      with
      an Employer hereunder, either as an individual on his or her own account, as
      a
      partner, joint venturer, employee, agent, salesman for any person; as an
      officer, director or stockholder (other than a beneficial holder of not more
      than one percent (1%) of the outstanding voting stock of a company having at
      least 500 holders of voting stock) of a corporation, or otherwise directly
      or
      indirectly,

     

     

    
      
        
        

      

      
        -13-

        
        

      

      
        
        

      

    

    (i)  
      enter
      into or engage in any business competitive with that carried on by the Company
      or his or her Employer within any area of the United States in which his or
      her
      Employer or the Company is then doing business, providing Employee has had
      access to any of the Company’s or his or her Employer’s trade secrets, secret
      underwriting or business information, programs, plans, data, processes,
      techniques, or customer information; or

     

    (ii)  
      solicit
      or attempt to solicit any of his or her Employer’s or the Company’s customers
      with whom Employee has had contact as an Employee in the exercise of his or
      her
      duties and responsibilities hereunder with the intent or purpose to perform
      for
      such customer the same or similar services or to sell to such customer the
      same
      or similar products or policies which Employee performed for or sold to such
      customer during the term of his or her employment.

    

    If
      the
      Committee determines that an Employee has refused to make himself or herself
      available for consultation or violated his or her agreement, the Committee
      may,
      by written notice to such Employee, cause his or her benefits to be immediately
      suspended for the duration of such refusal or competition or if payment of
      benefits had not yet commenced, notify the Employee that such continued conduct
      will cause a forfeiture of his or her 2005 Plan Account and any Unvested 2004
      Plan and/or Performance Multiplier Account balance. If after the sending of
      such
      notice the Committee finds that the Employee has continued to refuse to consult
      or continue to compete with the Company or his or her Employer for a period
      of
      thirty days following such notice, the Committee may permanently cancel the
      Employee’s 2005 Account and any Unvested 2004 Plan and/or Performance Multiplier
      Account hereunder, and thereupon all rights of such Employee under this Plan
      shall terminate. The foregoing forfeiture provisions shall be inoperative
      following a Change of Control.

    

    7.2  Any
      amounts forfeited pursuant to Section 7.1 hereof shall be allocated as a
      forfeiture in accordance with Section 6.3 hereof. 

     

     

    
      
        
        

      

      
        -14-

        
        

      

      
        
        

      

    

    ARTICLE
      EIGHT

     

    AMENDMENT
      AND TERMINATION

     

    8.1  The
      Company shall have the power at any time and from time to time, to amend this
      Plan by resolution of its Board of Directors provided, however, that no
      amendment under any circumstances may be adopted the effect of which would
      be to
      deprive any Participant of his or her then vested interest, if any, in this
      Plan.

     

    8.2  The
      Company reserves the right to terminate this Plan by resolution of its Board
      of
      Directors. Upon termination of this Plan, the credits in the 2005 Plan Accounts
      and Unvested 2004 Plan and/or Performance Multiplier Accounts of Employees
      shall
      become one hundred percent (100%) vested and non-forfeitable. Distribution
      of
      the balances shall be made in accordance with Section 6.4 or 6.5 hereof upon
      the
      Employee’s subsequent retirement or termination of service. There shall be no
      increase in a 2005 Plan Account or an Unvested 2004 Plan and/or Performance
      Multiplier Account balance of an Employee between the date the Plan is
      terminated and the date such balances are distributed. If a Change of Control
      occurs, the Plan as it then exists must be continued, with interest credited
      to
      2005 Plan Account balances, and any available Performance Multiplier credited
      to
      Unvested 2004 Plan and/or Performance Multiplier Account balances as provided
      in
      Sections 6.2 and 5.2, for two (2) years before it can be terminated. Any
      unallocated balance carried forward shall be similarly allocated prior to the
      expiration of such two-year period. All balances shall be fully vested and
      distribution shall be made in accordance with Section 6.4 hereof.

     

    ARTICLE
      NINE

     

    MISCELLANEOUS

     

    9.1  No
      Employee or any other person shall have any interest in any fund or reserve
      account or in any specific asset or assets of the Company or any Employer by
      reason of any credit to his 2005 Plan Account or Unvested 2004 Plan and/or
      Performance Multiplier Account under this Plan, nor have the right to receive
      any distribution under this Plan except as and to the extent expressly provided
      for in the Plan.

     

     

    
      
        
        

      

      
        -15-

        
        

      

      
        
        

      

    

    9.2  Nothing
      in the Plan shall be construed to:

     

    (a)  give
      any
      Employee any right to participate in the Plan, except in accordance with the
      provisions of the Plan;

     

    (b)  limit
      in
      any way the right of an Employer to terminate an Employee’s employment;
      or

     

    (c)  be
      evidence of any agreement or understanding, express or implied, that an Employer
      will employ an Employee in any particular position or at any particular rate
      of
      remuneration.

     

    9.3  No
      benefits under this Plan shall be pledged, assigned, transferred, sold, or
      in
      any manner whatsoever anticipated, charged, or encumbered by an Employee, former
      Employee, or their beneficiaries, or in any manner be liable for the debts,
      contracts, obligations or engagements of any person having a possible interest
      in the Plan, voluntary or involuntary, or for any claims, legal or equitable,
      against any such person, including claims for alimony or the support of any
      spouse. Notwithstanding the foregoing, benefits under this Plan may be assigned
      to or made subject of a valid living trust.

     

    9.4  Notwithstanding
      any contrary provision herein, in the case of any assets set aside (directly
      or
      indirectly) in a trust (or other arrangement as provided under regulations
      issued by the Department of Treasury) for purposes of paying deferred
      compensation under this Plan, no such assets (or trust) shall ever be located
      or
      transferred outside the United States.

     

    9.5  No
      acceleration of the time or schedule of any distribution or payment under this
      Plan shall be permitted, except to the extent provided in regulations or other
      guidance issued by the Department of the Treasury under Code Section
      409A.

     

    9.6  Notwithstanding
      any contrary provision herein, no transfer of assets shall be made under or
      in
      connection with the Plan, or any compensation deferred under the Plan, that
      would result in such assets becoming restricted to the provision of benefits
      under the Plan in connection with a change in the Company’s financial health, as
      provided under Code Section 409A and the regulations or other guidance issued
      by
      the Department of the Treasury thereunder.

     

     

    
      
        
        

      

      
        -16-

        
        

      

      
        
        

      

    

    9.7  This
      Plan
      shall be construed in accordance with the laws of the State of North Carolina
      in
      every respect, including, without limitation, validity in its interpretation
      and
      performance.

     

    9.8  Article
      headings and numbers herein are included for the convenience or reference only,
      and this Plan is to be construed without any reference thereto. If there be
      any
      conflict between such numbers and headings and the text hereof, the text shall
      control.

     

    9.9  Wherever
      appropriate, words used in this Plan in the singular includes the plural and
      the
      masculine includes the feminine.

     

    IN
      WITNESS WHEREOF, the Company has caused this Plan to be signed by its duly
      qualified officers and caused its corporate seal to be hereunto affixed on
      this
        
      day of     ,
      2006.

    

    

                RMIC
      CORPORATION/REPUBLIC 

                MORTGAGE
      INSURANCE
      COMPANY

    

                By:  
             

    

                Title:
            

    

    

    Attest:

    

    By:           

    

    Title:
           

     

     

    
      
         

      

      
        -17-

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