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                                                                   EXHIBIT 10.19

                         EXECUTIVE EMPLOYMENT AGREEMENT

      THIS AGREEMENT ("Agreement"), made as of the 14th day of October, 2004,
effective on the Effective Date (as defined herein), between Penn-America Group,
Inc. and its insurance subsidiaries (the "Company" or "Penn-America"), a
Pennsylvania corporation, having its principal place of business at 420 South
York Road, Hatboro, Pennsylvania, and Joseph F. Morris (the "Executive").

                              W I T N E S S E T H:

      WHEREAS, the importance of Executive's contributions to the Company is
hereby acknowledged;

      WHEREAS, the Company desires to secure the continuing services of
Executive beyond the date on which a merger agreement between the Company and
United National Group, Ltd. and its affiliates ("UNGL") (such agreement, the
"Merger Agreement") is signed, and Executive is willing to continue in the
employment of the Company, upon the terms and subject to the conditions set
forth in this Agreement;

      WHEREAS, Executive possesses knowledge and skills that will contribute to
the continued success of the Company's business;

      WHEREAS, the Company believes that Executive's knowledge and skills will
prove to be crucial in both effectuating a successful merger and integrating the
operations of UNGL and the operations of the Company;

      WHEREAS, the Company is prepared to enhance the terms and conditions of
employment currently applicable to Executive; and

      WHEREAS, the recitals set forth above are hereby incorporated into and
made a part of this Agreement.

      NOW, THEREFORE, intending to be legally bound, the Company agrees to
employ Executive, and Executive hereby agrees to be employed by the Company,
upon the following terms and conditions:

                                    ARTICLE I
                                   EMPLOYMENT

      1.01. Position and Duties. Executive is hereby employed as the President
and Chief Executive Officer of the Company, and will use his best energies and
abilities in the performance of his duties, related to and consistent with his
position, as may be assigned to him from time to time by the Board of Directors
of the Company (the "Board"), the Chairman of Penn-America, or the Chief
Executive Officer of United American Indemnity, Ltd. Executive's duties shall
include managing the strategic and financial direction of the Company and duties
of comparable

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status and responsibility that the Board determines are necessary to conduct the
business of the Company.

      1.02. Location. Executive's place of work shall be in Hatboro,
Pennsylvania, provided that Executive shall be obligated to travel as business
needs require.

      1.03. Term. This Agreement shall be effective as of the "Closing" (as
defined below) (the date on which the Closing occurs, the "Effective Date");
provided that in the event the Closing does not occur on or before February 28,
2005 (or May 31, 2005, as may be required by applicable regulatory bodies) (the
"Deadline Date"), the Company may elect to terminate this Agreement. The initial
term of this Agreement shall commence on the Effective Date and shall continue
for an initial term (the "Initial Term") of three years from the Effective Date.
The Initial Term will extend automatically for one three year period and then
for consecutive one year periods thereafter (each such extension, an "Extension
Term") unless either Executive or the Company provides at least 90 days' advance
written notice prior to the expiration of the Initial Term or an Extension Term,
as applicable, to the other stating that the term will not be extended.

      1.04. Compensation.

            1.04.1. Salary. Executive shall receive an annual base salary in the
gross amount of $350,000, subject to applicable tax and payroll withholding,
which may be adjusted upward or downward from time to time at the Company's sole
discretion, subject to the provisions of Section 2.06(iii). The base salary
shall be payable in accordance with the Company's generally applicable payroll
practices and policies.

            1.04.2. Bonus Opportunity. Executive shall be eligible to
participate in the Company's 2004 KEIC Bonus Plan, a copy of which is attached
as Exhibit A, which Plan was established for 2004 performance and payable in
2005. The Company may not amend such Plan as respects any 2004 bonus
compensation to which Executive is entitled. Commencing in 2005, Executive shall
be eligible to participate in a key employee cash bonus incentive plan to be
adopted by the Company and similar to the 2004 KEIC Bonus Plan, pursuant to the
terms of which Executive shall be eligible to receive 40% of his then annual
base salary as a cash bonus for each calendar year during which Executive is
employed by the Company.

The Company and its affiliates reserve the right to amend or substitute the plan
referenced in Section 1.04.2 for any fiscal years after fiscal year 2004, and
except as provided below, to make any other adjustments deemed necessary by the
Chairman of the Board, as approved by the Compensation Committee, to account for
the consummation of the Merger Agreement and business activities after the
Effective Date. In any case, the Board, in its reasonable discretion, shall
determine that such adjustments shall (x) not impose any burden or reduce any
benefits, bonuses or awards that otherwise would be provided or paid to
Executive as a result of any costs or expenses incurred by the Company and its
affiliates in connection with (i) any out-of-pocket expenses directly incurred
in 2004 by Penn-America or its affiliates in any registration or sale of
securities related to (I) the Closing (as defined below) or (II) the withdrawal
or cessation of registrations or sales that were a direct result of the Merger
Agreement, (ii) any out-of-pocket expenses directly incurred by Penn-America
and/or the Company or their respective affiliates related to the Merger
Agreement, the transactions provided for in the Merger Agreement, or the

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closing and consummation of the transactions provided for in the Merger
Agreement ("Closing"), or (iii) payment of the Annual Integration Bonuses, the
Signing Bonuses, and any other expenses or extraordinary charges incurred in
connection with the Merger Transaction (the expenses and payments set forth in
subclauses (i)-(iii) collectively referred to as the "Excluded Expenses"), and
(y) exclude the Excluded Expenses from the actual performance results associated
with any performance cycles underlying any applicable bonus arrangements or
awards.

            1.04.3. Equity Compensation. Executive shall be eligible to
participate in the Company's Performance Based Long-Term Equity Compensation
Plan (the "Restricted Share Plan"), a copy of which is attached as Exhibit B,
which Plan was established and adopted for 2004 performance and provides for
awards of restricted stock under certain circumstances in 2005. The Company may
not amend such Restricted Share Plan with respect to any 2004 bonus award to
which Executive is entitled; provided however that grants of shares under the
Restricted Share Plan shall be grants of Class A common shares of UNGL ("UNGL
Shares"), and the number of UNGL Shares to be awarded shall be based on the
number of Penn-America shares that would otherwise be due to Executive, with an
adjustment based on the price of UNGL Shares, as provided for in the Merger
Agreement ($15.375 per share) (such price, the "Merger Price"). Commencing in
2005, Executive shall be eligible to participate in a performance-based
restricted share plan to be adopted by the Company prior to or at the time of
the Closing that is similar to the Restricted Share Plan, and which shall
provide that the achievement of mid-point performance objectives (as such
objectives are specified in Exhibit B) shall result in a target opportunity of
50% of Executive's then current base salary, payable in UNGL Shares, valued at
the closing price of UNGL Shares on the date of grant.

The Company and its affiliates reserve the right to amend or substitute the
Restricted Share Plan for any fiscal years after fiscal year 2004, and except as
provided below, to make any other adjustments deemed necessary by the Chairman
of the Board, as approved by the Compensation Committee, to account for the
consummation of the Merger Agreement and business activities after the Effective
Date. In any case, the Board, in its reasonable discretion, shall determine that
such adjustments shall (x) not impose any burden or reduce any benefits, bonuses
or awards that otherwise would be provided or paid to Executive as a result of
any out-of-pocket costs or expenses incurred by the Company and its affiliates
in connection with any Excluded Expenses, and (y) exclude the Excluded Expenses
from the actual performance results associated with any performance cycles
underlying any applicable awards under the Restricted Share Plan and any
successor thereto.

            1.04.4. Car Allowance. Executive shall receive a car allowance equal
to $650 per month. The car allowance shall be payable, or credited to, Executive
in accordance with the Company's applicable practices and policies.

            1.04.5. Signing Bonus. Upon Closing, Executive shall receive a cash
payment in the amount of $390,000 (the "Signing Bonus"), subject to applicable
tax and payroll withholding.

            1.04.6. Successful Integration Bonus. Upon the completion of each of
the Company's 2005 and 2006 fiscal years, Executive shall, to the extent then
actively employed, be

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paid a total (over two years) of $780,000 (the "Target Integration Bonus"), but
only upon the satisfaction of those integration milestones set forth in Exhibit
C hereto, as determined in good faith by the Chairman of the Board of Directors
of UNGL and approved by UNGL's Compensation Committee (such resulting figure,
the "Annual Integration Bonus"). If Executive is not actively employed at the
time such Annual Integration Bonus would be payable, Executive nonetheless shall
be entitled to receive the Annual Integration Bonus, if any, that is payable to
him under the provisions of Section 3.05. The Target Integration Bonus shall be
payable in UNGL Shares as provided for below. The UNGL Shares comprising the
Annual Integration Bonus shall be subject to a shareholder-approved plan, which
plan shall have been approved prior to or at the time of the approval of the
Merger Transaction, and available for resale under an S-8 filed with the
Securities and Exchange Commission. Payment of such UNGL Shares shall be made in
two installments, the first installment on or before April 1, 2006, and the
second installment on or before April 1, 2007; or with respect to each such year
at such later date as the financial statements for such years have been
completed and certified by the Company's outside auditors. The UNGL Shares
comprising the Annual Integration Bonus shall be subject to Stock Ownership
Guidelines, in the form attached hereto as Exhibit D, and shall otherwise be
free of any and all restrictions on sale or resale, except as such sale or
resale may be restricted under applicable securities laws and regulations. The
conversion of the Target Integration Bonus into UNGL Shares shall be based on
the Merger Price. Notwithstanding any other provision of this Agreement to the
contrary, UNGL Shares paid in satisfaction of the Annual Integration Bonus shall
not be sold, transferred or otherwise disposed of by Executive for a period of
eighteen (18) months following the payment of such shares, except to the extent
necessary to satisfy any tax liability associated with such payment.

            1.04.7. Equity Rollover.

                  (i) Any options (whether vested or unvested) held by Executive
in Penn-America prior to the Effective Date ("Old Options") shall be cancelled
as of the Effective Date and Executive shall be issued and fully vested in an
aggregate number of options in UNGL Shares with the same aggregate value as the
Old Options, as determined in accordance with the Merger Agreement. Executive
may exercise the options to be granted under this Section 1.04.7(i) at any time
after the Closing. Executive shall be solely responsible for any taxes payable
by reason of such issuance and/or exercise. Executive may, prior to the Closing
and consistent with the Company's policies and applicable securities
regulations, exercise any vested Old Options and/or sell securities issued
thereunder prior to the Closing.

                  (ii) Any vested, and unvested restricted, shares held by
Executive in Penn-America prior to the Effective Date ("Old Shares") shall be
converted as of the Effective Date into vested UNGL Shares and the fixed cash
payment in accordance with the Merger Agreement. The shares shall be subject to
the Stock Ownership Guidelines.

      1.05. Benefits and Expenses.

            1.05.1. Benefits. Until the first anniversary of the Effective Date,
Executive will be covered by such group insurance and other benefit plans
(including life insurance policies issued to the Executive for the benefit of a
named beneficiary) and shall be eligible for such paid vacation and holidays, at
least equal to those benefits afforded Executive through Penn-America.

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A list of the current benefits to be provided to Executive is attached to this
Agreement as Exhibit E. Such benefits may be amended from time to time by the
Company to increase or add benefits during the first year following the
Effective Date, and thereafter for any reason in connection with
across-the-board modifications, or to comply with any legal requirements
applicable to such benefits, or necessary to maintain the deductibility for tax
purposes of amounts paid by the Company to provide or maintain such benefits.
During the first year following the Effective Date, the Company shall not
terminate or eliminate any such benefit plans or reduce benefits provided under
such plans, unless a change in the law applicable to such benefits shall cause
the continued provision of such benefits to be contrary to applicable law, or
shall cause the amounts paid by the Company to provide or maintain such
benefits, which amounts formerly were deductible for tax purposes by the
Company, to no longer be deductible for such purposes under applicable law;
provided however that the Company shall continue the existing payment
arrangements for supplemental life insurance policies purchased for Executive
and in effect as of the date of the execution of this Agreement during the
Initial Term and the Extension Terms (if any).

            1.05.2. Business Expenses. The Company shall pay or reimburse
Executive for all reasonable expenses incurred or paid by Executive in the
performance of Executive's duties hereunder, upon presentation of expense
statements or vouchers and such other information as the Company may require in
accordance with the generally applicable policies and procedures of the Company.

                                   ARTICLE II
                                   TERMINATION

      2.01. Incapacity. If during the term of Executive's employment, Executive
is prevented from effectively performing the essential functions of his job,
with reasonable accommodation (if such reasonable accommodation can be provided
by Company), for a period of 180 days within any twelve (12) month period by
reason of illness or Disability, the Company, by written notice to Executive,
may terminate Executive's employment. Upon delivery to Executive of such notice,
together with payment of any salary accrued under Section 1.04.1, any awarded
but unpaid bonuses applicable to any prior period, and any other amounts as may
be due under Sections 1.04 and 1.05 up to the date of termination, Executive's
employment and all obligations of the Company will terminate and this Agreement
shall end. For purposes of this Agreement, "Disability" is defined as Executive
being eligible for disability insurance benefits under the Company's long term
disability insurance policy, or in the absence of such disability insurance
coverage, "Disability" shall be defined as the inability to provide the
executive level services provided for hereunder, as determined by an outside
physician selected by the Company.

      2.02. Retirement. This Agreement shall end, without notice to terminate
being required, upon Executive's voluntary election to retire at any time after
Executive reaches age 65. Upon retirement, Executive's employment shall
terminate and Executive shall be entitled to payment of any salary accrued under
Section 1.04.1, and any awarded but unpaid bonuses applicable to any prior
period, together with any other amounts as may be due under Sections 1.04 and
1.05 up to the date of termination, following which all obligations of the
Company will terminate.

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      2.03. Death. If Executive dies during the term of his employment,
Executive's employment will terminate, the Agreement shall end, and all
Company's obligations, other than any obligations with respect to the payment of
accrued but unpaid salary under Section 1.04.1, and any awarded but unpaid
bonuses applicable to any prior period, together with any other amounts as may
be due under Sections 1.04 and 1.05 up to the date of death, will cease.

      2.04. Termination For Cause. If the Company terminates Executive for
Cause, this Agreement and all obligations of the Company shall terminate
effective upon notice of termination for Cause, other than (x) any obligations
with respect to the payment of accrued but unpaid salary under Section 1.04.1,
(y) in the case of a termination under Section 2.04(i) only, certain Limited
Severance Benefits (as provided in Section 3.07), and (z) any other amounts as
may be due under Section 1.05 up to the date of termination. For purposes of
this Agreement, "Cause" shall mean:

            (i) Executive's failure to perform duties (other than as a result of
      incapacity as described in Section 2.01) in any material respect that
      remains uncured for 30 days after written notice thereof is given to
      Executive, such written notice will be provided to the extent that the
      Board reasonably determines such failure is curable;

            (ii) Executive's willful misconduct or gross negligence or any
      willful material misrepresentation to the directors or officers of the
      Company (including any willful material misrepresentation made in this
      Agreement);

            (iii) Executive's willful failure to conduct the business of the
      Company in accordance with the lawful directives of the Board or Company
      officers to whom Executive reports;

            (iv) any material breach by Executive of any of the covenants, terms
      or conditions of this Agreement that remains uncured for 30 days after
      written notice thereof is given to Executive, such written notice will be
      provided to the extent that the Board reasonably determines such failure
      is curable;

            (v) Executive's engagement in conduct which is dishonest or
      disloyal, which has injured or would injure the business or reputation of
      the Company or otherwise adversely affects its interests in any material
      respect; or

            (vi) Executive's engagement in fraud or embezzlement, or a good
      faith determination by the Board that Executive's arraignment for a felony
      charge or other serious crime involving moral turpitude is based on facts
      and actions of Executive that are likely to result in the successful
      criminal prosecution of Executive and that such arraignment and
      prosecution would be likely to adversely affect the business, operations
      or prospects of the Company or its affiliates, or Executive's plea of nolo
      contendre to a felony. This provision shall not apply to any arraignment,
      conviction or plea of nolo contendre to any traffic (driving) offenses.

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            2.04.1. Any notice given by the Company under the subsections of
Section 2.04 shall specifically state the manner in which Executive has not
performed his duties, or has breached any of the covenants, terms or conditions
of this Agreement, that the notice is given under this Section 2.04, and that
failure to correct such breach will result in termination of employment under
this Agreement. For the purpose of the above definition of Cause, no act, or
failure to act, on Executive's part shall be deemed "willful" unless done, or
omitted to be done, by Executive not in good faith and without reasonable belief
that his action or omission was in the best interest of the Company. Failure of
the Company, the Penn-America business or Executive to achieve or satisfy any
target, milestone or other performance goal or hurdle, in and of itself, shall
not be deemed Cause for termination under Sections 2.04(ii) through (vi) above.

            2.04.2. Notwithstanding the foregoing, termination by the Company
for Cause shall not be effective until and unless a notice to terminate for
Cause has been given by the Company within (i) 180 days after the Company learns
of the act, failure or event constituting "Cause" under Section 2.04(i) (which
is not cured by Executive within any time period permitted for such cure) or
(ii) 90 days after the Company learns of the act, failure or event constituting
"Cause" under any of Sections 2.04(ii)-(vi) (which is not cured by Executive
within any time period permitted for such cure), and other than in connection
with any activity by Executive that has been concealed or is of a fraudulent
nature. If Executive has commenced arbitration in the manner prescribed in this
Agreement within 15 days after receipt of such notice of termination, disputing
the Company's right under this Agreement to terminate for Cause, and the
Arbitrator shall thereafter have determined that Executive was not terminated
for Cause, Executive shall be entitled, in addition to any amount otherwise due
to Executive under this Agreement, to receive interest on any payments that
should have otherwise been due him, commencing from the date of the Company's
notice of termination, at the Company's then long term borrowing rate.

      2.05. Termination Without Cause. Executive's employment is at-will, and
this Agreement may be terminated at any time by the Company without Cause upon
30 days' notice to Executive. If the Company terminates Executive without Cause
hereunder, the Company shall pay to Executive accrued but unpaid salary under
Section 1.04.1, together with any other amounts as may have been due and payable
under Sections 1.04 and 1.05 up to the date of termination, any awarded but
unpaid bonuses applicable to any prior period, together with Severance Benefits
in accordance with Article III, and Executive shall be entitled to retain all
restricted stock awards and options that were vested as of such termination
date, and unless a longer period is otherwise provided for in the underlying
award or plan or under any Company policy or applicable securities laws, shall
have thirty (30) days from the date of such termination to exercise and/or sell
such shares or options. Executive's right to receive Severance Benefits listed
in Section 3.05 or Limited Severance Benefits under Section 3.07 is subject to
Executive's complying with the obligations set forth in Section 3.02. The
Company's provision of written notice not to extend either the Initial Term or
an Extension Term of this Agreement pursuant to Section 1.03 shall be deemed to
be a termination of Executive by the Company without Cause hereunder.

      2.06. Executive Termination for Good Reason. If Executive terminates his
employment for Good Reason, this Agreement and all obligations of the Company
shall terminate effective upon Executive's provision of notice of termination,
and Executive shall

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receive the same salary, benefits and Severance Benefits as would be provided or
payable to him in connection with a termination without Cause under Section 2.05
hereof. For purposes of this Agreement, "Good Reason" shall mean:

      (i)   an assignment to Executive of any duties or responsibilities that
            comprise a significant reduction or change by the Company (or its
            successor) in the nature or scope of the authority of, such duties
            or responsibilities assigned to or held by Executive as of the
            Effective Date; provided that a good faith assignment by the Board
            to a position within the Company or one of its affiliates with
            similar responsibility, title and compensation is not considered to
            be Good Reason;

      (ii)  any removal of Executive from the officer positions with the Company
            (or its successor) and its affiliates held by him as of the
            Effective Date; provided that a good faith assignment by the Board
            to a position within the Company or one of its affiliates with
            similar responsibility, title and compensation is not considered to
            be Good Reason;

      (iii) a reduction by the Company (or its successor) and its subsidiaries
            in Executive's base salary as of the Effective Date or, if greater,
            at any time thereafter;

      (iv)  a transfer or relocation of the site of employment of Executive,
            without his express written consent, to a location more than 35
            miles from the location of his principal place of business
            immediately preceding the Effective Date; or

      (v)   any failure of the Company to comply with and satisfy its material
            obligations under this Agreement (other than those specified in
            clauses (i) through (iv) above, as to which no notice and
            opportunity to cure shall be provided) that remains uncured for 30
            days after written notice thereof is given to the Company.

                                   ARTICLE III
                               SEVERANCE BENEFITS

      3.01 Benefits Payable Upon Termination without Cause, Non-Renewal or
Termination for Good Reason. If, during the Initial Term or any Extension Term,
(i) the Company terminates Executive without Cause, (ii) in connection with the
expiration of the Initial Term or any Extension Term, the Company gives notice
of non-renewal of this Agreement, or (iii) Executive terminates his employment
for Good Reason, Executive shall be paid Severance Benefits, as hereafter
defined, in addition to all other amounts payable to Executive as referenced in
Section 2.05.

      3.02 Release/Compliance with Obligations. Notwithstanding the foregoing
provisions, payment of Severance Benefits or Limited Severance Benefits is
conditioned upon Executive's execution of the form of release in Exhibit F-2.

      3.03 Limitation on Payments. Notwithstanding anything to the contrary in
this Agreement, in no event shall Severance Benefits be paid more than once to
Executive under this Agreement.

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      3.04 Timing of Payments. Severance Benefits shall be paid or provided in
monthly installments, with the first monthly installment payable within 10 days
after the release referenced in Section 3.02 becomes irrevocable; provided,
however, that the portion of any Severance Benefits representing the pro-rated
amount of any cash bonus or performance-based long-term equity compensation
award shall not be paid until such amounts are otherwise normally payable
pursuant to the plan or arrangement under which such amounts are paid.

      3.05 Severance Benefits. "Severance Benefits" means amounts and/or
benefits as follows:

            (i) 1.5 times either Executive's annual base salary set forth in
      Section 1.04.1 or, if greater, the annual base salary as in effect
      immediately prior to Executive's termination of employment, to be paid in
      equal monthly installments over an 18-month period;

            (ii) the pro-rated amount of any cash bonus which Executive
      otherwise would have received under the Company's KEIC bonus plan, or its
      successor, as set forth in Section 1.04.2, for each whole or partial
      calendar quarter of employment during the partial year in which
      Executive's employment is terminated, provided that any Company
      performance goals under such plan are achieved for the year in which
      termination of employment occurs;

            (iii) the pro-rated amount of any performance based long-term equity
      compensation award which Executive would have otherwise received, as set
      forth in Section 1.04.3, for each whole or partial calendar quarter of
      employment during the partial year in which Executive's employment is
      terminated, provided that any Company performance goals under such plan
      are achieved for the year in which termination of employment occurs;

            (iv) vesting of any awarded but unvested restricted stock and
      non-qualified stock options in accordance with the vesting schedule
      established in the applicable plan or agreement, which vesting will
      continue in accordance with its terms following termination of employment
      until fully vested;

            (v) provision of eighteen (18) months of Executive's then current
      medical and dental benefits, or the cash equivalent payment thereof, as
      set forth in Section 1.05.1;

            (vi) provision of eighteen (18) months of Executive's life insurance
      premiums on any policy of life insurance issued to Executive on
      Executive's life for the benefit of a named beneficiary, as set forth in
      Section 1.05.1;

            (vii) any earned but unpaid Annual Integration Bonus (the Annual
      Integration Bonus shall be deemed earned if Executive is employed with the
      Company or its affiliates on the last day of the fiscal year for which
      such Annual Integration Bonus is payable), which shall be payable within
      90 days after the close of the Company's fiscal year to which it relates,
      provided that any Company performance goals listed under Exhibit C have
      been achieved for the year for which such bonus relates.

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      3.06. No Severance Payable. Notwithstanding any contrary provision herein,
no Severance Benefits or Limited Severance Benefits (as defined below) shall be
payable (except as otherwise specifically provided in Sections 2.01, 2.02 and
2.03) if:

            3.06.1 Executive voluntarily resigns from his position for any
reason other than for Good Reason in accordance with Section 2.06;

            3.06.2 Executive's employment is terminated for reasons described in
Section 2.01 ("Incapacity"), Section 2.02 ("Retirement"), or Section 2.03
("Death");

            3.06.3. Executive violates the applicable provisions of Sections
4.02, 4.03, 4.04 and 4.05 in any material respect after the date of termination
of Executive's employment under this Agreement. If Executive violates the
applicable provisions of Sections 4.02, 4.03, 4.04 and 4.05 in any material
respect after any Severance Benefits or Limited Severance Benefits have been
paid, no further payments will be due to Executive and Executive shall be
required to reimburse the Company for any and all such payments previously made;
or

            3.06.4. Executive's employment is terminated for Cause, other than
under Section 2.04(i).

      3.07 Limited Severance Benefits. If Executive's employment is terminated
for Cause under Section 2.04(i), Executive shall be entitled to receive eighteen
(18) months of Executive's then current annual base salary and medical and
dental benefits (such salary and benefits, "Limited Severance Benefits").
Executive shall not be entitled to any other Severance Benefits listed in
Section 3.05.

      3.08. Preservation of Vested Equity Awards. Upon Executive's termination
of employment for any reason hereunder, Executive shall (i) retain all
restricted stock awards and options that were vested as of such termination
date; and (ii) have (or his estate or legal representative shall have) thirty
(30) days from the date of such termination to exercise such options; provided
that such time period may be extended by provisions in the underlying award or
plan or under any Company policy or applicable securities laws.

      3.09. Damage Limitation. Executive understands and agrees that he is
entitled exclusively to the compensation and benefits as stated in Article II
and Article III (as applicable) in the event of a termination and that any claim
for damages by Executive arising out of this Agreement and his employment by
Employer will be limited exclusively to the compensation and benefits as set
forth in Article II and Article III (as applicable) in the event of termination;
provided that this Section 3.09 shall not limit Executive's entitlement, if any,
to attorneys' fees under Section 5.011.

                                   ARTICLE IV
                   EXECUTIVE'S REPRESENTATIONS AND WARRANTIES

      4.01. Duties. Executive agrees that, in addition to all other obligations
commensurate with his employment with the Company, he shall devote his full
business time, energies and talents to the business of the Company, and comply
with each of the Company's corporate governance and ethics guidelines, conflict
of interests policies and code of conduct applicable to

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all Company employees or senior Executives as adopted by the Board and by the
UNGL Board from time-to-time. Executive first shall obtain the consent of the
Board in writing before engaging in any other business or commercial activities,
duties or pursuits. Notwithstanding the foregoing, nothing shall preclude
Executive from (i) engaging in charitable activities and community affairs, (ii)
acting as a member, director or officer of any industry trade association or
group, (iii) serving as a trustee, director or advisor to any family companies
or trusts, and (iv) managing his personal investments and affairs, provided such
activities do not, in the reasonable judgment of the Board, materially interfere
with the proper performance of his duties and responsibilities hereunder.
Executive also agrees that he will advise the Board of any corporate
opportunities and not usurp such opportunities.

      4.02. Noncompetition. Executive acknowledges and agrees that the insurance
business and operations of the Company are national in scope, and that the
Company operates in multiple locations and business segments in the course of
conducting its business. In consideration of this Agreement and the equity
interests being made available to Executive hereunder, Executive covenants and
agrees that during his employment with the Company, and for a period of eighteen
(18) months following the termination of such employment for any reason (the
"Restrictive Period"), Executive shall not (i) engage, whether as owner,
manager, operator or otherwise, directly or indirectly, in any property and/or
casualty insurance company (or holding company which controls such company) that
is based in the United States or does a substantial amount of its business in
the United States and that writes more than 15% of its written premium by
issuing commercial insurance policies for businesses through a network of
wholesale general agents on a binding authority basis; provided however that the
restrictions herein shall not prohibit or prevent Executive from acting as an
owner, manager, operator or employee of any wholesale general agent, (ii) use
any information obtained in the course of Executive's employment by the Company
for the purpose of notifying individuals of Executive's willingness to provide
services after such termination in competition with the Company or in breach of
this Agreement, or (iii) otherwise solicit for competitive purposes any person
who is, or at any time during the term of Executive's employment by the Company
was, a customer of the Company; provided that Executive shall not be subject to
the above restrictions if the Company fails to pay (i) Severance Benefits due to
Executive, if any, pursuant to Section 3.01 (other than as provided for under
Section 3.06.3). Ownership of less than 5% of the securities of any publicly
traded company will not violate this Section 4.02. In the event that this
paragraph shall be determined by any court of competent jurisdiction to be
unenforceable in part by reason of its being too great a period of time or
covering too great a geographical area, it shall be in full force and in effect
as to that period of time or geographical area determined to be reasonable by
the court.

      4.03. Executive Nonsolicitation. Executive covenants and agrees that
during the Restrictive Period, Executive shall not solicit or induce, or attempt
to solicit or induce, any employee of the Company or its affiliates, other than
any administrative assistant, to terminate such employment for any reason
whatsoever or hire any employee of the Company or its affiliates, other than any
administrative assistant.

      4.04. Non-Disclosure. Executive shall not, during or after his employment
with the Company, (i) disclose, in whole or in part, any Company Confidential
Information, as hereinafter defined, to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever unless
authorized in writing to do so by the Company or required by law, order of

                                       11
<PAGE>

any court or court process, or (ii) use any Company Confidential Information for
Executive's own purpose or for the benefit of any person, firm, corporation,
association or other entity other than the Company; except in the proper
performance of Executive's duties as instructed by the Company. Company
Confidential Information shall not include (x) information in the public domain
or generally known in the industry (unless Executive is responsible, directly or
indirectly, for such Company Confidential Information entering the public domain
or becoming known in the industry without the Company's consent), (y)
information and know-how derived or known by Executive from experience in the
industry generally and not specific to Company, and (z) information disclosed by
the Company to third parties without any duty or obligation of confidentiality
or non-disclosure.

            4.04.1. Confidential Information. For purposes of this Agreement,
Company Confidential Information shall mean the knowledge and information
acquired by Executive concerning the Company's confidential and proprietary
information regarding its business plans, software, formatting, programs, client
prospects, client lists, supplier and vendor information, client contacts,
client information and data, marketing plans, data processing systems and
information contained therein, products, proposals to clients and potential
clients, account reports, plans, studies, price lists, financial statements and
records, files and other trade secrets, know-how, or other private, confidential
or proprietary information of or about the Company which is not already
available to the public or known generally in the industry.

      4.05. Inventions. Executive shall disclose promptly in writing to the
Company, all inventions, including discoveries, concepts and ideas, patentable
or not, hereafter made or conceived solely or jointly by Executive during
employment with the Company, or within six months after termination of
Executive's employment, if based on or related to proprietary information of the
Company known by Executive, provided such invention, discovery, concepts and
ideas relate in some manner to the business or activities of the Company.

            4.05.1. Assignment of Invention. Executive agrees that in connection
with any invention covered by Section 4.05, Executive shall, on request of the
Company, promptly execute a specific assignment of title to the Company and do
anything else reasonably necessary to enable the Company to secure a patent
therefor in the United States and foreign countries.

            4.05.2. Work For Hire. If the Company deems such execution to be
necessary, Executive shall execute and deliver the Company's standard "work for
hire" agreement regarding ownership by the Company of all rights in its
confidential and business materials. A copy of such "work for hire" agreement is
attached hereto as Exhibit G.

      4.06. Duty to Cooperate after Termination. In the event of Executive's
termination of employment during the twelve (12) month period immediately
following the Effective Date, Executive agrees to be available to Company from
time to time to answer questions or provide information relating to Company
matters that he worked on during his employment at the Company. The Company
shall make reasonable efforts to minimize any burden placed on Executive by
reason of the provisions of this Section 4.06, and shall not unreasonably
interfere in Executive's obligations to any subsequent employer. In the event
that Executive would reasonably be required to incur any cost or expense to
communicate with the Company or travel to any location requested by the Company,
Company shall advance any such travel or other costs

                                       12
<PAGE>

reasonably incurred by Executive to comply with and perform his obligations
under this Section 4.06.

      4.07. Review by Counsel. Executive represents and warrants that he has
been provided a full and otherwise fair opportunity to have legal counsel for
Executive review this Agreement and to verify from counsel that the terms and
provisions of this Agreement are reasonable and enforceable.

      4.08. Acknowledgment. Executive acknowledges and agrees that the terms of
this Article IV: (i) are reasonable in light of all of the circumstances; (ii)
are sufficiently limited to protect the legitimate interests of the Company and
its subsidiaries; (iii) impose no undue hardship on Executive; and (iv) are not
injurious to the public. Executive further acknowledges and agrees that (x)
Executive's breach of the provisions of this Article IV will cause the Company
irreparable harm, which cannot be adequately compensated by money damages, and
(y) if the Company elects to prevent Executive from breaching such provisions by
obtaining an injunction against Executive, there is a reasonable probability of
the Company's eventual success on the merits. Executive consents and agrees that
if Executive commits any such breach or threatens to commit any breach, the
Company shall (at its election and notwithstanding Section 5.011 hereof) be
entitled to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage, in addition to, and not in lieu of, such
other remedies as may be available to the Company for such breach, including the
recovery of money damages.

      4.09. Representations and Warranties. In addition to any other
representations and warranties contained herein, Executive hereby represents and
warrants that, to the best of his actual (not constructive) knowledge, without
independent investigation into the representations and warranties made by the
Company and its affiliates and Executive in the Merger Agreement, he has not
willfully failed to disclose to the Company that he has knowledge that such
representations and warranties contain any untrue statements of a material fact
or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading. The
foregoing representation and warranty of Executive shall survive for a period of
180 days from the Effective Date. If the Company determines in good faith that
(i) the foregoing representation and warranty of Executive is untrue, and (ii)
such breach has caused material harm to the Company, then the Company, as its
sole remedy for Executive's breach of this Section 4.09, shall be entitled to
terminate Executive's employment under this Agreement during such 180-day
period, and such termination shall be deemed a termination with Cause under
Section 2.04(i) of this Agreement.

                                    ARTICLE V
                               GENERAL PROVISIONS

      5.01. Authorization to Modify Restrictions. The provisions of this
Agreement will be enforceable to the fullest extent permissible under applicable
law, and the unenforceability (or modification to conform to law) of any
provision will not render unenforceable, or impair, the remainder of this
Agreement. If any provision will be found invalid or unenforceable, in whole or
in part, this Agreement will be considered amended to delete or modify, as
necessary, the offending provision or provisions and to alter its bounds to
render it valid and enforceable.

                                       13
<PAGE>

      5.02. No Waiver. The failure of either the Company or Executive to insist
upon the performance of any term in this Agreement, or the waiver of any breach
of any such term, shall not waive any such term or any other term of this
Agreement. Instead, this Agreement shall remain in full force and effect as if
no such forbearance or waiver had occurred.

      5.03. Entire Agreement. This Agreement represents the entire agreement of
the parties with respect to the subject matter hereof and supersedes any prior
agreement between Executive and the Company (or any of its predecessors or
affiliates). Executive acknowledges that he has executed a letter agreement
under which he has waived any rights to any payments and benefits under any
change of control agreements with respect to the Closing that were in effect
prior to the Closing, and acknowledges that upon the Closing, such change of
control agreements shall be null and void, and without force and effect. This
Agreement may be amended only by a writing signed by each of the parties. This
Agreement may be assigned by Company, provided that Company complies with the
provisions of Section 5.09. This Agreement may not be assigned by Executive.

      5.04. Governing Law. This Agreement will be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania.

      5.05. Consent to Jurisdiction. Executive hereby irrevocably submits to the
personal jurisdiction of the United States District Court for the Eastern
District of Pennsylvania or any Pennsylvania state court with jurisdiction in
any action or proceeding seeking to enforce or interpret this Agreement, so long
as said action or proceeding does not conflict with Section 5.011.

      5.06. Service of Process. Executive irrevocably consents to the service of
any summons and complaint and any other process which may be served in any
action or proceeding arising out of or related to this Agreement brought in the
United States District Court for the Eastern District of Pennsylvania or any
Pennsylvania state court with jurisdiction by the mailing by certified or
registered mail of copies of such process to Executive at his address as set
forth on the signature page of this Agreement.

      5.07. Venue. Executive irrevocably waives any objection which he now or
hereafter may have to the laying of venue of any action or proceeding arising
out of or relating to this Agreement brought in the United States District Court
for the Eastern District of Pennsylvania or any Pennsylvania state court and any
objection on the ground that any such action or proceeding in either of such
courts has been brought in an inconvenient forum. Nothing in this Section 5.07
will affect the right of the Company to bring any action or proceeding against
Executive or his property in the courts of other jurisdictions.

      5.08. Agreement Binding. The obligations of Executive under this Agreement
will continue after the termination of his employment with the Company for any
reason, to the extent provided herein, and will be binding on his heirs,
executors, legal representatives, and assigns.

      5.09. Successor Corporation. The Company shall require any successor or
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and

                                       14
<PAGE>

substance satisfactory to Executive, to acknowledge expressly that this
Agreement is binding upon and enforceable against the Company in accordance with
the terms hereof, and to become jointly and severally obligated with the Company
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession or successions had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession, and to the extent that Executive resigns
as a result thereof, shall entitle Executive to all Severance Benefits
referenced in Section 3.05. As used in this Agreement, the Company shall mean
the Company as hereinbefore defined and any such successor or successors to its
business and/or assets, jointly and severally.

      5.010. Counterparts, Section Headings. This Agreement may be executed in
any number of counterparts. Each will be considered an original, but all will
constitute one and the same instrument. The section headings of this Agreement
are for convenience of reference only and will not affect the construction or
interpretation of any of its provisions.

      5.011. Arbitration. In the event that any disagreement or dispute
whatsoever shall arise between the parties concerning this Agreement, such
disagreement or dispute shall be submitted to the Judicial Arbitration and
Mediation Services, Inc ("JAMS") for resolution in a confidential private
arbitration in accordance with the comprehensive rules and procedures of JAMS,
including the internal appeal process provided for in Rule 34 of the JAMS rules
with respect to any initial judgment rendered in an arbitration. Any such
arbitration proceeding shall take place in Philadelphia, Pennsylvania, New York,
New York or Washington, D.C. (as selected by Executive) before a single
arbitrator (rather than a panel of arbitrators). The parties agree that the
arbitrator shall have no authority to award any punitive or exemplary damages
and waive, to the full extent permitted by law, any right to recover such
damages in such arbitration. Each party shall each bear their respective costs
(including attorney's fees, and there shall be no award of attorney's fees);
provided that the Company shall bear the cost of any arbitrator selected by the
parties (unless such arbitrator shall determine that Executive has commenced a
frivolous action, in which case arbitrator fees shall be split between the
parties), except in the case of an appeal, in which case the appealing party
shall bear the costs of the appeal. To the extent that Executive is the
prevailing party in any final judgment by the arbitrator on any case commenced
in arbitration by Executive the Company shall pay or reimburse Executive for all
reasonable attorneys' fees incurred by Executive in such matter. Nothing herein
shall prevent the Company from seeking injunctive relief as provided for in
Article 4 of this Agreement. Judgment upon the final award rendered by such
arbitrator, after giving effect to the JAMS internal appeal process, may be
entered in any court having jurisdiction thereof. If JAMS is not in business or
is no longer providing arbitration services, then the American Arbitration
Association shall be substituted for JAMS for the purposes of the foregoing
provisions. Each party agrees that it shall maintain absolute confidentiality in
respect to any dispute between them.

      5.012. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:

                                       15
<PAGE>

      If to Executive:             Joseph Morris
                                   1324 Cinnamon Drive
                                   Fort Washington, PA 19034

      If to the Company:           Board of Directors
                                   Penn-America Group, Inc.
                                   420 South York Road
                                   Hatboro, PA 19040

      With a Copy To:              United National Group, Ltd.
                                   Walker House
                                   87 Mary Street
                                   P.O. Box 908GT
                                   George Town
                                   Grand Cayman
                                   Cayman Islands
                                   Attn: General Counsel

or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

      5.013. Condition of Effectiveness. The occurrence of the Closing on or
before the Deadline Date and the execution and delivery by Executive of the
Release attached hereto as Exhibit F-1 shall be a condition precedent for the
effectiveness and enforceability of this Agreement.

      5.014. Employee Manuals and Handbooks. Executive acknowledges that from
time to time the Company or its affiliates may establish, maintain and
distribute employee manuals or handbooks or personnel policy manuals, and
officers or other representatives of the Company shall be expected to comply
fully with the policies and procedures provided for therein, to the extent not
inconsistent with the provisions of this Agreement. No policies, procedures or
statements of any nature by or on behalf of the Company (whether written or
oral, and whether or not contained in any employee manual or handbook, as the
same may exist from time to time, or personnel policy manual), and no acts or
practices of any nature, shall be construed to modify the terms of this
Agreement.

      5.015. Insurance and Indemnity. The Company shall, to the fullest extent
permitted by law and its by-laws and charter, defend and indemnify Executive.
The Company shall also provide Executive with coverage as a named insured under
a directors and officers liability insurance policy to be maintained for the
Company's directors and officers. The Company shall continue to maintain
directors and officers liability insurance for the benefit of Executive during
the term of this Agreement and for at least six (6) years following the
termination of Executive's employment with the Company, provided that such
insurance is available on commercially reasonable terms. This obligation to
provide insurance and indemnify Executive shall survive expiration or
termination of this Agreement with respect to proceedings or threatened
proceedings based on acts or omissions of Executive occurring during Executive's
employment with the Company or with any affiliated company. Such obligations
shall be binding upon the

                                       16
<PAGE>

Company's successors and assigns and shall inure to the benefit of Executive's
heirs and personal representatives.

      EXECUTIVE ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THE FOREGOING
PROVISIONS AND THOSE SUCH PROVISIONS ARE REASONABLE AND ENFORCEABLE.

      IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of 14th day of October, 2004.

EXECUTIVE                          PENN-AMERICA GROUP, INC.

/s/ Joseph F. Morris               By: /s/ Garland P. Pezzuolo
--------------------------------       -----------------------------------
Joseph F. Morris                            Garland P. Pezzuolo
                                            Vice President, Secretary & General
                                            Counsel

                                       17
<PAGE>

                                    EXHIBIT A

                              2004 KEIC BONUS PLAN

<PAGE>

                  2004 KEY EMPLOYEE INCENTIVE COMPENSATION PLAN

                         PENN-AMERICA INSURANCE COMPANY
                                   HATBORO, PA

                            EFFECTIVE JANUARY 1, 2004

                                       2
<PAGE>

                         PENN-AMERICA INSURANCE COMPANY
                  2004 KEY EMPLOYEE INCENTIVE COMPENSATION PLAN

                                PLAN DESCRIPTION

I.    COMPENSATION PHILOSOPHY

      Penn-America Insurance Company ("Penn-America" or the "Company") wishes to
      provide a comprehensive, competitive compensation program for its
      management and professional personnel. The Key Employee Incentive
      Compensation Plan (the "Plan") is intended to be an integral part of the
      total compensation opportunity offered by the Company to its key
      employees. The Plan is an adjunct, not an offset, to other forms of
      compensation provided by Penn-America.

II.   PLAN PURPOSES

      The purposes of the Plan are two-fold: to foster achievement of corporate
      performance objectives and to recognize participants' contributions to
      corporate success. Participating employees realize current operating
      period awards when their performances result in attainment of
      pre-determined Company goals for growth, profitability, and efficiency.

      While performance-based variable compensation is intended to be an ongoing
      element of key employee compensation, the Plan as constituted herein is
      intended to operate for calendar year 2004 only.

III.  PARTICIPATION

      Participation in the Plan is open, in the President's discretion, to any
      employee of Penn-America actively employed with Penn-America on the date
      payment is made, who is deemed to have significant positive impact on the
      business and a high potential for long-term professional growth within the
      Penn-America organization. Typically, participation will be limited to
      those senior level positions (managers and higher) who have broad
      responsibilities for product line and employee management, revenue
      generation, client relationship management, support system management, or
      project management responsibilities, and have demonstrated their ability
      to contribute to the business over time.

                                       3
<PAGE>

      The President of Penn-America will, at his discretion, identify employees
      for participation, and ultimately confirm eligible participants at the
      time payment is made. Changes in organizational responsibilities and/or
      personal performance levels may affect ultimate individual participation
      in the Plan.

      Officers and other key employees who may be considered insiders under the
      Securities Exchange Act of 1934, as amended (the "Act") will participate
      in the Plan under the same eligibility guidelines defined for all other
      participants.

IV.   INCENTIVE AWARDS

      The Plan is an annual incentive program, running coincident with the
      Company's fiscal (calendar) year, providing opportunities for participants
      to earn cash based on overall Company and individual performance. The goal
      of the Plan is to be simple and predictable, yet to provide significant
      monetary incentives to participants. The Plan is designed to allow
      participants to share in the Company's success by providing additional
      annual cash compensation for participants.

V.    CRITERIA FOR ANNUAL INCENTIVE AWARDS

      The President has determined that any bonus awarded for calendar year 2004
      shall be calculated as a percentage of base salary as of December 31,
      2004, based on the Company's achievement of GAAP underwriting income,
      before taxes, of $14,984,000.

      A sample calculation follows:

      Sample 2004 Bonus Calculation

<TABLE>
<S>                                                          <C>                                <C>
Employee's base salary on December 31, 2004                                                     $   25,000.00
         Employee's bonus participation percentage                                                         15%
         Eligible base bonus                                                                    $    3,750.00

BONUS EARNED BASED UPON COMPANY'S ACHIEVEMENT OF 2004 GAAP     % OF
UNDERWRITING INCOME GOAL OF $14,984,000:                      ELIGIBLE
                                                             BASE BONUS

EXAMPLES (USING GAAP UNDERWRITING INCOME GOAL):
         $ 4,000,000                                              0%                            $        0.00
         $ 7,500,000                                             85%                            $    3,187.50
         $14,984,000                                            100%                            $    3,750.00
         $18,500,000                                            125%                            $    4,687.50
</TABLE>

                                        4
<PAGE>

VI.   DISTRIBUTION OF INCENTIVE AWARDS

      1.    Determination of Incentive Award

            Annually, before the payment date, the President will make a
            determination of the corporate performance against the criteria
            established, will finalize the participants and will calculate the
            appropriate award for each participant.

      2.    Distribution of Incentive Award

            All compensation payable under the Plan shall be paid on or before
            March 15, 2005 in a lump sum distribution, subject to tax
            withholding and other regular payroll deductions.

      3.    Active Employee Contingency

            Subject to the President's discretion, participants must be actively
            employed with the Company on the payment date to qualify for receipt
            of an incentive award.

VII.  MISCELLANEOUS PROVISIONS

            If any provision of this Plan is determined to be invalid or
            unenforceable, said invalid or unenforceable provision shall be
            deemed null and void, this Plan shall continue and shall be
            construed in all respect to the extent possible to fulfill the
            purposes of the Plan as if such invalid or unenforceable provision
            was omitted.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                              2004 KEIC CASH BONUS (1)
                                  04/01/04   PARTICIPATION     ----------------------------------------------------
                                  SALARY (2)   PERCENTAGE               PLAN                PLAN           PLAN
                                  ----------   ----------      ----------------------   ---------------------------
<S>                               <C>        <C>               <C>       <C>            <C>            <C>
GAAP UNDERWRITING INCOME TARGET                                 ABOVE    $ 7,500,000    $14,984,000    $ 18,500,000

GAAP COMBINED RATIO                                              95.9           95.9           91.9            90.0
RETURN ON EQUITY                                                                10.0%          13.8%           15.0%

     PERCENTAGE EARNED                                              0%            85%           100%            125%

Joseph F. Morris                  $  260,000       30%         $ 0.00    $ 66,300.00    $ 78,000.00    $  97,500.00
</TABLE>

                                       6
<PAGE>

                                    EXHIBIT B

              PERFORMANCE BASED LONG-TERM EQUITY COMPENSATION PLAN

<PAGE>

2004 EQUITY COMPENSATION PLAN SUMMARY OF PARAMETERS

-     Restricted stock, if earned, will be issued under the 2002 Stock Incentive
      Plan.

-     Financial triggers:

      -     50% will be awarded based upon a three-year calendar year combined
            ratio.

      -     50% will be awarded based upon the achievement of a three-year
            return on equity, which shall be calculated by dividing the
            Company's net income (after taxes) by the Company's shareholders'
            account (as defined under GAAP) ("ROE")

      -     Subject to three "knock out" provisions.

                  -     If the three-year ROE is below 10%, then no award will
                        be made under either component.

                  -     If the three-year calendar year combined ratio is
                        greater than 97.0, then no award will be made under
                        either component.

                  -     If the 2004 calendar year combined ratio is greater than
                        100.0, then no award will be made under either
                        component.

-     Aggregate and officer/manager level of restricted stock awarded was
      recommended by Watson.

-     Targeted aggregate incentive payout to Key Employees (cash and restricted
      stock) - 7.5% of Pre-tax income.

-     Targeted aggregate incentive payout to all employees - 10% of pre-tax
      income.

-     Five-year vesting of shares.

-     The Company will pay a cash bonus (gross-up) for the payment of state,
      federal and local income taxes due at the time of vesting as a result of
      the award.

-     The President and CEO will have a discretionary pool of 10,000 shares of
      restricted stock per year available to attract new employees as necessary.

-     The President and CEO will have a discretionary pool of $100,000 available
      annually to award cash bonuses to direct reports of CEO, as long as total
      incentive compensation (including the discretionary pool) does not exceed
      10% of annual pre-tax income.

-     Ownership guidelines:

            -     CEO - three times annual base salary

            -     Direct reports of CEO - one times annual base salary

            -     Direct reports of Direct Reports of CEO - -1/2 times annual
                  base salary

            -     Guidelines become effective June 30, 2006.

<PAGE>


GROUP, INC.
KEY EMPLOYEE INCENTIVE
COMPENSATION PLAN
2004 RESTRICTED STOCK KEY
EMPLOYEE INCENTIVE PLAN

<TABLE>
<CAPTION>

                                                                                                 2004
                                                                                                 PLAN
                                                                                                 ----
<S>                              <C>         <C>                <C>     <C>     <C>     <C>      <C>
FINANCIAL
MEASUREMENT
TRIGGERS:
   THREE-YEAR CALENDAR COMBINED                                 BELOW
RATIO (GAAP BASIS)                                               97.0     97.0    95.3    94.2     93.7
   THREE-YEAR CALENDAR YEAR                                     BELOW
RETURN ON EQUITY                                                 10%      10.0%   11.0%   12.0%    13.1%

                                               PERCENTAGE
                                 04/01/04    OF RESTRICTED
                                  SALARY       STOCK POOL

TARGETED RESTRICTED STOCK                                         -     17,500  31,200  48,400   59,500

Joseph F. Morris                  $260,000       14.5%            -      2,500   4,500   7,000    8,600
</TABLE>

<TABLE>
<CAPTION>

                                                                                VALUE OF AWARD
                                                                                    AT PLAN
                                                                                           % OF
                                                                                $         SALARY
                                                                             --------    --------
<S>                                              <C>      <C>      <C>       <C>         <C>
FINANCIAL
MEASUREMENT
TRIGGERS:
   THREE-YEAR CALENDAR COMBINED
RATIO (GAAP BASIS)                                 91.9     90.9     89.5
   THREE-YEAR CALENDAR YEAR
RETURN ON EQUITY                                   14.0%    15.0%    16.0%

TARGETED RESTRICTED STOCK                        71,300   80,800   89,600

Joseph F. Morris                                 10,100   11,700   13,000    $129,000     49.6%
</TABLE>

<PAGE>

                KEY EMPLOYEE RESTRICTED SHARE INCENTIVE PLAN (2)

2005 METRICS

<TABLE>
<S>                                               <C>     <C>        <C>       <C>        <C>        <C>        <C>        <C>
Three-Year Calendar Combined Ratio (GAAP
Basis)                                                        97.0       95.3      94.2       93.7        91.9      90.9       89.5
Three-Year Calendar Year
Return on Equity                                              10.0       11.0      12.0       13.1        14.0      15.0       16.0

2005 Salary                                               $350,000   $350,000  $350,000   $350,000   $ 350,000  $350,000   $350,000
Target Opportunity as Percentage of Base Salary               14.7%      26.2%     40.7%      50.0%       59.9%     67.9%      75.3%
Dollar Value of Target Opportunity                        $ 51,000   $ 92,000  $142,000   $175,000   $ 210,000  $238,000   $264,000
Assumed Market Price at Time (1)                  $16.00
Restricted Shares Awarded                                    3,200      5,700     8,900     10,900      13,100    14,900     16,500
</TABLE>

(1) Illustrative price only. The conversion price will be market value of UNGL's
Class A Common Shares at time of grant.

(2) The Company will pay a cash bonus (gross-up) for the payment of state,
federal and local income taxes due at the time of vesting as a result of the
award.

<PAGE>

                                    EXHIBIT C

                          INTEGRATION BONUS OBJECTIVES

The following objectives and Percentages (as defined below) shall be used to
calculate the amount of Executive's Annual Integration Bonus. The Annual
Integration Bonus with respect to a given fiscal year (e.g., 2005 or 2006) (the
"Bonus Determination Year") shall be equal to the product of (i) 50% of the
Target Integration Bonus and (ii) the sum of Percentage 1 and Percentage 2,
subject to any other provisions of this Agreement governing such Bonus. The
Board shall retain the sole and exclusive authority and discretion to administer
and interpret the terms of this Integration Bonus arrangement, including without
limitation, the determination of whether the targets and objectives set forth
below have been satisfied, and its determination and judgment shall be made in
good faith.

1. INCOME TARGETS -- "PERCENTAGE 1"

<TABLE>
<CAPTION>
PRE-TAX OPERATING INCOME OF THE COMPANY FOR THE BONUS DETERMINATION YEAR BEFORE
GIVING EFFECT TO ANY  TRANSACTIONS WITH WIND RIVER INSURANCE                         PERCENTAGE 1
COMPANY, LTD.                                                                           EQUALS
-------------------------------------------------------------------------------    --------------
<S>                                                                                <C>
80% of the Target Income (as defined below) or less                                      0%
Greater than

80% but less than 100% of the Target Income                                        pro-rata (in a
                                                                                    linear manner)

100% of the Target Income or greater                                                    75%
</TABLE>

The Target Income shall be equal to $36,483,000 for 2005 and $40,131,000 for
2006.

2. RETENTION TARGETS - "PERCENTAGE 2"

Percentage 2 shall equal the product of (i) 25% and (ii) the lower of
Percentages 2(a) and 2(b) below, but in no event shall Percentage 2 exceed 25%:

(a) Percentage 2(a) shall be equal to (i) the rate of retention of the Company's
managing general agents for the Bonus Determination Year divided by (ii) the
average rate of retention of the Company's managing general agents over the
three fiscal years beginning with 2002 and ending with 2004.

(b) Percentage 2(b) shall be equal to (i) the rate of retention of the Company's
vice-presidents and assistant vice-presidents for the Bonus Determination Year
divided by (ii) the average rate of the retention of the Company's
vice-presidents and assistant vice-presidents over the three fiscal years
beginning with 2002 and ending with 2004.

For purposes of this Section 2, retention rates shall not take into account any
terminations of managing general agents, vice-presidents and assistant
vice-presidents initiated by the Company,

<PAGE>

or new hires or new managing general agent relationships until one year has
passed since the date of such hire or the date of such formal commencement of
such relationship. For purposes solely of calculating Percentage 2, the 2004
fiscal year period shall take into account only that portion of 2004 that
preceded the Effective Date and the 2005 fiscal year period shall take into
account all of 2005 and that portion of 2004 that fell on or after the Effective
Date.

The Board shall retain the sole discretion to increase Percentage 2 as it deems
appropriate.

<PAGE>

                                    EXHIBIT D

                           STOCK OWNERSHIP GUIDELINES

D-1 Beginning on March 31, 2007, Executives who hold the position of Vice
President with the Company shall own Class A Common shares of UNGL ("UNGL
Shares") equal in value to one-half times Executive's then current annual base
salary.

D-2. Executives who hold the position of Assistant Vice President with the
Company or any position that is similar or less prestigious in stature shall not
be subject to this Exhibit D.

D-3. For all other Executives:

      (1) As of the Effective Date, Executive shall own UNGL Shares equal in
value to one (1) times Executive's then current annual base salary.

      (2) By March 31, 2007, Executive shall own UNGL Shares equal in value to
two (2) times Executive's then current annual base salary.

<PAGE>

                                    EXHIBIT E

             LIST OF GENERAL BENEFITS TO WHICH EXECUTIVE IS ENTITLED

Paid Vacation
Paid Sick Time
Paid Holidays
Personal Day
Cafeteria Reflex Plan
Employee Group Medical Plans
Employee Group Dental Plan
Employee Group Vision Plan
Medical and Dependent Care Flexible Spending Accounts
Company provided Life Insurance
Supplemental personal insurance on file with Penn-America
Accidental Death and Dismemberment
Long Term Disability
Short Term Disability
Long Term Care Insurance
Incentive Savings and Retirement Plan
Employee Assistance Program
Education Reimbursement
Red Cross CPR and First Aid
Direct Deposit of Paycheck
PNC Bank Workplace Banking Program
Finder's Fee
Memberships to the Hatboro Area YMCA
Country club dues

<PAGE>

                                   EXHIBIT F-1

                                 INITIAL RELEASE

      R-1. Effective at Closing (the "Effective Date"), and otherwise subject to
the terms and conditions, including but not limited to effectiveness of the new
Employment Agreement dated October 14, 2004 (the "Employment Agreement"),
Executive hereby irrevocably consents to the termination of any agreements
regarding employment and compensation (including change-of-control compensation)
between himself and Penn-America Group, Inc. and its affiliates and insurance
subsidiaries (the "Company") (such agreements, the "Existing Agreements"), and
hereby agrees that the entry of the Company and Executive into the Employment
Agreement will not give rise to any liability on the part of the Company or any
of its affiliates under the Existing Agreements. Executive on behalf of himself
and his affiliates, heirs, executors and successors hereby remises, releases and
forever discharges, and by these present does release and forever discharge the
Company and its subsidiaries, parents and affiliates, and their respective
successors and assigns of and from any and all actions, causes of action, suits,
debts, accounts, bonds, bills, covenants, contracts, controversies, agreements,
liabilities, damages, costs, expenses, demands, judgments, executions,
variances, claims and other obligations of whatever kind or nature, in law or in
equity, known or unknown, including without limitation, arising from or
connected with or related to the Existing Agreements or any employment by or
other matter relating to the Company or any claim to compensation or benefits
arising from or related to his employment (collectively, the "Claims"),
including without limitation, any Claims related to or in connection with Fox
Paine & Company, LLC, Fox Paine Capital Fund, L.P., FPC Investors, L.P., Fox
Paine Capital, LLC; Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund
II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund
II Co-Investors International, L.P., FPC Investment GP, and all corporate
entities that are partners in any such related entities and each of their past
and present directors, members, managers, officers, employees, servants,
divisions, owners, shareholders and successors (all collectively referred to
hereinafter for purposes of this paragraph R-1 as the "Company"), including any
Claims, under local, state, or federal law based on:

      (i)   claims of discrimination on the basis of race, age, religion, sex,
            sexual harassment, sexual orientation, national origin, marital
            status, or disability including without limitation, any claims
            arising under the Age Discrimination in Employment Act of 1967
            ("ADEA"), as amended, the Older Workers Benefit Protection Act, the
            Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964,
            the Civil Rights Act of 1991, the Americans with Disabilities Act of
            1990, the Family and Medical Leave Act of 1993, each as amended;

      (ii)  infliction of any tort;

      (iii) breach of contract, whether actual or implied, written or oral; and

      (iv)  any violation of any pension or welfare plans or any other benefit
            plan or arrangement (including without limitation, ERISA).

      The foregoing Release shall not act as a release of (i) the obligations of
the Company under the Employment Agreement dated August 2, 2000 (the "Old
Employment Agreement"), to provide Executive with the payments, benefits and
severance benefits specified therein, (ii) any

<PAGE>

vested benefits under any employee retirement or welfare plan or program, (iii)
any rights as a shareholder or owner of any equity interest in the Company, (iv)
any rights Executive may have to receive unemployment compensation, and (v)
Executive's right to be indemnified by the Company, pursuant to charter,
certificate, by-laws or other constituent documents of the Company, or under any
insurance maintained by or for the benefit of the Company, for any liability,
cost or expense for which Executive would have been indemnified for actions
taken on behalf of the Company during Executive's employment with the Company.

      R-2. Executive further represents that he has not, at any time up to and
including the Effective Date, commenced, and will not in the future commence, to
the full extent permitted by law, any action or proceeding, or file any charge
or complaint, of any nature against the Company relating to the matters released
above and Executive waives to the fullest extent permitted by law, any right to
any monetary or equitable relief in any proceeding that may relate to the
matters released above.

      R-3. Executive agrees that in the event of a breach by him or his heirs of
this Release, and in addition to any other rights or remedies the Company may
have hereunder or otherwise: (i) the Company will, with respect to paragraph R-1
hereof, be irreparably damaged and will have no adequate remedy at law, and will
be entitled to an injunction as a matter of right from any court of competent
jurisdiction restraining any further breach of this Release; (ii) the Company
will, with respect to a breach by Executive of paragraph R-1, be indemnified and
held harmless from and against any and all damages or losses incurred by the
Company (including reasonable attorneys' fees and expenses) as a result of such
breach; and (iii) the Company may offset against any amounts otherwise owed
Executive damages or losses incurred as a result of a breach of this Release.
Executive further agrees that this Release may and shall be pleaded as a full
and complete defense to any action, suit or other proceeding covered by the
terms of this Release, which is or may be instituted, prosecuted or maintained
by Executive and his heirs.

      R-4. In full and complete settlement of any claims that the Company may
have against Executive, other than the fulfillment of Executive's obligations
hereunder and Executive's remaining obligations under the Old Employment
Agreement, if any, and for and in consideration of the undertakings of
Executive, the Company does hereby remise, release, and forever discharge
Executive and Executive's heirs, executors and administrators (hereinafter all
included within the term "Executive"), of and from any and all manner of actions
and causes of actions, suits, debts, liabilities, claims and demands whatsoever
in law or in equity, which the Company ever had, now has, or hereafter may have,
by reason of any civil (but specifically not any criminal act or fraud,
embezzlement or dishonest conduct) matter, cause or thing within the scope of
Executive's employment by the Company from the beginning of Executive's
employment with the Company to the Effective Date of this Release; and
particularly, but without limitation of the foregoing general terms, any claims
arising from or relating in any way to actions taken by Executive within the
scope of Executive's employment relationship and the termination of that
employment relationship with the Company (all such items, "Claims").

<PAGE>

      THE FOREGOING RELEASE IS HEREBY AGREED TO ON THIS 14th OF OCTOBER, 2004.
THIS RELEASE SHALL BE OF NO FORCE AND EFFECT IF THE MERGER TRANSACTION
ANTICIPATED BETWEEN UNGL AND THE COMPANY IS NOT CONSUMMATED.

                                          PENN-AMERICA GROUP, INC.

/s/ Joseph F. Morris                      /s/ Garland P. Pezzuolo
---------------------                     -------------------------------
Joseph F. Morris                          Garland P. Pezzuolo
                                          Vice President, Secretary & General
                                          Counsel

<PAGE>

                                   EXHIBIT F-2

                             POST-EMPLOYMENT RELEASE

      R-1. Pursuant to Section 3.02 of the employment agreement between Joseph
Morris ("Executive") and Penn-America Group, Inc. and its insurance subsidiaries
(the "Company") dated as of the 14th of October, 2004 (the "New Employment
Agreement"), Executive hereby irrevocably consents to the termination of any
agreements regarding employment and compensation between himself and the Company
(or its affiliates) ("Existing Agreements"). Executive on behalf of himself and
his affiliates, heirs, executors and successors hereby remises, releases and
forever discharges, and by these present does release and forever discharge the
Company and its subsidiaries, parents and affiliates, and their respective
successors and assigns of and from any and all actions, causes of action, suits,
debts, accounts, bonds, bills, covenants, contracts, controversies, agreements,
liabilities, damages, costs, expenses, demands, judgments, executions,
variances, claims and other obligations of whatever kind or nature, in law or in
equity, known or unknown, including without limitation, arising from or
connected with or related to the Existing Agreements or any employment by or
other matter relating to the Company or any claim to compensation or benefits
arising from or related to his employment (collectively, the "Claims"),
including without limitation, any Claims related to or in connection with Fox
Paine & Company, LLC, Fox Paine Capital Fund, L.P., FPC Investors, L.P., Fox
Paine Capital, LLC; Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund
II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund
II Co-Investors International, L.P., FPC Investment GP, and all corporate
entities that are partners in any such related entities and each of their past
and present directors, members, managers, officers, employees, servants,
divisions, owners, shareholders and successors (all collectively referred to
hereinafter for purposes of this paragraph R-1 as the "Company"), including any
Claims, under local, state, or federal law based on:

      (i)   claims of discrimination on the basis of race, age, religion, sex,
            sexual harassment, sexual orientation, national origin, marital
            status, or disability including without limitation, any claims
            arising under the Age Discrimination in Employment Act of 1967
            ("ADEA"), as amended, the Older Workers Benefit Protection Act, the
            Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964,
            the Civil Rights Act of 1991, the Americans with Disabilities Act of
            1990, the Family and Medical Leave Act of 1993, each as amended;

      (ii)  infliction of any tort;

      (iii) breach of contract, whether actual or implied, written or oral; and

      (iv)  any violation of any pension or welfare plans or any other benefit
            plan or arrangement (including without limitation, ERISA).

      The foregoing Release shall not act as a release of (i) the obligations of
the Company under the New Employment Agreement, to provide Executive with the
payments, benefits and Severance Benefits specified therein to be provided to
Executive in connection with the termination of Executive's employment with the
Company, (ii) any vested benefits under any employee retirement or welfare plan
or program, (iii) any rights as a shareholder or owner of any equity interest in
the Company (subject to any changes or modifications that may be made
<PAGE>

therein pursuant to the provisions of the documentation relating to the merger
transaction between United National Group, Ltd. and its affiliates and the
Company and the provisions of the New Employment Agreement), (iv) any rights
Executive may have to receive unemployment compensation, and (v) Executive's
right to be indemnified by the Company, pursuant to charter, certificate,
by-laws or other constituent documents of the Company, or under any insurance
maintained by or for the benefit of the Company (and/or its predecessor), for
any liability, cost or expense for which Executive would have been indemnified
for actions taken by Executive on behalf of the Company prior to the date of
this Release.

      R-2. Executive further represents that he has not, at any time up to and
including the Effective Date, commenced, and will not in the future commence, to
the full extent permitted by law, any action or proceeding, or file any charge
or complaint, of any nature against the Company relating to the matters released
above and Executive waives to the full extent permitted by law, any right to any
monetary or equitable relief in any proceeding that may relate to the matters
released above.

      R-3. Executive agrees that in the event of a breach by him or his heirs of
this Agreement, and in addition to any other rights or remedies the Company may
have hereunder or otherwise: (i) the Company will, with respect to paragraph R-1
hereof, be irreparably damaged and will have no adequate remedy at law, and will
be entitled to an injunction as a matter of right from any court of competent
jurisdiction restraining any further breach of this Agreement; (ii) the Company
will, with respect to a breach by Executive of paragraph R-1, be indemnified and
held harmless from and against any and all damages or losses incurred by the
Company (including reasonable attorneys' fees and expenses) as a result of such
breach; and (iii) the Company may offset against any amounts otherwise owed
Executive damages or losses incurred as a result of a breach of this Release.
Executive further agrees that this Agreement may and shall be pleaded as a full
and complete defense to any action, suit or other proceeding covered by the
terms of this Agreement which is or may be instituted, prosecuted or maintained
by Executive and his heirs.

      R-4. In full and complete settlement of any claims that the Company may
have against Executive, other than the fulfillment of Executive's obligations
hereunder and Executive's obligations under the New Employment Agreement,
including, without limitation, Executive's obligations under Article IV of the
New Employment Agreement, and for and in consideration of the undertakings of
Executive, the Company does hereby remise, release, and forever discharge
Executive and Executive's heirs, executors and administrators (hereinafter all
included within the term "Executive"), of and from any and all manner of actions
and causes of actions, suits, debts, liabilities, claims and demands whatsoever
in law or in equity, which the Company ever had, now has, or hereafter may have,
by reason of any civil (but specifically not any criminal act or fraud,
embezzlement, or dishonest conduct) matter, cause or thing within the scope of
Executive's employment by the Company from the beginning of Executive's
employment with the Company and its affiliates to the date of this Agreement;
and particularly, but without limitation of the foregoing general terms, any
claims arising from or relating in any way to actions taken by Executive within
the scope of Executive's employment relationship and the termination of that
employment relationship with the Company and its affiliates (all such items,
"Claims").

<PAGE>

THE FOREGOING RELEASE IS HEREBY AGREED TO ON THIS ___ OF ___________ 2004:

EXECUTIVE                                            PENN-AMERICA GROUP, INC.

___________________                                  ________________________
Joseph F. Morris                                     Jon S. Saltzman
                                                     President & CEO

<PAGE>

                                    EXHIBIT G

                             WORK FOR HIRE AGREEMENT

As a condition of my employment with Penn-America Group, Inc. and its insurance
subsidiaries, affiliates, successors or assigns (collectively, the "Company"),
and in consideration of my employment with the Company and my receipt of the
compensation and benefits now and hereafter provided to me by the Company, I
agree to the following:

1.    Inventions.

      (a)   Assignment of Inventions. I shall disclose to the Company, and
hereby sell, transfer and assign to the Company, or its designee, all right,
title, and interest in and to any and all inventions, original works of
authorship, developments, concepts, improvements or trade secrets, whether or
not patentable or registrable under copyright or similar laws, and other
intellectual property which I have or may solely or jointly conceive or develop
or reduce to practice during the period of time I have been and shall remain in
the employ of the Company (collectively referred to as "Inventions"), except as
provided in Section 1(c) below. All original works of authorship which have been
or are made by me within the scope of and during the period of my employment
with the Company and which are protectable by copyright are "works made for
hire" and the Company or its designee shall own all rights therein. Any
Invention relating to the business of the Company and its affiliates that is
developed or disclosed by me within six (6) months following the termination of
my employment with the Company shall be deemed to fall within the provisions of
this Section 1(a) unless proved to have been first conceived and made following
such termination.

      (b)   Patent and Copyright Registrations. I shall assist the Company, or
its designee, at the Company's expense, in every proper way to secure the
Company's or its designee's rights in the Inventions and any copyrights, patents
or other intellectual property rights relating thereto in any and all countries.
I further agree that my obligation to execute or cause to be executed, when it
is in my power to do so, any such instrument or papers shall continue after the
termination of this Agreement. If the Company is unable because of my mental or
physical incapacity or for any other reason to secure my signature to apply for
or to pursue any application for any United States or foreign patents or
copyright registrations covering Inventions assigned to the Company as above,
then I hereby irrevocably designate and appoint the Company and its duly
authorized officers and agents as my agent and attorney in fact, to do all other
lawfully permitted acts to protect Inventions with the same legal force and
effect as if executed by me.

      (c)   Exception to Assignments. I understand that the provisions of this
Agreement requiring assignment of Inventions to the Company do not apply to any
Inventions made by me prior to my employment with the Company (as demonstrated
by written evidence as listed in G-1) and that is not used with my permission by
the Company or any of its designees. I also shall retain ownership of any
Inventions made by me while employed by the Company if such Inventions are made
without use of any Company equipment, supplies, facilities or trade secret
information and are developed entirely on my own time, and (a) do not relate (1)
to the business

<PAGE>

of the Company or (2) to the Company's actual or demonstrably anticipated
research or development, or (b) do not result from any work performed by me for
the Company or its clients.

2.    Representations. I agree to execute or verify any proper document required
to carry out the terms of this Agreement. I represent that my performance of all
the terms of this Agreement will not breach any agreement to keep in confidence
proprietary information acquired by me in confidence or in trust prior to my
employment by the Company. I have not entered into, and I agree I will not enter
into, any oral or written agreement in conflict with this Agreement.

3.    Injunctive Relief and Other Remedies. I acknowledge and agree that my
failure to comply with any of the terms of this Agreement shall irreparably harm
the business of the Company and that the Company shall not have an adequate
remedy at law in the event of such non-compliance. I further acknowledge and
agree that, notwithstanding any arbitration provisions in any agreement that I
may otherwise have with the Company, the Company shall be entitled to obtain a
court order preventing me from committing, threatening, or continuing any acts
of material non-compliance with this Agreement. All of the Company's remedies
for breach of this Agreement shall be cumulative and the pursuit of one remedy
shall not be deemed to exclude any other remedies.

4.    Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of, the Company and me, and our respective successors and
assigns. The Company shall have the right to assign its rights hereunder to any
successor in interest, whether by merger, consolidation, sale of assets, or
otherwise.

5.    Entire Agreement. This Agreement is the complete agreement between the
parties concerning the subject matter hereof and supersedes any prior such
agreements. This Agreement may not be amended or in any way modified except in
writing signed by both parties.

6.    Severability. If one or more of the provisions in this Agreement are
deemed void by law, then the remaining provisions shall continue in full force
and effect.

7.    Governing Law; Consent to Jurisdiction. I hereby expressly agree that the
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Pennsylvania without regard to its
conflicts of law principles.

8.    Effect of Waiver. No waiver by the Company of any breach by me of any
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions at the same or at any prior or subsequent time.

Date: October 14, 2004

/s/ Joseph F Morris
------------------------
Signature

Joseph F. Morris
------------------------------------
Name of Employee (typed or printed)

<PAGE>

                                   EXHIBIT G-1

            LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP

<TABLE>
<CAPTION>
Title      Date      Identifying Number or Brief Description
------     ----      ---------------------------------------
<S>        <C>       <C>
           2000      Any work product brought to Penn-America
                     from my prior experience with Reliance,
                     including but not limited to,
                     -    On-line MIS system
                     -    Components of premium dollar
                     -    Producer (Agent) Manual
                     -    Reliance Underwriting Manuals
                     -    Branch and Agent Experience
                          Evaluation Reports
</TABLE>

____ No inventions or improvements

____ Additional Sheets Attached

Signature of Employee:  /s/ Joseph F. Morris
                       ----------------------------

Print Name of Employee: Joseph F. Morris

Date:  October 14, 2004