EMPLOYMENT AGREEMENT

 Exhibit 10.7

                      EMPLOYMENT AGREEMENT

     AGREEMENT made as of the 1st day of June, 1996, by and
between COMMONWEALTH INSURANCE MANAGERS, INC., a Pennsylvania
corporation, OLD GUARD GROUP, INC., a Pennsylvania corporation,
and SCOTT A. ORNDORFF.

     Commonwealth Insurance Managers, Inc. and Old Guard Group,
Inc. both desire to employ Mr. Orndorff and Mr. Orndorff is
willing to serve Commonwealth Insurance Managers, Inc. and Old
Guard Group, Inc. on the terms and conditions herein provided.

     In order to effect the foregoing, the parties hereto desire
to enter into an employment agreement on the terms and conditions
set forth below.  Accordingly, in consideration of the premises
and the respective covenants and agreements of the parties
contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

     1.   Definitions and Special Provisions.  Each capitalized
word and term used herein shall have the meaning ascribed to it
in the glossary appended hereto, unless the context in which such
word or term is used otherwise clearly requires.  Such glossary
is incorporated herein by reference and made a part hereof.  In
addition, until such time as the Guarantors convert from mutual
to stock form and the Company acquires all of the common stock of
each Guarantor, the provisions set forth at Appendix 1 shall
apply, notwithstanding anything in this Agreement to the
contrary.

     2.   Employment.  Old Guard hereby agrees to employ the
Executive, and the Executive hereby agrees to serve Old Guard, on
the terms and conditions set forth herein.

     3.   Term of Agreement.  The Executive's employment under
this Agreement shall commence on the date hereof and, except as
otherwise provided herein, shall continue until May 31, 1999;
provided, however, that commencing on June 1, 1997 and each
June 1 thereafter, the term of this Agreement shall automatically
be extended for one additional year beyond the term otherwise
established unless, at least 90 days prior to such June 1st date,
Old Guard or the Executive shall have given a Notice of
Nonextension.

     4.   Position and Duties.  The Executive shall serve as Vice
President of CIMI and the Company, and he shall have such
responsibilities, duties and authority as may, from time to time,
be generally associated with such positions.  In addition, the
Executive shall serve in such capacity, with respect to each
Subsidiary or affiliated company, as the Board of Directors of
each such Subsidiary or affiliated company shall designate from
time to time.  During the term of this Agreement, he shall devote
substantially all of his working time and efforts to the business
and affairs of Old Guard, the Subsidiaries and affiliated
companies; provided, however, that nothing herein shall be
construed as precluding him from devoting a reasonable amount of
time to civic, charitable, trade association, and similar
activities, at least to the extent he is presently devoting time.

     5.   Compensation and Related Matters.

          (a)  Base Compensation.  During the period of the
     Executive's employment hereunder, Old Guard shall pay to him
     annual base compensation at a rate not less than $94,000.
     The Board(s) of Directors of Old Guard shall periodically
     review the Executive's employment performance, in accordance
     with policies generally in effect from time to time, for
     possible merit or cost-of-living increases in such base
     compensation.  Except for a reduction which is proportionate
     to a company-wide reduction in executive pay, the annual
     base compensation paid to the Executive in any calendar year
     shall not be less than the annual base compensation paid to
     him in any prior calendar year.  The frequency and manner of
     payment of such base compensation shall be in accordance
     with Old Guard's executive payroll practices from time to
     time in effect.  Nothing herein shall be construed as
     precluding the Executive from entering into any salary
     reduction or deferral plan or arrangement during the term of
     this Agreement; provided, however, that his base
     compensation shall be determined without regard to any such
     salary reduction or deferral for purposes of calculating the
     amount of any compensation and benefits to which he or his
     surviving spouse may be entitled under Paragraph 6, 7, 10,
     or 11 following his termination of employment.  During the
     initial calendar year of this Agreement, the amount set
     forth in the first sentence of this subparagraph shall be
     pro rated to reflect the portion of such calendar year which
     follows the execution date hereof.

          (b)  Incentive Compensation.  During the period of the
     Executive's employment hereunder, he shall be entitled to
     participate in all incentive plans, stock option plans,
     stock appreciation rights plans, and similar arrangements
     maintained by Old Guard for executive officers on a basis
     and at award levels consistent and commensurate with his
     position and duties hereunder.

          (c)  Employee Benefit Plans and Other Plans or 
     Arrangements.  The Executive shall be entitled to
     participate in all Employee Benefit Plans of Old Guard on
     the same basis as other executive officers of Old Guard.  In
     addition, he shall be entitled to participate in and enjoy
     any other plans and arrangements which provide for sick
     leave, vacation, sabbatical, or personal days,
     company-provided automobile, club memberships and dues,
     education payment or reimbursement, business-related
     seminars, and similar fringe benefits provided to or for the
     executive officers of Old Guard from time to time, but at
     least to the extent he is presently entitled to participate
     in and enjoy such plans and arrangements.

          (d)  Expenses.  During the period of the Executive's
     employment hereunder, he shall be entitled to receive prompt
     reimbursement for all reasonable and customary expenses,
     including transportation expenses, incurred by him in
     performing services hereunder in accordance with the general
     policies and procedures established by Old Guard.

     6.   Termination By Reason of Disability.

          (a)  In General.  In the event the Executive becomes
     unable to perform his duties on a full-time basis by reason
     of the occurrence of his Disability and, within 30 days
     after a Notice of Termination is given, he shall not have
     returned to the full-time performance of such duties, his
     employment may be terminated by Old Guard.

          (b)  Compensation and Benefits Following Termination. 
     In the event of the termination of the Executive's
     employment under Subparagraph (a), Old Guard shall pay or
     provide the compensation and benefits set forth below:

               (1)  The Executive shall be paid an amount per
          annum equal to the greater of (i) his highest base
          compensation received during one of the two calendar
          years immediately preceding the calendar year in which
          the Date of Termination occurs, or (ii) his base
          compensation in effect immediately prior to the Date of
          Termination (or prior to any reduction which entitled
          him to terminate his employment for Good Reason) for
          the two-year period, beginning with such Date of
          Termination.  The frequency and manner of payment of
          such amounts shall be in accordance with Old Guard's
          executive payroll practices from time to time in
          effect.

               (2)  The Executive shall be paid an amount equal
          to the higher of the aggregate bonus(es) paid to him
          with respect to one of the two years immediately
          preceding the year in which the Date of Termination
          occurs.  Such amount shall be paid to him in cash on
          each of the first and second anniversary dates of the
          Date of Termination.

               (3)  The Executive shall be paid an amount equal
          to the highest annual contribution made on his behalf
          (other than his own salary reduction contributions) to
          each tax-qualified and non-qualified Defined
          Contribution Plan of Old Guard with respect to the year
          in which the Date of Termination occurs or one of the
          two years immediately preceding such year.  The amount
          separately determined for each such plan shall be
          aggregated and shall be paid to him in cash on each of
          the first and second anniversary dates of the Date of
          Termination.

               (4)  The Executive shall accrue benefits equal to
          the excess of (i) the aggregate retirement benefits he
          would have received under the terms of each tax-
          qualified and non-qualified Defined Benefit Plan of Old
          Guard as in effect immediately prior to the Date of
          Termination had he (A) continued to be employed for the
          two-year period immediately following such termination
          date, and (B) received (on a pro rated basis, as
          appropriate) the greater of (I) the highest
          compensation taken into account under each such plan
          with respect to one of the two years immediately
          preceding the year in which the Date of Termination
          occurs, or (II) his annualized base compensation in
          effect immediately prior to the Date of Termination (or
          prior to any reduction which entitled him to terminate
          his employment for Good Reason), over (ii) the
          retirement benefits he actually receives under such
          plans.  The frequency, manner and extent of payment of
          such benefits shall be consistent with the terms of the
          plans to which they relate and any elections made
          thereunder.  (As of the date of the execution of this
          Agreement, there is no such plan.)

               (5)  The Executive and his eligible dependents
          shall be entitled to continue to participate at the
          same aggregate benefit levels, for the two-year period
          immediately following the Date of Termination and at no
          out-of-pocket or tax cost to him, in the Welfare
          Benefit Plans in which he was a participant immediately
          prior to the Date of Termination, to the extent
          permitted under the terms of such plans and applicable
          law.  To the extent Old Guard is unable to provide for
          continued participation in a Welfare Benefit Plan, it
          shall provide an equivalent benefit directly at no
          out-of-pocket or tax cost to him. For purposes of the
          preceding two sentences, Old Guard shall be deemed to
          have provided a benefit at no tax cost to him if it
          pays an additional amount to him or on his behalf, with
          respect to those benefits which would otherwise be
          nontaxable to him, calculated in a manner consistent
          with the provisions of Paragraph 12.

          (c)  Adjustment to Certain Subparagraph (b)
     Compensation and Benefits.  Notwithstanding the provisions
     of Subparagraph (b)(5), Old Guard's obligation to pay or
     fund any disability insurance premiums on behalf of the
     Executive shall be suspended while his Disability continues,
     provided the cessation of payment or funding does not result
     in the termination of disability benefits.  Any amounts
     otherwise due under Subparagraph (b) shall be reduced (but
     not below zero) by the dollar amount of disability benefits
     received by him pursuant to plans or policies funded,
     directly at its cost, by Old Guard.

          (d)  Earlier Cessation of Certain Welfare Benefits. 
     Notwithstanding the provisions of Subparagraph (b)(5), Old
     Guard shall not be required to provide, at its cost, the
     welfare benefits covered therein after the later of (i) the
     attainment by the Executive and his spouse (if any) of age
     65, or (ii) the date specified in the relevant plan document
     for benefit termination (assuming that he was employed until
     age 65 or the normal retirement date, if any, specified in
     such document).

          (e)  Death During Two-Year Period Following
     Termination.

               (1)  In the event the Executive dies during the
          two-year period following his termination for
          Disability and he is survived by a spouse, the
          compensation and benefits remaining to be paid and
          provided under Subparagraph (b) shall be unaffected by
          his death and shall be paid and provided to her or on
          her behalf; provided, however, that the extent of her
          rights to the accrued benefits described in
          Subparagraph (b)(4) shall be determined by reference to
          the relevant plan provisions and any elections made
          under such plans; and provided further, that Old Guard
          shall not be required to provide continued benefits
          with respect to her deceased husband; and provided
          further, that in no event shall Old Guard be required
          to provide, at its cost, the other welfare benefits
          described in Subparagraph (b)(5) to such spouse and her
          eligible dependents after the earlier of (i) her death,
          or (ii) the later of (A) her attainment of age 65, or
          (B) the date specified in the relevant plan document
          for benefit termination (assuming that the Executive
          was employed until age 65 or the normal retirement
          date, if any, specified in such document).

               (2)  In the event the Executive dies during the
          two-year period following his termination for
          Disability and he is not survived by a spouse, (i) Old
          Guard shall thereafter make the remaining payments
          described in Subparagraphs (b)(1) through (b)(3)
          directly to his estate, (ii) the extent of the rights
          of any person to the accrued benefits described in
          Subparagraph (b)(4) shall be determined by reference to
          the relevant plan provisions and any elections made
          under such plans, and (iii) Old Guard's obligation to
          provide continued benefits under Subparagraph (b)(5)
          shall terminate.

          (f)  Compensation and Benefits Upon Expiration of Two-
     Year Period Following Termination.  Upon the expiration of
     the two-year period following the Executive's termination
     for Disability, and provided his Disability then continues,
     he shall be entitled to receive the compensation and
     benefits provided under the terms of Old Guard's long-term
     disability plan in effect on the Date of Termination or, if
     greater, at the expiration of such two-year period.  Such
     compensation and benefits shall continue until the earlier
     of (i) his death, or (ii) the later of (A) his attainment of
     age 65, or (B) the date specified in the plan document for
     benefit termination.  To the extent Old Guard is unable to
     provide such compensation and benefits under its long-term
     disability plan, it shall provide equivalent compensation
     and benefits directly at no out-of-pocket or tax cost to
     him.  For purposes of the preceding sentence, Old Guard
     shall be deemed to have provided compensation and benefits
     at no tax cost to him if it pays an additional amount to him
     or on his behalf, with respect to the compensation and
     benefits which would otherwise be nontaxable to him,
     calculated in a manner consistent with the provisions of
     Paragraph 12.

     7.   Termination By Reason of Death.

          (a)  Compensation and Benefits to Surviving Spouse.  In
     the event the Executive dies while he is employed under this
     Agreement and is survived by a spouse, Old Guard shall pay
     or provide the compensation and benefits set forth below:

               (1)  The surviving spouse shall be paid an amount
          equal to the greater of (i) the Executive's highest
          base compensation received during one of the two
          calendar years immediately preceding the calendar year
          in which the Date of Termination occurs, or (ii) his
          base compensation in effect immediately prior to the
          Date of Termination (or prior to any reduction which
          entitled him to terminate his employment for Good
          Reason) for a period of one year, beginning with such
          Date of Termination.  The frequency and manner of
          payment of such amounts shall be in accordance with Old
          Guard's executive payroll practices from time to time
          in effect.

               (2)  The surviving spouse shall be paid an amount
          equal to the highest payment made to Executive under
          each incentive bonus plan of Old Guard with respect to
          one of the two years immediately preceding the year in
          which the Date of Termination occurs.  Such amount
          shall be paid in cash to her within 30 days after the
          Date of Termination. 

               (3)  The surviving spouse shall be paid an amount
          equal to the sum of the highest annual contribution
          made on the Executive's behalf (other than his own
          salary reduction contributions) to each tax-qualified
          and non-qualified Defined Contribution Plan of Old
          Guard with respect to the year in which the Date of
          Termination occurs or one of the two years immediately
          preceding such year.  Such amount shall be paid in cash
          to her within 30 days after the Date of Termination or
          within 30 days after such amount can first be
          determined, whichever is later.

               (4)  Subject to the following sentence, the
          surviving spouse shall be paid benefits determined by
          reference to the excess of (i) the aggregate retirement
          benefits the Executive would have accrued under the
          terms of each tax-qualified and non-qualified Defined
          Benefit Plan as in effect immediately prior to the Date
          of Termination, had he (A) continued to be employed for
          a period of one year following the Date of Termination,
          and (B) received (on a pro rated basis, as appropriate)
          the greater of (I) the highest compensation taken into
          account under each such plan with respect to one of the
          two years immediately preceding the year in which the
          Date of Termination occurs, or (II) his annualized base
          compensation in effect immediately prior to the Date of
          Termination (or prior to any reduction which entitled
          him to terminate his employment for Good Reason), over
          (ii) the retirement benefits actually determined under
          such plans.  The frequency, manner, and extent of
          payment of such benefits shall be consistent with the
          terms of the plans to which they relate and any
          elections made thereunder.  (As of the date of the
          execution of this Agreement, there is no such plan.)

               (5)  The surviving spouse and her eligible
          dependents shall be entitled to continue to participate
          at the same aggregate benefit levels, for a period of
          one year following the Date of Termination and at no
          out-of-pocket or tax cost to her, in the Welfare
          Benefit Plans in which the Executive was a participant
          immediately prior to the Date of Termination, to the
          extent permitted under the terms of such plans and
          applicable law; provided, however, that Old Guard shall
          not be required to provide continued benefits with
          respect to her deceased husband; and provided further,
          that Old Guard shall not thereafter be required to
          provide, at its cost, the other welfare benefits
          covered by such plans to such spouse and her eligible
          dependents after the earlier of (i) her death, or
          (ii) the later of (A) her attainment of age 65, or
          (B) the date specified in the relevant plan document
          for benefit termination (assuming the Executive was
          employed until age 65 or the normal retirement date, if
          any, specified in such document).  To the extent Old
          Guard is unable to provide for continued participation
          in a Welfare Benefit Plan as required, it shall provide
          an equivalent benefit directly at no out-of-pocket or
          tax cost to her.  For purposes of the preceding two
          sentences, Old Guard shall be deemed to have provided a
          benefit at no tax cost to her if it pays an additional
          amount to her or on her behalf, with respect to those
          benefits which would otherwise be nontaxable to her,
          calculated in a manner consistent with the provisions
          of Paragraph 12.

          (b)  Compensation and Benefits to Estate, Etc.  In the
     event the Executive dies while he is employed under this
     Agreement and is not survived by a spouse, (i) Old Guard
     shall make the payments described in Subparagraphs (a)(1)
     through (a)(3) directly to his estate, (ii) the extent of
     the rights of any person to the accrued benefits described
     in Subparagraph (a)(4) shall be determined by reference to
     the relevant plan provisions and any elections made under
     such plans, and (iii) Old Guard's obligation to provide
     benefits under Subparagraph (a)(5) shall terminate.

     8.   Termination By Old Guard for Cause.

          (a)  In General.  In the event Old Guard intends to
     terminate the Executive's employment for Cause, it shall
     deliver a Notice of Termination to him which specifies a
     Date of Termination not less than 30 days following the date
     of such notice, unless a shorter period of notice is
     required by the principal regulator of the Company or any
     affiliate of the Company.

          (b)  Compensation.  Within 30 days after the
     Executive's termination under Subparagraph (a), Old Guard
     shall pay him, in one lump sum, his accrued but unpaid base
     compensation and leave bank compensation earned through the
     Date of Termination.

     9.   Termination By the Executive Without Good Reason.

          (a)  In General.  In the event the Executive intends to
     terminate his employment without Good Reason, he shall
     deliver a Notice of Termination to Old Guard which specifies
     a Date of Termination not less than (i) 90 days following
     the date of such notice, if a Change in Control shall not
     have occurred, or (ii) 30 days following the date of such
     notice, if a Change in Control shall have occurred.

          (b)  Compensation.  Within 30 days after the
     Executive's termination under Subparagraph (a), Old Guard
     shall pay him, in one lump sum, his accrued but unpaid base
     compensation and leave bank compensation earned through the
     Date of Termination.

     10.  Termination By Old Guard Without Disability or Cause.

          (a)  In General.  In the event Old Guard intends to
     terminate the Executive's employment for any reason other
     than Disability or Cause, it shall deliver a Notice of
     Termination to him which specifies a Date of Termination not
     less than 90 days following the date of such notice.

          (b)  Compensation and Benefits Following Termination. 
     In the event of the termination of the Executive's
     employment under Subparagraph (a), Old Guard shall pay or
     provide the compensation and benefits described in
     Paragraph 6(b).

          (c)  Adjustment to Certain Subparagraph (b)
     Compensation and Benefits.  In the event the Executive
     suffers a Disability during the remaining term of this
     Agreement following the Date of Termination, Old Guard's
     obligation to pay or fund any disability insurance premiums
     on his behalf shall be suspended while his Disability
     continues, provided the cessation of payment or funding does
     not result in the termination of disability benefits.  Any
     amounts described in Paragraph 6(b) and otherwise payable
     under Subparagraph (b) shall be reduced (but not below zero)
     by the dollar amount of disability benefits received by him
     pursuant to plans or policies funded, directly at its cost,
     by Old Guard. 

          (d)  Earlier Cessation of Certain Welfare Benefits. 
     Notwithstanding the provisions of Subparagraph (b), Old
     Guard shall not be required to provide, at its cost, the
     welfare benefits covered by Paragraph 6(b)(5) after the
     later of (i) the attainment by the Executive and his spouse
     (if any) of age 65, or (ii) the date specified in the
     relevant plan document for benefit termination (assuming
     that he was employed until age 65 or the normal retirement
     date, if any, specified in such document).

          (e)  Death During Two-Year Period Following
     Termination.

               (1)  In the event the Executive dies during the
          two-year period following his termination without
          Disability or Cause by Old Guard and he is survived by
          a spouse, the compensation and benefits required to be
          paid and provided under Subparagraph (b) shall be
          unaffected by his death and shall be paid and provided
          to her or on her behalf; provided, however, that the
          extent of her rights to the accrued benefits described
          in Paragraph 6(b)(4) shall be determined by reference
          to the relevant plan provisions and any elections made
          under such plans; and provided further, that Old Guard
          shall not be required to provide continued benefits
          with respect to her deceased husband; and provided
          further, that in no event shall Old Guard be required
          to provide, at its cost, the other welfare benefits
          described in Paragraph 6(b)(5) to such spouse and her
          eligible dependents after the earlier of (i) her death,
          or (ii) the later of (A) her attainment of age 65, or
          (B) the date specified in the relevant plan document
          for benefit termination (assuming that the Executive
          was employed until age 65 or the normal retirement
          date, if any, specified in such document).

               (2)  In the event the Executive dies during the
          two-year period following his termination without
          Disability or Cause and he is not survived by a spouse,
          (i) Old Guard shall thereafter make the remaining
          payments described in Paragraphs 6(b)(1) through
          6(b)(3) directly to his estate, (ii) the extent of the
          rights of any person to the accrued benefits described
          in Paragraph 6(b)(4) shall be determined by reference
          to the relevant plan provisions and any elections made
          under such plans, and (iii) Old Guard's obligation to
          provide the continued benefits described in Paragraph
          6(b)(5) shall terminate.

     11.  Termination By the Executive for Good Reason.  

          (a)  In General.  In the event the Executive intends to
     terminate his employment for Good Reason, he shall deliver a
     Notice of Termination to Old Guard which specifies a Date of
     Termination not less than 30 days following the date of such
     notice.

          (b)  Compensation and Benefits Following Termination. 
     In the event of the termination of the Executive's
     employment under Subparagraph (a), Old Guard shall pay or
     provide the compensation and benefits described in
     Paragraph 6(b).

          (c)  Adjustment to Certain Subparagraph (b)
     Compensation and Benefits.  In the event the Executive
     suffers a Disability during the two-year period following
     the Date of Termination, Old Guard's obligation to pay or
     fund any disability insurance premiums on his behalf shall
     be suspended while his Disability continues, provided the
     cessation of payment or funding does not result in the
     termination of disability benefits.  Any amounts described
     in Paragraph 6(b) and otherwise payable under Subparagraph
     (b) shall be reduced (but not below zero) by the dollar
     amount of disability benefits received by him pursuant to
     plans or policies funded, directly at its cost, by Old
     Guard.

          (d)  Earlier Cessation of Certain Welfare Benefits. 
     Notwithstanding the provisions of Subparagraph (b), Old
     Guard shall not be required to provide, at its cost, the
     welfare benefits covered by Paragraph 6(b)(5) after the
     later of (i) the attainment by the Executive and his spouse
     (if any) of age 65, or (ii) the date specified in the
     relevant plan document for benefit termination (assuming
     that he was employed until age 65 or the normal retirement
     date, if any, specified in such document).

          (e)  Death During Two-Year Period Following
     Termination.

               (1)  In the event the Executive dies during the
          two-year period following his termination for Good
          Reason and he is survived by a spouse, the compensation
          and benefits required to be paid and provided under
          Subparagraph (b) shall be unaffected by his death and
          shall be paid and provided to her or on her behalf;
          provided, however, that the extent of her rights to the
          accrued benefits described in Paragraph 6(b)(4) shall
          be determined by reference to the relevant plan
          provisions and any elections made under such plans; and
          provided further, that Old Guard shall not be required
          to provide continued benefits with respect to her
          deceased husband; and provided further, that in no
          event shall Old Guard be required to provide, at its
          cost, the other welfare benefits described in Paragraph
          6(b)(5) to such spouse and her eligible dependents
          after the earlier of (i) her death, or (ii) the later
          of (A) her attainment of age 65, or (B) the date
          specified in the relevant plan document for benefit
          termination (assuming that the Executive was employed
          until age 65 or the normal retirement date, if any,
          specified in such document).

               (2)  In the event the Executive dies during the
          two-year period following his termination for Good
          Reason and he is not survived by a spouse, (i) Old
          Guard shall thereafter make the remaining payments
          described in Paragraphs 6(b)(1) through 6(b)(3)
          directly to his estate, (ii) the extent of the rights
          of any person to the accrued benefits described in
          Paragraph 6(b)(4) shall be determined by reference to
          the relevant plan provisions and any elections made
          under such plans, and (iii) Old Guard's obligation to
          provide the continued benefits described in Paragraph
          6(b)(5) shall terminate.

     12.  Provisions Relating to Excise Taxes.

          (a)  In General.  In the event the Executive becomes
     liable, for any taxable year, for the payment of an Excise
     Tax (because of a change in control) with respect to the
     compensation and benefits payable by Old Guard under this
     Agreement or otherwise, Old Guard shall make one or more
     Gross-Up Payments to the Executive or on his behalf.  The
     amount of any Gross-Up Payment shall be calculated by a
     certified public accountant or other tax professional
     designated jointly by the Executive and Old Guard.  The
     provisions of this paragraph shall apply with respect to the
     Executive's surviving spouse or estate, where relevant.

          (b)  Methodology for Calculation of Gross-Up Payment. 
     For purposes of determining the amount of any Gross-Up
     Payment, the Executive shall be deemed to pay income taxes
     at the highest federal, state, and local marginal rates of
     tax for the calendar year in which the Gross-Up Payment is
     to be made, net of the maximum reduction in federal income
     tax which could be obtained from the deduction of state and
     local income taxes.  In the event that the Excise Tax is
     subsequently determined to be less than the amount taken
     into account at the time the Gross-Up Payment was made, the
     Executive shall repay to Old Guard, at the time that the
     amount of such reduction in Excise Tax is finally
     determined, the portion of the Gross-Up Payment attributable
     to the reduction (plus a portion of the Gross-Up Payment
     attributable to the Excise Tax and the federal, state, and
     local income taxes imposed on the portion of the Gross-Up
     Payment being repaid by the Executive to the extent such
     repayment results in a reduction in Excise Tax or federal,
     state, or local income tax), plus interest on the amount of
     such repayment.  Such interest shall be calculated by using
     the rate in effect under Section 1274(d)(1) of the IRC, on
     the date the Gross-Up Payment was made, for debt instruments
     with a term equal to the period of time which has elapsed
     from the date the Gross-Up Payment was made to the date of
     repayment.  In the event that the Excise Tax is subsequently
     determined to exceed the amount taken into account at the
     time the Gross-Up Payment was made (including by reason of
     any payment the existence or amount of which could not be
     determined at the time of the Gross-Up Payment), Old Guard
     shall make an additional Gross-Up Payment with respect to
     the excess at the time the amount thereof is finally
     determined, plus interest calculated in a manner similar to
     that described in the preceding sentence.

          (c)  Time of Payment.  Any Gross-Up Payment provided
     for herein shall be paid not later than the 30th day
     following the payment of any compensation or the provision
     of any benefit which causes such payment to be made;
     provided, however, that if the amount of such payment cannot
     be finally determined on or before such day, Old Guard shall
     pay on such day an estimate of the minimum amount of such
     payment and shall pay the remainder of such payment
     (together with interest calculated in a manner similar to
     that described in Subparagraph (b)) as soon as the amount
     thereof can be determined.  In the event that the amount of
     an estimated payment exceeds the amount subsequently
     determined to have been due, such excess shall constitute a
     loan by Old Guard to the Executive, payable on the 30th day
     after demand by Old Guard (together with interest calculated
     in a manner similar to that described in Subparagraph (b)).

               (d)  Notwithstanding the provisions of this
     paragraph to the contrary, the actual amounts payable
     hereunder as Gross-Up Payments shall be coordinated with any
     similar amounts paid to the Executive under any other
     contract, plan, or arrangement.

     13.  Fees and Expenses of the Executive.  Except as provided
in the following sentence, Old Guard shall pay, within 30 days
following demand by the Executive, all legal, accounting,
actuarial, and related fees and expenses incurred by him in
connection with the enforcement of this Agreement.  An
arbitration panel or a court of competent jurisdiction shall be
empowered to deny payment to the Executive of such fees and
expenses only if it determines that he instituted a proceeding
hereunder, or otherwise acted, in bad faith.

     14.  Reduction for Compensation and Benefits Received Under 
Old Guard Severance Policy, Etc.  Notwithstanding anything herein
to the contrary, in the event the Executive, his surviving
spouse, or any other person becomes entitled to continued
compensation and benefits hereunder by reason of the Executive's
termination of employment and, in addition, compensation or
similar benefits are payable under a severance policy, program or
arrangement maintained by Old Guard (other than retirement
plans), then the compensation or benefits otherwise payable
hereunder shall be reduced by the compensation or benefits
provided under such severance policy, program or arrangement.

     15.  Mitigation.  The Executive shall not be required to
mitigate the amount of any compensation or benefits which may
become payable hereunder by reason of his termination by seeking
other employment or otherwise, nor, except as otherwise provided
in the following sentence or elsewhere herein, shall the amount
of any such compensation or benefits be reduced by any
compensation or benefits received by the Executive as the result
of his employment by another employer.  Notwithstanding anything
in this Agreement to the contrary, Old Guard's obligation to
provide any medical and dental benefits hereunder may be
suspended, with the written concurrence of the Executive or, if
applicable, his surviving spouse during any period of time that
such benefits are being provided by reason of his or her
employment.

     16.  Funding of Compensation and Benefits; Acceleration of
Certain Payments.

          (a)  Grantor Trust.  In the event the Executive's
     employment is terminated without Cause or he terminates his
     employment for Good Reason and a Change in Control has
     occurred as of the Date of Termination or occurs thereafter,
     the Executive shall have the right to require Old Guard to
     establish a grantor trust (taxable to Old Guard) and fund
     such trust, on an actuarially sound basis, to provide the
     compensation and benefits to which he is entitled hereunder,
     other than those which may be paid pursuant to the
     provisions of Subparagraph (c).  The specific terms of such
     trust shall be as agreed to by the parties in good faith;
     provided, however, that the trustee shall be a financial
     institution independent of Old Guard; and provided further,
     that in no event shall Old Guard be entitled to withdraw
     funds from the trust for its benefit, or otherwise
     voluntarily assign or alienate such funds, until such time
     as all compensation and benefits required hereunder are paid
     and provided.  The determination of the extent of required
     funding, including any supplemental funding in the event of
     adverse investment performance of trust assets, shall be
     made by an actuary or a certified public accountant retained
     by each party.  To the extent such professionals cannot
     agree on the proper level of funding, they shall select a
     third such professional whose determination shall be binding
     upon the parties. Notwithstanding the foregoing, Old Guard
     shall remain liable for all compensation and benefits
     required to be paid or provided hereunder. 

          (b)  Alternate Security.  In lieu of the right given to
     the Executive under Subparagraph (a), he shall have the
     right under such circumstances to require that Old Guard
     provide (i) an irrevocable standby letter of credit issued
     by a financial institution other than the Company or any
     Subsidiary of the Company with a senior debt credit rating
     of "A" or better by Moody's Investors Service or Standard &
     Poor's Corporation, or (ii) other security reasonably
     acceptable to him, to secure the payment of such
     compensation and benefits.

          (c)  Accelerated Payment of Present Value of Certain
     Compensation.  In the event the Executive's employment is
     terminated without Cause or he terminates his employment for
     Good Reason and a Change in Control has occurred as of the
     Date of Termination or occurs thereafter, the Executive
     shall have the continuing right to demand that the present
     value of the remaining payments described in
     Paragraphs 6(b)(1) through (3), and payable by reason of the
     provisions of Paragraph 10 or 11 (as the case may be), be
     paid to him in one lump sum within 30 days after the date
     written demand is given.  For purposes of calculating the
     present value of such payments, a discount factor shall be
     applied to each such payment which is equal to the relevant
     applicable federal rate in effect on the date written demand
     is given by him, determined by reference to the period of
     time between the date of such notice and the scheduled time
     such payment would otherwise be made.  In the event any
     payment described in Paragraphs 6(b)(1) through (3) is not
     yet determinable on the date written demand is made, the
     other payments shall nonetheless be made as provided above;
     and the undetermined payment shall be made within 30 days
     after it becomes determinable, calculated as provided in the
     preceding sentence but by treating the date on which the
     payment becomes determinable as the date of written notice. 
     Nothing in this subparagraph shall be construed as affecting
     the Executive's right to one or more Gross-Up Payments in
     accordance with the provisions of Paragraph 12; and a Gross-
     Up Payment (if applicable) will be calculated and made with
     any payment made under this subparagraph, as well as any
     other Gross-Up Payments that may be required hereunder at a
     subsequent date.

     17.  Withholding Taxes.  All compensation and benefits
provided for herein shall, to the extent required by law, be
subject to federal, state, and local tax withholding.

     18.  Confidential Information.  The Executive agrees that
subsequent to his employment with Old Guard, he will not, at any
time, communicate or disclose to any unauthorized person, without
the written consent of the Old Guard, any proprietary or other
confidential information concerning the Company or any Subsidiary
of the Company; provided, however, that the obligations under
this paragraph shall not apply to the extent that such matters
(i) are disclosed in circumstances where the Executive is legally
obligated to do so, or (ii) become generally known to and
available for use by the public otherwise than by his wrongful
act or omission; and provided further, that he may disclose any
knowledge of insurance, financial, legal and economic principles,
concepts and ideas which are not solely and exclusively derived
from the business plans and activities of Old Guard.

     19.  Covenants Not to Compete or to Solicit.

          (a)  Noncompetition.  If the Executive's employment 
     terminates under Paragraph 8 prior to a Change in Control or
     he voluntarily terminates his employment prior to a Change
     in Control, he agrees that for a period of 12 months after
     the Date of Termination he will not, without the written
     consent in writing of the Board of Directors of the Company,
     become an officer, employee, agent, partner, director, or a
     four and nine-tenths percent or greater shareholder or
     equity owner of any entity engaged in the property and
     casualty insurance business with its corporate headquarters
     located within 50 miles of the City of Lancaster,
     Pennsylvania.  If at the time of the enforcement of this
     paragraph a court holds that the duration, scope, or area
     restrictions stated herein are unreasonable under the
     circumstances then existing and, thus, unenforceable, Old
     Guard and the Executive agree that the maximum duration,
     scope, or area reasonable under such circumstances shall be
     substituted for the stated duration, scope, or area.

          (b)  Nonsolicitation.  During his employment and for a
     period of 12 months following the Date of Termination, the
     Executive shall not, whether on his own behalf or on behalf
     of any other individual or business entity, solicit,
     endeavor to entice away from the Company, a Subsidiary or
     any affiliated company, or otherwise interfere with the
     relationship of the Company, a Subsidiary or any affiliated
     company with any person who is, or was within the then most
     recent 12 month period, an employee or associate thereof;
     provided, however, that this subparagraph shall not apply
     following the occurrence of a Change in Control.

     20.  Arbitration.  To the extent permitted by applicable
law, any controversy or dispute arising out of or relating to
this Agreement, or any alleged breach hereof, shall be settled by
arbitration in the City of Lancaster, Pennsylvania, in accordance
with the commercial rules of the American Arbitration Association
then in existence (to the extent such rules are not inconsistent
with the provisions of this Agreement), it being understood and
agreed that the arbitration panel shall consist of three
individuals acceptable to the parties hereto.  In the event that
the parties cannot agree on three arbitrators within 20 days
following receipt by one party of a demand for arbitration from
another party, then the Executive and Old Guard shall each
designate one arbitrator and the two arbitrators selected shall
select the third arbitrator.  The arbitration panel so selected
shall convene a hearing no later than 90 days following the
selection of the panel.  The arbitration award shall be final and
binding upon the parties, and judgment may be entered thereon in
the Pennsylvania Court of Common Pleas or in any other court of
competent jurisdiction.

     21.  Additional Equitable Remedy.  The Executive
acknowledges and agrees that Old Guard's remedy at law for a
breach or a threatened breach of the provisions of Paragraphs 18
and 19 would be inadequate; and, in recognition of this fact and
notwithstanding the provisions of Paragraph 20, in the event of
such a breach or threatened breach by him, it is agreed that Old
Guard shall be entitled to request equitable relief in the form
of specific performance, temporary restraining order, temporary
or permanent injunction, or any other equitable remedy which may
then be available.  Nothing in this paragraph shall be construed
as prohibiting Old Guard from pursuing any other remedy available
under this Agreement for such a breach or threatened breach.

     22.  Related Agreements.  Except as may otherwise be
provided herein, to the extent that any provision of any other
agreement between Old Guard and the Executive shall limit,
qualify, duplicate, or be inconsistent with any provision of this
Agreement, the provision in this Agreement shall control and such
provision of such other agreement shall be deemed to have been
superseded, and to be of no force or effect, as if such other
agreement had been formally amended to the extent necessary to
accomplish such purpose.

     23.  No Effect on Other Rights.  Except as otherwise
specifically provided herein, nothing contained in this Agreement
shall be construed as adversely affecting any rights the
Executive may have under any agreement, plan, policy or
arrangement to the extent any such right is not inconsistent with
the provisions hereof.

     24.  Exclusive Rights and Remedy.  Except for any explicit
rights and remedies the Executive may have under any other
contract, plan or arrangement with Old Guard, the compensation
and benefits payable hereunder and the remedy for enforcement
thereof shall constitute his exclusive rights and remedy in the
event of his termination of employment.

     25.  Director and Officer Liability Insurance;
Indemnification.  Old Guard shall provide the Executive
(including his heirs, executors, and administrators) with
coverage under a standard directors' and officers' liability
insurance policy, at Old Guard's expense, in amounts consistent
with amounts provided by peer corporations to their directors and
officers, and shall indemnify him as both a director and as an
officer (and his heirs, executors, and administrators) to the
fullest extent permitted under Pennsylvania law against all
expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit, or proceeding in which
he may be involved by reason of his having been an officer or
director of Old Guard or any Subsidiary or affiliated company
(whether or not he continues to be such an officer or director at
the time of incurring such expenses or liabilities).  Such
expenses and liabilities shall include, but not be limited to,
judgments, court costs, and attorneys' fees, and the costs of
reasonable settlements.

     26.  Notices.  Any notice required or permitted under this
Agreement shall be sufficient if it is in writing and shall be
deemed given (i) at the time of personal delivery to the
addressee, or (ii) at the time sent certified mail, with return
receipt requested, addressed as follows:

          If to the Executive--

               Mr. Scott A. Orndorff
               578 Wheatfield Drive
               Lititz, PA  17543

          If to Old Guard, CIMI, or the Company--

               2929 Lititz Pike
               P.O. Box 3010
               Lancaster, PA  17604

               Attention:  President

The name or address of any addressee may be changed at any time
and from time to time by notice similarly given.

     27.  No Waiver.  The failure by any party to this Agreement
at any time or times hereafter to require strict performance by
any other party of any of the provisions, terms, or conditions
contained in this Agreement shall not waive, affect, or diminish
any right of the first party at any time or times thereafter to
demand strict performance therewith and with any other provision,
term, or condition contained in this Agreement.  Any actual
waiver of a provision, term, or condition contained in this
Agreement shall not constitute a waiver of any other provision,
term, or condition herein, whether prior or subsequent to such
actual waiver and whether of the same or a different type.  The
failure of Old Guard to promptly terminate the Executive's
employment for Cause or the Executive to promptly terminate his
employment for Good Reason shall not be construed as a waiver of
the right of termination, and such right may be exercised at any
time following the occurrence of the event giving rise to such
right.

     28.  Joint and Several Obligations of CIMI and the Company. 
CIMI and the Company shall be jointly and severally liable for
all compensation and benefits that may become payable hereunder
to or on behalf of the Executive or, if applicable, his surviving
spouse, estate or beneficiaries.

     29.  Survival.  Notwithstanding the nominal termination of
this Agreement and the Executive's employment hereunder, the
provisions hereof which specify continuing obligations,
compensation and benefits, and rights shall remain in effect
until such time as all such obligations are discharged, all such
compensation and benefits are received, and no party or
beneficiary has any remaining actual or contingent rights
hereunder.

     30.  Severability.  In the event any provision in this
Agreement shall be held illegal or invalid for any reason, such
illegal or invalid provision shall not affect the remaining
provisions hereof, and this Agreement shall be construed,
administered and enforced as though such illegal or invalid
provision were not contained herein.

     31.  Binding Effect and Benefit.  The provisions of this
Agreement shall be binding upon and shall inure to the benefit of
the successors and assigns of Old Guard and the executors,
personal representatives, surviving spouse, heirs, devisees, and
legatees of the Executive.

     32.  Entire Agreement.  This Agreement embodies the entire
agreement among the parties with respect to the subject matter
hereof, and it supersedes all prior discussions and oral
understandings of the parties with respect thereto.

     33.  No Assignment.  This Agreement, and the benefits and
obligations hereunder, shall not be assignable by any party
hereto except by operation of law.

     34.  No Attachment.  Except as otherwise provided by law, no
right to receive compensation or benefits under this Agreement
shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to
set off, execution, attachment, levy, or similar process, and any
attempt, voluntary or involuntary, to effect any such action
shall be null and void.

     35.  Captions.  The captions of the several paragraphs and
subparagraphs of this Agreement have been inserted for
convenience of reference only.  They constitute no part of this
Agreement and are not to be considered in the construction
hereof.

     36number of counterparts, each of which shall be deemed one and the
same instrument which may be sufficiently evidenced by any one
counterpart.

     37.  Number.  Wherever any words are used herein in the
singular form, they shall be construed as though they were used
in the plural form, as the context requires, and vice versa.

     38.  Applicable Law.  Except to the extent preempted by
federal law, the provisions of this Agreement shall be construed,
administered, and enforced in accordance with the domestic
internal law of the Commonwealth of Pennsylvania.

     39.  Guarantee.  The business entities executing this
Agreement as Guarantor shall be liable as payment guarantors of
the obligations of CIMI and the Company hereunder.

     IN WITNESS WHEREOF, the parties have executed this
Agreement, or caused it to be executed, as of the date first
above written.

                              /s/ Scott A. Orndorff        (SEAL)
                              Scott A. Orndorff

                              COMMONWEALTH INSURANCE MANAGERS,
                              INC.

                              By/s/ David E. Hosler             

                              Attest:/s/ Steven D. Dyer          

                              OLD GUARD GROUP, INC.

                              By/s/ David E. Hosler             

                              Attest:/s/ Steven D. Dyer          

Payments Guaranteed by:       
                              OLD GUARD MUTUAL INSURANCE COMPANY

                              By/s/ David E. Hosler             

                              Attest:/s/ Steven D. Dyer          

                              OLD GUARD MUTUAL FIRE INSURANCE
                              COMPANY

                              By/s/ David E. Hosler             

                              Attest:/s/ Steven D. Dyer          

                              GOSCHENHOPPEN-HOME MUTUAL INSURANCE
                              COMPANY

                              By/s/ David E. Hosler             

                              Attest:/s/ Steven D. Dyer          

                           APPENDIX 1

     The parties hereto acknowledge that the corporate
reorganization of the Guarantors (pursuant to which such
companies will demutualize under Pennsylvania law) and certain
other related transactions involving Old Guard, CIMI and
Neffsville Mutual Fire Insurance Company (a company affiliated
with the Guarantors) have not occurred as of the date of this
Agreement, so that literal application of the terms of this
Agreement prior thereto may be inappropriate or otherwise not
feasible.  Accordingly, pending the occurrence of such
demutualizations and related transactions, the parties agree that
this Agreement shall be construed, administered and enforced, to
the maximum extent practical, in a manner consistent with the
spirit and reasonably inferable intent hereof.

GLOSSARY

     "Board of Directors" means the board of directors of the
relevant corporation.

     "Cause" means (i) a documented repeated and willful failure
by the Executive to perform his duties and achieve reasonably
established goals, but only after written demand and only if
termination is effected by action taken by a vote of (A) prior to
a Change in Control, at least a majority of the directors of the
Company then in office, or (B) after a Change in Control, at
least 80% of the nonofficer directors of the Company then in
office, (ii) his final conviction of a felony, (iii) conduct by
him which constitutes moral turpitude which is directly and
materially injurious to the Company or any Subsidiary or
affiliated company, (iv) willful material violation of corporate
policy, or (v) the issuance by the regulator of the Company or
any Subsidiary or affiliated company of an unappealable order to
the effect that he be permanently discharged.

For purposes of this definition, no act or failure to act on the
part of the Executive shall be considered "willful" unless done
or omitted not in good faith and without reasonable belief that
the action or omission was in the best interest of the Company or
any of its Subsidiaries or affiliated companies.

     "Change in Control" means the occurrence of any of the
following events:

          (a)  any Person (except (i) the Company or any
     Subsidiary or prior affiliate of the Company, or (ii) any
     Employee Benefit Plan (or any trust forming a part thereof)
     maintained by the Company or any Subsidiary or prior
     affiliate of the Company) is or becomes the beneficial
     owner, directly or indirectly, of the Company's securities
     representing 19.9% or more of the combined voting power of
     the Company's then outstanding securities, or 50.1% or more
     of the combined voting power of a Material Subsidiary's then
     outstanding securities, other than pursuant to a transaction
     described in Clause (c);

          (b)  there occurs a sale, exchange, transfer or other
     disposition of substantially all of the assets of the
     Company or a Material Subsidiary to another entity, except
     to (i) an entity controlled directly or indirectly by the
     Company or (ii) an entity in which David E. Hosler is the
     chief executive officer; or

          (c)  there occurs a merger, consolidation, share
     exchange, division or other reorganization of or relating to
     the Company, unless David E. Hosler is an executive of the
     Surviving Company with duties consistent with the duties of
     the chief executive officer or chief operating officer; or

               (i)  the shareholders of the Company immediately
          before such merger, consolidation, share exchange,
          division or reorganization own, directly or indirectly,
          immediately thereafter at least two-thirds of the
          combined voting power of the outstanding voting
          securities of the Surviving Company in substantially
          the same proportion as their ownership of the voting
          securities immediately before such merger,
          consolidation, share exchange, division or
          reorganization; and

               (ii)  the individuals who, immediately before such
          merger, consolidation, share exchange, division or
          reorganization, are members of the Incumbent Board
          continue to constitute at least two-thirds of the board
          of directors of the Surviving Company; provided,
          however, that if the election, or nomination for
          election by the Company's shareholders, of any new
          director was approved by a vote of at least two-thirds
          of the Incumbent Board, such director shall, for the
          purposes hereof, be considered a member of the
          Incumbent Board; and provided further, however, that no
          individual shall be considered a member of the
          Incumbent Board if such individual initially assumed
          office as a result of either an actual or threatened
          Election Contest or Proxy Contest, including by reason
          of any agreement intended to avoid or settle any
          Election Contest or Proxy Contest; and

               (iii)  no Person (except (A) the Company or any
          Subsidiary or prior affiliate of the Company, (B) any
          Employee Benefit Plan (or any trust forming a part
          thereof) maintained by the Company or any Subsidiary or
          prior affiliate of the Company, or (C) the Surviving
          Company or any Subsidiary or prior affiliate of the
          Surviving Company) has beneficial ownership of 19.9% or
          more of the combined voting power of the Surviving
          Company's outstanding voting securities immediately
          following such merger, consolidation, share exchange,
          division or reorganization;

          (d)  a plan of liquidation or dissolution of the
     Company, other than pursuant to bankruptcy or insolvency
     laws, is adopted;

          (e)  during any period of two consecutive years,
     individuals who, at the beginning of such period,
     constituted the Board of Directors of the Company cease for
     any reason to constitute at least a majority of such Board
     of Directors, unless the election, or the nomination for
     election by the Company's shareholders, of each new director
     was approved by a vote of at least two-thirds of the
     directors then still in office who were directors at the
     beginning of the period; provided, however, that no
     individual shall be considered a member of the Board of
     Directors of the Company at the beginning of such period if
     such individual initially assumed office as a result of
     either an actual or threatened Election Contest or Proxy
     Contest, including by reason of any agreement intended to
     avoid or settle any Election Contest or Proxy Contest; or

          (f)  prior to demutualization of the Guarantors, the
     management agreement between a Guarantor and CIMI is
     terminated.

Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities representing 19.9% or more
of the combined voting power of the Company's then outstanding
securities solely as a result of an acquisition by the Company of
its voting securities which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person; provided, however, that if a
Person becomes a beneficial owner of 19.9% or more of the
combined voting power of the Company's then outstanding
securities by reason of share repurchases by the Company and
thereafter becomes the beneficial owner, directly or indirectly,
of any additional voting securities of the Company, then a Change
in Control shall be deemed to have occurred with respect to such
Person under Clause (a). 

Notwithstanding anything contained herein to the contrary, if the
Executive's employment is terminated and he reasonably
demonstrates that such termination (i) was at the request of a
third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who
effects a Change in Control, or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes hereof, a Change in
Control shall be deemed to have occurred on the day immediately
prior to the date of such termination of his employment.

Notwithstanding anything contained herein, the demutualization of
one or more of the Guarantors and the initial public offering of
the Company shall not constitute a Change in Control.

     "CIMI" means Commonwealth Insurance Managers, Inc., a
Pennsylvania corporation.

     "Company" means Old Guard Group, Inc., a Pennsylvania
(stock) corporation, and any successor thereto.

     "Date of Termination" means:

          (a)  if the Executive's employment is terminated for
     Disability, 30 days after the Notice of Termination is given
     (provided that he shall not have returned to the performance
     of his duties on a full-time basis during such 30-day
     period);

          (b)  if the Executive's employment terminates by reason
     of his death, the date of his death;

          (c)  if the Executive's employment is terminated by Old
     Guard for Cause, the date specified in the Notice of
     Termination;

          (d)  if the Executive's employment is terminated by him
     without Good Reason, the date specified in the Notice of
     Termination;

          (e)  if the Executive's employment is terminated by Old
     Guard for any reason other than for Disability or Cause, the
     date specified in the Notice of Termination; or 

          (f)  if the Executive's employment is terminated by him
     for Good Reason, the date specified in the Notice of
     Termination;

provided, however that the Date of Termination shall mean the
actual date of termination in the event the parties mutually
agree to a date other than that described above.

     "Defined Benefit Plan" has the meaning ascribed to such term
in Section 3(35) of ERISA.

     "Defined Contribution Plan" has the meaning ascribed to such
term in Section 3(34) of ERISA.

     "Disability" has the meaning ascribed to the term "permanent
and total disability" in Section 22(e)(3) of the IRC.

     "Election Contest" means a solicitation with respect to the
election or removal of directors that is subject to the
provisions of Rule 14a-11 of the 1934 Act.

     "Employee Benefit Plan" has the meaning ascribed to such
term in Section 3(3) of ERISA.

     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and as the same may be amended from time to
time.

     "Excise Tax" means the tax imposed by Section 4999 of the
IRC (or any similar tax that may hereafter be imposed by federal,
state or local law).

     "Executive" means Scott A. Orndorff, an individual residing
in Lancaster County, Pennsylvania.

     "Good Reason" means, after a Change in Control:

               (a)  a change in the Executive's status or
     position, or any material diminution in his duties or
     responsibilities;

               (b)  any increase in the Executive's duties
     inconsistent with his position;

               (c)  any reduction in the Executive's base
     compensation;

               (d)  a failure to increase the Executive's base
     compensation, consistent with his performance review, within
     12 months of the last increase; or a failure to consider
     Executive for an increase within 12 months of his last
     performance review;

               (e)  a failure to continue in effect any Employee
     Benefit Plan in which the Executive participates, including
     (whether or not they constitute Employee Benefit Plans)
     incentive bonus, stock option, or other qualified or
     nonqualified plans of deferred compensation (A) other than
     as a result of the normal expiration of such a plan, or
     (B) unless such plan is merged or consolidated into, or
     replaced with, a plan with benefits which are of equal or
     greater value;

               (f)  requiring the Executive to be based anywhere
     other than the county where his principal office was located
     immediately prior to the Change in Control;

               (g)  refusal to allow the Executive to attend to
     matters or engage in activities in which he was permitted to
     engage prior to the Change in Control;

               (h)  delivery to the Executive of a Notice of
     Nonextension;

               (i)  failure to secure the affirmation by a
     Successor, within three business days prior to a Change in
     Control, of this Agreement and its or Old Guard's continuing
     obligations hereunder (or where there is not at least three
     business days advance notice that a Person may become a
     Successor, within one business day after having notice that
     such Person may become or has become a Successor); or

               (j)  any purported termination of the Executive's
     employment which is not in accordance with the terms of this
     Agreement.

     "Gross-Up Payment" means an additional payment to be made to
or on behalf of the Executive in an amount such that the net
amount retained by him, after deduction of any Excise Tax on the
Total Payments and any federal, state, and local income tax and
Excise Tax on such additional payment, equals the Total Payments.

     "Guarantor" means any one or more of the following:  Old
Guard Mutual Insurance Company, Old Guard Mutual Fire Insurance
Company, and Goschenhoppen-Home Mutual Insurance Company, each of
which is a Pennsylvania-chartered mutual insurance company at the
time of the execution of this Agreement and each of which has
executed this Agreement intending to guarantee the obligations of
CIMI and the Company hereunder.

     "Incumbent Board" means the Board of Directors of the
Company as constituted at any relevant time.

     "IRC" means the Internal Revenue Code of 1986, as amended
and as the same may be amended from time to time.

     "Material Subsidiary" means a Subsidiary whose net worth,
determined under generally accepted accounting principles, at the
fiscal year end immediately prior to any relevant time is at
least 25% of the aggregate net worth of the controlled group of
corporations of which the Company is the common parent.

     "1934 Act" means the Securities Exchange Act of 1934, as
amended and as the same may be amended from time to time.

     "Notice of Nonextension" means a written notice delivered to
or by the Executive which advises that the Agreement will not be
extended as otherwise provided in Paragraph 3.

     "Notice of Termination" means a written notice that
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and (iii) gives the required advance notice of
termination.

     "Old Guard" means the Company and CIMI, collectively, or, as
the context requires, either the Company or CIMI, and any
successor to either or both of them.

     "Person" has the same meaning as such term has for purposes
of Sections 13(d) and 14(d) of the 1934 Act.

     "Proxy Contest" means the solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors of the Company.

     "Subsidiary" means any business entity of which a majority
of its voting power or its equity securities or equity interests
is owned, directly or indirectly by the Company.

     "Successor" means any Person that succeeds to, or has the
practical ability to control (either immediately or with the
passage of time), Old Guard's business directly, by merger or
consolidation, or indirectly, by purchase of Old Guard's voting
securities or all or substantially all of its assets.

     "Surviving Company" means the business entity that is a
resulting company following a merger, consolidation, share
exchange, division or other reorganization of or relating to the
Company.

     "Total Payments" means the compensation and benefits that
become payable under the Agreement or otherwise (and which may be
subject to an Excise Tax) by reason of the Executive's
termination of employment, determined without regard to any
Gross-Up Payments that may also be made.

     "Welfare Benefit Plan" has the meaning ascribed to the term
"employee welfare benefit plan" in Section 3(1) of ERISA.  For
purposes of determining the Executive's or his dependents' right
to continued welfare benefits hereunder following his termination
of employment, the meaning of such term shall include any retiree
health plan maintained by Old Guard at any time after the
relevant Date of Termination, notwithstanding the fact that the
Executive is not a participant therein prior to such date. 

Basic Info X:

Name: EMPLOYMENT AGREEMENT
Type: Employment Agreement
Date: Sept. 26, 1996
Company: OLD GUARD GROUP INC
State: Pennsylvania

Other info:

Date:

  • 1st day of June , 1996
  • May 31 , 1999
  • June 1 , 1997

Organization:

  • Notice of Nonextension
  • b Incentive Compensation
  • Reason of Disability
  • Benefits Upon Expiration of Two- Year Period Following Termination
  • Reason of Death
  • Old Guard for Cause
  • Executive Without Good Reason
  • Old Guard Without Disability
  • Earlier Cessation of Certain Welfare Benefits
  • e Death During Two-Year Period Following Termination
  • Time of Payment
  • Moody 's Investors Service
  • Standard & Poor 's Corporation
  • Accelerated Payment of Present Value of Certain Compensation
  • Change in Control
  • City of Lancaster
  • Date of Termination
  • American Arbitration Association
  • Officer Liability Insurance
  • Wheatfield Drive Lititz
  • Lititz Pike P.O
  • Several Obligations of CIMI
  • Neffsville Mutual Fire Insurance Company
  • Commonwealth Insurance Managers , Inc.
  • Old Guard Group , Inc.
  • Notice of Termination
  • Goschenhoppen-Home Mutual Insurance Company
  • Board of Directors of the Company

Location:

  • Lancaster County
  • Pennsylvania

Money:

  • $ 94,000

Person:

  • Steven D. Dyer
  • David E. Hosler
  • Scott A. Orndorff

Percent:

  • 80 %
  • 50.1 %
  • 19.9 %
  • 25 %