ex10-1.htm


    
       Exhibit
10.1



     

    AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

     

    THIS
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT, made and entered into as of
the 15th day of
March, 2009, by and between PMA Capital Corporation, a Pennsylvania corporation,
with its principal place of business at 380 Sentry Parkway, Blue Bell,
Pennsylvania 19422-0754 and/or such of its affiliates and/or subsidiaries it
designates (hereinafter collectively referred to as "PMA Capital") and VINCENT
T. DONNELLY ("Executive")

    


    WHEREAS,
Executive has significant experience in the insurance industry and currently
serves as the President and Chief Executive Officer of PMA Capital pursuant to
an Executive Employment Agreement made and entered into as of March 15, 2006 and
as a member of the Board of Directors of PMA Capital;

    


    WHEREAS,
PMA Capital desires to continue to avail itself of the expertise possessed by
Executive and to employ Executive as President and Chief Executive Officer, in
which position he will have access to confidential information of PMA
Capital;

    


    WHEREAS,
Executive desires to be so employed by PMA Capital;

    


    WHEREAS,
the parties desire to amend and restate the March 15, 2006 Employment
Agreement.

    


    NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, and each intending to be legally bound hereby, the parties agree as
follows:

    


    1.           Employment.  Subject
to the terms of this Agreement, PMA Capital hereby continues to employ Executive
as President and Chief Executive Officer. In that capacity, Executive will
perform such duties as are appropriate to the management of all aspects of PMA
Capital's business and such other duties, consistent with the foregoing duties
and his position, as directed by the Chairman of the Board of Directors of PMA
Capital.  Executive shall report 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    directly
to the Chairman of the Board of Directors of PMA Capital.  Executive
hereby accepts such employment and agrees to serve PMA Capital on a full-time
basis and to perform such duties faithfully, diligently and to the best of his
ability and in conformity with all federal, state and local statutes,
regulations and rules applicable to PMA Capital and in accordance with the PMA
Capital Business Ethics and Practices Policy.  Executive further
agrees not to engage in any outside for-profit business, employment or
commercial activity, without first obtaining approval in writing from the
Chairman of the Board of Directors of PMA Capital.

    


    2.           Compensation.  PMA
Capital agrees to pay Executive, and Executive agrees to accept from PMA
Capital, in full payment for Executive's services, compensation consisting of
the following:

    


    (a)           A
minimum base salary at an annual rate of $715,000, payable on a semi-monthly
basis or on such other basis that PMA Capital may adopt as its regular payroll
practice. The Compensation Committee of the Board of Directors of PMA Capital
will review the base salary on at least an annual basis at the same time that it
reviews the annual incentive compensation awards;

    


    (b)           The
standard benefits PMA Capital makes available from time to time to its senior
executive employees and, in addition, Executive will participate in the
following employee benefit plans according to their terms, as amended and
restated from time to time:  the PMA Capital Corporation Retirement
Savings Excess Plan; the PMA Capital Corporation Executive Management Pension
Plan (the "EMPP"); and the PMA CapitalCorporation Supplemental Executive
Retirement Plan (frozen as of 12/31/05); and a supplemental long-term disability
benefit which currently provides for a benefit of $7,500 per month, subject to
policy restrictions;

     

    
      
        
        

      

      
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    (c)           Annual
incentive compensation based on performance objectives established for 2009,
2010 and 2011, to be described in Exhibit A.  Such incentive
compensation is to be paid within two and a half months after the end of the
applicable year.  Annual incentive metrics will be established
annually by the Compensation Committee of the Board; and

    


    (d)           Eligibility
for such long-term incentive award(s) to be determined by the Compensation
Committee of the Board of Directors of PMA Capital under PMA Capital's 2007
Equity Incentive Plan or any successor plan as described in Exhibit
B.

    


    3.           Expenses.  PMA
Capital will reimburse Executive for such of his out-of-pocket expenses as are
reasonably necessary in connection with services rendered by Executive pursuant
to this Agreement, as provided in the business expense policies adopted by PMA
Capital from time to time.  Notwithstanding the foregoing, the amount
of expenses eligible for reimbursement during any calendar year shall not affect
the expenses eligible for reimbursement in any other calendar year, and the
reimbursement of an eligible expense shall be made as soon as practicable after
Executive requests such reimbursement, but not later than December 31 following
the calendar year in which the expense was incurred.

    


    4.           Term.  The
term of this Agreement is from March 15, 2009 through March 14,
2012.  No later than November 1, 2011, Executive shall inform the
Chairman of PMA Capital in writing whether or not he is interested in
negotiating an. extension of this Agreement for a new term and, if so, propose
the terms and conditions for such an extension. Within one week of receiving
such written notice from Executive, PMA Capital shall inform Executive if it is
willing to negotiate an extension of this Agreement.  If both parties
are interested in negotiating an extension of this Agreement, they then will
engage in good faith negotiations for an extension of this Agreement, provided,
however, that Executive's failure to negotiate in good faith will not be deemed
to be "Cause" for termination of Executive's employment hereunder, and will not
be the 

     

    
      
        
        

      

      
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    basis for
PMA Capital's denial of or failure to pay any severance payments, compensation
or benefits due to Executive pursuant to the provisions of this
Agreement.

    


    5.           
Termination.  Executive's
employment may be terminated before the end of the term of this Agreement as
follows:

    


    (a)           By
PMA Capital, at any time, for Cause; after providing Executive with at least
three (3) weeks written notice; specifying the circumstances amounting to Cause
and, if requested by Executive, the opportunity for Executive and his counsel to
appear before the Board of Directors of PMA Capital to address these
circumstances.  "Cause" shall mean Executive: (i) commits any act of
fraud, embezzlement, theft or commission of a felony in the course of his
employment; (ii) engages in knowing and willful misconduct or gross negligence
in the performance of his duties; (iii) unlawfully appropriates a corporate
opportunity of PMA Capital or its affiliates and subsidiaries (as defined in
paragraph 23 below); or (iv) knowingly and willfully breaches any of Executive's
representations, warranties or covenants contained in this Agreement in any
material respect, each as reasonably determined by the Board of Directors of PMA
Capital.  In the event that "Cause" is based on gross negligence, PMA
Capital shall give Executive written notice specifying in reasonable detail the
conduct that it believes amounts to gross negligence, and shall provide
Executive with the three (3) week notice period specified above to cease or
correct such conduct;

    


    (b)           Automatically
on the date of Executive's death;

    


    (c)           Automatically
if Executive becomes disabled or otherwise incapacitated so that Executive
cannot perform the essential functions of his job with or without reasonable
accommodation for a continuous period of more than one hundred eighty (180) days
or for more than one hundred eighty (180) cumulative days in any one (1) year
period ("Permanent Disability").  Any question as to the existence of
Permanent Disability upon which Executive 

     

    
      
        
        

      

      
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    and PMA
Capital cannot agree shall be determined by a qualified independent physician
selected by Executive (or, if Executive is unable to make such selection, such
selection shall be made by any adult member of Executive's immediate family or
Executive's legal representative) and approved by PMA Capital, said approval not
to be unreasonably withheld.  The determination of such physician
shall be communicated in writing to PMA Capital and to Executive and shall be
final and conclusive for all purposes of this Agreement.  Until the
date of termination as defined herein by reason of Permanent Disability,
Executive shall continue to receive the compensation and benefits as set forth
in paragraph 2 of this Agreement.  No termination of this Agreement
for Permanent Disability shall impair any rights of Executive to collect
benefits according to the terms of any disability policy maintained by PMA
Capital for that Permanent Disability;

    


    (d)           By
PMA Capital, at any time, for other than Cause upon thirty (30) days written
notice to Executive; or

    


    (e)           By
Executive’s voluntary resignation, prior to his being employed for at least 90%
of the term of the Agreement,  for other than Good Reason upon not
less than thirty (30) days prior written notice to PMA Capital; or

    


    (f)           By
Executive’s voluntary resignation for Good Reason, which shall mean Executive
has given thirty (30) days prior written notice that he intends to resign due
to:  (i) a material adverse change in his duties, authority or
responsibilities without his agreement; (ii) his being required to relocate his
office to executive offices outside of an area within a fifty (50) mile radius
of PMA Capital’s existing executive offices in Blue Bell, Pennsylvania; (iii)
there being a material reduction in the overall value of the employee benefits
being provided to him pursuant to paragraph 2(b) unless the reduction is
effective for all senior executive employees; or (iv) a material breach by PMA
Capital of any of its obligations to Executive under this Agreement (“Good
Reason Events”).  For a voluntary resignation to constitute a
voluntary 

     

    
      
        
        

      

      
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    resignation
for Good Reason Executive (i) must provide PMA Capital notice within sixty (60)
days of the initial existence of one or more of the Good Reason Events (“Good
Reason Notice”) and PMA Capital fails to remedy the Good Reason Event(s) within
thirty (30) days of receipt of the notice and (ii) must voluntarily incur a
“separation from service” from PMA Capital within the meaning of section 409A of
the Code” within 120 days of the initial existence of the Good Reason Event
described in the Good Reason Notice; or

    


    (g)           By
Executive’s voluntary resignation between twelve and fourteen months following a
Section 409A Change in Control of PMA Capital Corporation, upon not less than
thirty (30) days prior written notice to PMA Capital, which notice is given not
earlier than eleven (11) months and not later than thirteen (13) months
following a Section 409A Change in Control.  For purposes of this
Agreement, a “Section 409A Change in Control” is a “Change in Control” as set
forth in paragraph 9(b) of the PMA Capital Corporation 2007 Omnibus Incentive
Compensation Plan that is also a change in the ownership or effective control of
PMA Capital Corporation, or in the ownership of a substantial portion of the
assets of PMA Capital Corporation, as described in Section 409A(2)(A)(v) of the
Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury
regulations promulgated thereunder; or

     

    (h)           By
Executive’s voluntary resignation for other than Good Reason after being
employed for at least 90% of the term of the Agreement (“Service Period”) upon
not less than thirty (30) days prior written notice to PMA Capital provided
Executive incurs a “separation from service” from PMA Capital, within the
meaning of Section 409A of the Code, on or prior to the expiration of this
Agreement.

    


    6.             
Incidents of
Termination.

    


    (a)           If
Executive’s employment is terminated under subparagraph 5(a), (b), (c) or (e)
above, PMA Capital shall have no further obligation under this Agreement, except
as 

     

    
      
        
        

      

      
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    provided
under paragraph 16 and except the obligation to:  (i) pay Executive an
amount equal to the portion of his compensation and out-of-pocket business
expenses, as defined in paragraph 3, as may be accrued and unpaid on the date of
termination; (ii) pay Executive such portion of Executive’s annual incentive
compensation for the year in which termination occurs as the Compensation
Committee of the Board of Directors of PMA Capital shall determine was earned by
Executive; and (iii) provide all benefits set forth pursuant to the benefit,
medical, pension or other plans and programs provided by PMA Capital for which
Executive qualifies (collectively “Benefits”) as are due under the terms of the
Benefits plans and programs, recognizing that Executive’s employment has
terminated.  In the event of Executive’s death, any sums and benefits
due to Executive under any provision of this Agreement shall be paid to his
estate or heirs, as applicable.  Any accrued compensation and annual
incentive compensation payable pursuant to this subparagraph 6(a) shall be paid
within 90 days of the date on which Executive’s employment
terminates.

    


    (b)           (1)           Except
as stated in subparagraph 6(d) below, if Executive’s employment is terminated
under subparagraph 5(d), 5(f) or 5(h) above (and such termination constitutes a
“separation from service” within the meaning of section 409A of the Code), then
PMA Capital shall pay Executive as described in paragraph 6(a) above and as
described in Exhibit B, plus it will pay any cash portion of the annual
incentive compensation for the year in which termination occurs that is earned
because Executive accomplished certain identifiable tasks as of the date of
termination.  With regard only to payment of the cash portion of the
annual incentive compensation for the year in which termination occurs, it is
specifically understood that objectives related to profitability, revenue
growth, stock price and similar performance measures are not intended to be
measured other than at year end and accordingly will not qualify as identifiable
tasks on an interim basis and these are not eligible for payment of incentive


     

    
      
        
        

      

      
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    compensation
unless deemed appropriate by the Compensation Committee of the Board of
Directors of PMA Capital in connection with their consideration of payments as
discussed above. Any cash portion of the annual incentive compensation payable
pursuant to this subparagraph 6(b)(1) shall be paid within 90 days of the date
on which the Executive's employment terminates. In addition, solely in the event
of a termination under 5(d) or 5(f) above, PMA Capital shall pay Executive
twenty-four (24) months of severance pay with each monthly payment being equal
to the sum of Executive's then current monthly base salary plus 1/12th of
Executive's minimum targeted annual incentive compensation for the year in which
employment terminates, minus any appropriate withholdings and deductions,
without regard to whether Executive obtains another position with a new
employer. (For example, if Executive's annual base salary at the time of his
termination is $715,000 and his minimum targeted annual incentive compensation
at the time of his termination is $429,000, Executive's monthly severance
payment for each month of the severance period will equal 1/12th of $715,000
plus 1/12th of $429,000 or $95,333.33, minus any appropriate withholdings or
deductions.) These severance payments will be made on or about the regular pay
dates recognized by PMA Capital, beginning on the next regular pay date
following Executive's last regular pay date on which he is paid his base salary,
provided that any severance triggered by a termination of Executive's employment
that occurs within the fourteen (14) month period following a Section 409A
Change in Control shall be paid in a lump sum on the first business day
following the six (6) month anniversary of Executive's termination date. Solely
in the event of a termination under 5(h) above, PMA Capital shall pay Executive
severance pay totaling $2,288,000 in 24 equal monthly
installments.  These severance payments will be made on or about the
regular pay dates recognized by PMA Capital, beginning on the next regular pay
date following Executive's last regular pay date on which he is paid his base
salary, provided that any severance triggered by a termination of Executive's
employment that

     

    
      
        
        

      

      
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     occurs
within the fourteen (14) month period following a Section 409A Change in Control
shall be paid in a lump sum on the first business day following the six (6)
month anniversary of Executive's termination date.

    


    (2)           Notwithstanding
the foregoing, the severance payments described in subparagraph 6(b)(1) which
otherwise would be paid during the six (6) month period beginning on the day
following Executive’s separation from service described in subparagraph 5(d),
5(f), or 5(h) shall instead be paid to Executive in a single lump sum payment on
the first business day following the end of such six (6) month
period.  The lump sum payment shall be adjusted for simple interest
that accrues during the initial six (6) month period following Executive's
termination of employment at the interest rate used to determine lump sum
payments under the PMA Capital Corporation Pension Plan.

    


    (3)           Further,
if Executive elects to continue his health insurance benefits under COBRA, PMA
Capital will continue to pay the same monthly subsidy of the premiums for such
insurance continuation as was being paid by PMA Capital before Executive’s
employment terminated, with the remainder of the premium being deducted from
Executive’s severance payments to the extent severance is paid in installments
pursuant to subparagraph 6(b)(1), through the earlier of the end of two (2)
years from the termination date or the date Executive becomes eligible to
receive and/or obtain alternative health insurance coverage through new
employment.  During the six (6) month period in which Executive’s
severance benefits are delayed (as described in subparagraph 6(b)(2)), PMA
Capital shall pay the full premium for Executive’s continued health insurance
benefits, and shall be reimbursed for the Executive’s portion of such premiums
out of the lump sum severance payment to be made to Executive on the first
business day following the six (6) month period.  It is intended that
this provision of continuation health coverage shall run concurrently with any
period of continuation 

     

    
      
        
        

      

      
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    coverage
required under COBRA.  For the period of health insurance continuation
coverage after the expiration of the COBRA coverage period provided for and used
by Executive pursuant to this provision, Executive shall pay the entire amount
of the applicable insurance premium which shall be withheld from Executive's
severance pay installments.  PMA Capital shall pay Executive a bonus
equal to the amount of each premium paid by Executive after the expiration of
the COBRA coverage period, grossed up for taxes (computed consistent with the
method for computing a Gross Up under Section 7) in the same month in which the
premium is paid. Executive’s participation in the life insurance and accidental
death and disability insurance provided by the Company shall continue through
the end of two (2) years from the termination date.

    


    (4)           PMA
Capital’s obligation to provide the severance pay and benefits provided in this
paragraph is conditioned upon Executive signing and not revoking a valid general
release agreement in the form attached hereto as Exhibit C.  The
severance payments and benefits provided for in this Agreement shall be in lieu
of and not in addition to any severance pay or benefits that are payable to
Executive upon termination of employment under the PMA Capital Corporation and
PMA Capital Insurance Company Severance Pay Plan or any other applicable
severance plan or severance policy of PMA Capital.

    


    (c)           If
Executive’s employment is terminated under subparagraphs 5(b), (c), (d), (f),
(g) or (h) above (and such termination constitutes a “separation from service”
within the meaning of section 409A of the Code):

    


    (1)           Executive
retains his fully (100%) vested and nonforfeitable interest in his “Retirement
Benefit” under the EMPP or any successor or replacement plan, and

    


    (2)           Executive’s
benefit under the PMA Capital Corporation Retirement Savings Excess Plan shall
be increased to the extent necessary so that his aggregate

     

    
      
        
        

      

      
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    benefit
payable under the EMPP, and PMA Capital Corporation Retirement Savings Excess
Plan (amounts attributable to Retirement Credits only) (collectively, the
Ongoing Pension Arrangements) is not less than the aggregate benefit that would
have been payable under such Ongoing Pension Arrangements if Executive’s
employment had continued through the end of the calendar quarter that contains
the 24-month anniversary following Executive’s termination date (or, in the case
of a termination under subparagraph 5(g), above, through the end of the calendar
quarter containing the 36-month anniversary following such termination date),
assuming the Executive is paid at the same salary rate during such period as in
effect as of his termination of employment.  Notwithstanding the
foregoing, subparagraph 6(c)(2) shall apply only to the extent that it has the
effect of increasing the present value of the aggregate benefit payable under
the Ongoing Pension Arrangements.  Executive shall be entitled to
receive the increased benefit described in subparagraph 6(c)(2) during the
calendar quarter containing the 24-month anniversary following Executive’s
termination date (or, in the case of a termination under subparagraph 5(c), (d),
(f), (g), or (h), above, that occurs within fourteen (14) months following a
Section 409A Change in Control, the first business day following the 6-month
anniversary of Executive’s termination date).

    


    (d)           (1)           If
Executive’s employment is terminated under subparagraph 5(g) or if it is
terminated under subparagraph 5(d) within twelve (12) months following a Section
409A Change in Control (and such termination constitutes a “separation from
service” within the meaning of section 409A of the Code), then PMA Capital shall
pay Executive as described in paragraph 6(a) above and as described in Exhibit
B, plus it will pay any cash portion of the annual incentive compensation for
the year in which termination occurs if it is earned because Executive
accomplished certain identifiable tasks as of the date of
termination.  With regard only to payment of the cash portion of the
annual incentive compensation for the year in which 

     

    
      
        
        

      

      
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    termination
occurs, it is specifically understood that objectives related to profitability,
revenue growth, stock price and similar performance measures are not intended to
be measured other than at year end and accordingly will not qualify as
identifiable tasks on an interim basis and these are not eligible for payment of
incentive compensation unless deemed appropriate by the Compensation Committee
of the Board of Directors of PMA Capital in connection with their consideration
of payments as discussed above.  Any cash portion of the annual
incentive compensation payable pursuant to this subparagraph 6(d)(1) shall be
paid within 90 days of the date on which Executive’s employment
terminates.

    


    (2)           In
addition, PMA Capital shall pay Executive severance pay in a single
sum.  The amount of such payment shall be equal to:

     

    


     

    


    
      
        
          
            
              	 	
                      i.

                    	
                      three
      times the greater of (A) Executive's then current annual base salary or
      (B) Executive's annual base salary immediately preceding the Change in
      Control; plus

                    
	 
      	 
      
	 	
                      ii.

                    	
                      three
      times the greater of (A) the amount of Executive's minimum targeted annual
      incentive award for the year of the termination or (B) the amount of that
      target for the year corresponding to the date immediately before the
      Change in Control, minus any appropriate withholdings and
      deductions

                    


            

          

        

      

    

     

    to be
paid without regard to whether Executive obtains another position with a new
employer, with such sum to be paid on the first business day following the six
(6) month anniversary of Executive's termination date.

    


    (3)           Further,
if Executive elects to continue health insurance benefits under COBRA, PMA
Capital will continue to pay the same monthly subsidy of the premiums for such
insurance continuation as was being paid by PMA Capital before Executive’s
employment terminated, with the remainder of the premium payable by Executive,
through the earlier of the end of three (3) years from the termination date or
the date Executive becomes eligible to receive 

     

    
      
        
        

      

      
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    and/or
obtain alternative health insurance coverage through new
employment.  Notwithstanding the foregoing (i) the Executive will pay
the entire premium cost for the health insurance benefit for the six months of
coverage which following the Executive’s termination date and (ii) on the first
business day following the six month anniversary of the Executive’s termination
date PMA Capital will pay Executive in a single lump sum the portion of the
premiums that would otherwise have been paid by PMA Capital during such six
month period, but for the provisions of clause (i) in this
paragraph.”  For the period of health insurance continuation coverage
after the expiration of the COBRA coverage period provided for and used by
Executive pursuant to this provision, Executive shall pay the entire amount of
the applicable insurance premium. Executive’s life insurance and accidental
death and disability insurance coverage as provided by the Company shall
continue through the end of three (3) years from the termination date. PMA
Capital shall pay Executive a bonus equal to the amount of each premium paid by
Executive after the expiration of the COBRA coverage period, grossed up for
taxes (computed consistent with the method for computing a Gross Up under
Section 7) in the same month in which the premium is paid.

    


    (4)           PMA
Capital’s obligation to provide the severance pay and benefits provided in this
paragraph is conditioned upon Executive signing and not revoking a valid general
release agreement in the form attached hereto as Exhibit C.  The
severance payments and benefits provided for in this Agreement shall be in lieu
of and not in addition to any severance pay or benefits that are payable to
Executive upon termination of employment under the PMA Capital Corporation and
PMA Capital Insurance Company Severance Pay Plan or any other applicable
severance plan or severance policy of PMA Capital.

    


    (e)           Upon
any termination of employment, Executive shall be deemed to have automatically
resigned from the Board of Directors and as an Officer of PMA
Capital.

     

    
      
        
        

      

      
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    7.           Excise
Taxes.  If the value of any compensation (in whatever form)
provided pursuant to this Agreement (a) is counted as a “parachute payment”
within the meaning of section 28OG of the Code, and the value of all such
parachute payments would be subject to the excise tax imposed by section 4999 of
the Code (the “4999 Excise Tax”), or (b) is treated as “deferred compensation”
within the meaning of section 409A of the Code and is subject to interest and
additional tax under section 409A(a)(1)(B) (the “409A Penalties,” and together
with the 4999 Excise Tax, the “Penalties”), then Executive shall be entitled to
receive from PMA Capital an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by Executive of all taxes (but not including any
interest or penalties imposed with respect to such taxes), including any Penalty
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Penalties imposed upon such payments.  The
Gross-Up Payment shall be paid to the Executive no later than thirty (30) days
after the date the Executive remits the taxes to which such Gross-Up Payment
relates.

    


    8.           Trade Secrets and
Confidential Information. Executive shall not disclose or use at any time
either during or after employment by PMA Capital, any Confidential Information
(as defined below) of which he becomes aware, whether or not any such
information is developed by him, except to the extent that such disclosure or
use is required or appropriate in the performance of the duties assigned to him
by PMA Capital or if Executive is required to testify under subpoena or court
order after Executive gives sufficient advance written notice of such
requirement to PMA Capital so that it may seek to limit or otherwise protect
such testimony from public disclosure.  Executive shall follow all
procedures established by PMA Capital to safeguard Confidential Information and
to protect it against disclosure, misuse, espionage, loss or
theft.  "Confidential Information" shall mean information that is not
generally known or available to the public, which is used, developed or obtained
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    business
and the businesses of its clients, vendors, agents, brokers or customers,
including but not limited to:  business and marketing strategies,
distribution channels; products or services; fees, costs and pricing structures;
marketing information; advertising and pricing strategies; analyses; reports;
computer software, including operating systems, applications and program
listings; flow charts; manuals and documentation; data bases; accounting and
business methods; inventions and new developments and methods, whether
patentable or unpatentable and whether or not reduced to practice; all
copyrightable works; PMA Capital's existing and prospective clients, vendors,
agents, brokers or customers and their confidential information; existing and
prospective client, vendor, agent, broker or customer lists and other data
related thereto; all trade secret information protected by the federal Economic
Espionage Act of 1996, 18 U.S.C. § 1831 et seq., the Pennsylvania Uniform Trade
Secrets Act and all similar and related information in whatever
form.  Confidential Information shall not include any information that
has been published in a form generally available to the public prior to the date
upon which Executive proposes to disclose such information.

    


    9.           Creative Works and Other
Property.

    


    (a)           Executive
will promptly disclose to PMA Capital all inventions, concepts, processes,
improvements, methodologies and other creative works, including without
limitation insurance products, whether or not they can be patented or
copyrighted, that during his employment were or were caused to be conceived or
developed by him, either solely or jointly with others, relating to PMA
Capital's business (collectively "Creative Works") and Executive agrees that all
such Creative Works shall be the sole property of PMA Capital.  Upon
the request and at the expense of PMA Capital, Executive will at any time
(whether during his employment or after its termination for any reason) assist
PMA Capital and fully cooperate with it to protect PMA Capital's interest in
such Creative Works and to obtain, for PMA Capital's benefit, patents


     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    or
copyrights for any and all Creative Works in the United States and in any and
all foreign countries.  This paragraph does not apply to any Creative
Work that Executive develops entirely on his own time and for which no
equipment, supplies, facility or Confidential Information of PMA Capital was
used, unless:  (a) the Creative Work relates to PMA Capital's business
or to the actual or anticipated research or development activities of PMA
Capital; or (b) the Creative Work results from any work Executive performs for
PMA Capital,

    


    (b)           Upon
the termination of Executive's employment for PMA Capital, Executive shall
immediately, and without request, deliver to PMA Capital all copies and
embodiments, in whatever form, of all Confidential Information and all other
documents, materials or property belonging to PMA Capital even if they do not
contain Confidential Information including but not limited
to:  written records, notes, photographs, manuals, computers and
computer equipment, cell phones, notebooks, reports, keys, credit cards,
documentation, flow charts and all magnetic media such as tapes, disks or
diskettes, wherever located, and, if requested by PMA Capital, shall provide PMA
Capital with written confirmation that all such materials have been
returned.  Executive has no claim or right to the continued use,
possession or custody of such information, documents, materials or property
following the termination of his employment with PMA Capital.

    


    10.           Restrictive
Covenants.  While employed by PMA Capital and through the
period ending two (2) years after termination of employment (whether voluntary
or involuntary and regardless of the reason for termination), Executive agrees
that, unless he obtains written approval in advance from the Chairman of the
Board of Directors of PMA Capital, he shall not, except on behalf of PMA
Capital, in any way, directly or indirectly:

    


    (a)           engage
in any business that directly competes with PMA Capital within any geographic
territory in which PMA Capital operates or is doing business, either
individually 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    or as an
agent, employee, consultant, partner, officer, director, stockholder,
proprietor, owner or otherwise, of any person, firm, corporation or
organization; provided, however, that ownership of less than one (1 %) percent
of the outstanding stock of any publicly traded corporation will not be deemed
to be a violation of this restrictive covenant;

    


    (b)           contact,
employ, hire, solicit or attempt to persuade any person or entity that has at
any time within the one (1) year period before the termination of Executive's
employment been an employee, agent, broker or independent contractor of PMA
Capital to terminate his, her or its relationship with PMA Capital or do any act
that may result in the impairment of the relationship between PMA Capital on the
one hand and the employees, agents, brokers or independent contractors of PMA
Capital on the other hand;

    


    (c)           contact,
solicit, serve or sell to, in furtherance of or in the context of any business
that directly competes with PMA Capital, any person or entity that has at any
time within the one (1) year period before the termination of Executive's
employment been a client, customer, agent or broker or a prospective client,
customer, agent or broker of PMA Capital or attempt to persuade any such person
or entity to purchase or otherwise acquire or use any product(s) or service(s)
offered by any business of the same or similar nature as products or services
offered by PMA Capital. (For purposes of this sub-paragraph, a "prospective
client, customer, agent or broker" means a person or entity with whom or which
PMA Capital has had direct contact and made a proposal to provide products or
services.); or

    


    (d)           engage
in any activities or make any statements that may disparage or reflect
negatively on PMA Capital, its Directors, Officers or employees, except as
required to enforce the provisions of this Agreement or any of the Benefits
plans.

    


    11.           Reasonableness of
Restrictions.  Executive agrees and acknowledges that the type
and scope of restrictions described in paragraphs 8, 9 and 10 are fair and
reasonable and that the 

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    restrictions
are intended to protect the legitimate interests of PMA Capital and not to
prevent him from earning a living.  Executive recognizes that his key
position as President and Chief Executive Officer and his access to Confidential
Information make it necessary for PMA Capital to restrict his post-employment
activities, as set forth in this Agreement.  Executive represents and
warrants that the knowledge, ability and skill he currently possesses are
sufficient to enable him to earn a livelihood satisfactory to him for a period
of two (2) years in the event his employment with PMA Capital terminates,
without violating any restriction in this Agreement. If, however, any of the
restrictions set forth in paragraphs 8, 9 or 10 are held invalid by a court by
reason of length of time, area covered, activity covered or any or all of them,
then such restriction or restrictions shall be reduced only to the minimum
extent necessary to cure such invalidity.

    


    12.           Remedies.  Executive
agrees that if he should breach any of the covenants contained in paragraphs 8,
9 or 10, irreparable damage would result to PMA Capital and that damages arising
out of such breach may be difficult to determine.  Executive therefore
further agrees that, in addition to all other remedies provided at law or at
equity (including without limitation damages and an equitable accounting of all
earnings, profits and other benefits arising from any such breach), PMA Capital
shall be entitled as a matter of course to specific performance and temporary
and permanent injunctive relief from any court of competent jurisdiction to
prevent any further breach of any such covenant by Executive, without the
necessity of proving actual damage to PMA Capital by reason of any such breach,
and Executive acknowledges that his employers, employees, partners, agents or
other associates, or any of them, may similarly be enjoined.  If
either party prevails in any lawsuit claiming breach of paragraphs 8, 9 or 10 of
this Agreement, the other party shall reimburse the prevailing party for its or
his expenses incurred in connection with such a lawsuit, including without
limitation 

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    attorney’s
fees and costs.  (For purposes of this paragraph, PMA Capital will be
considered to have prevailed in a lawsuit if it is established by written
adjudication that Executive has breached in any material respect any provision
of paragraphs 8, 9 or 10 as written or as modified under paragraph
11.  Executive will be considered to have prevailed in a lawsuit if it
is established by written adjudication that he did not breach in any material
respect any provision of paragraphs 8, 9 or 10 as written or as modified under
paragraph 11).  Any reimbursement made by PMA Capital pursuant to this
paragraph 12 shall be payable as follows:  (i) the amount of such
expenses eligible for reimbursement in any calendar year shall not affect the
expenses eligible for reimbursement in any other calendar year and (ii) all such
reimbursements must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred.

    


    13.           Previous
Employment.  Executive represents and warrants that he is not
under any legal restraint or restriction that would prevent or make unlawful his
execution of this Agreement or his performing the obligations under this
Agreement and that Executive has disclosed to PMA Capital any and all
restraints, confidentiality commitments or employmentrestrictions that Executive
has with any other employer or organization.

    


    14.           Cooperation.  At
all times during the term of this Agreement and for a period of three (3) years
thereafter, Executive will reasonably cooperate with PMA Capital in any
litigation or administrative proceedings involving any matters with which
Executive was involved during his employment by PMA Capital; provided that,
following the term of this Agreement, such activities will be scheduled at such
times and locations as PMA Capital and Executive may mutually agree. PMA Capital
will reimburse Executive for his reasonable out-of- pocket expenses, if any,
incurred in providing such assistance.  In addition, if such
assistance is 

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    provided
by Executive after his employment has terminated and at a time when he is not
receiving severance payments under paragraph 6(b), then he also shall be paid
$330 per hour.

    


    15.           Assignment.  Neither
PMA Capital nor Executive shall have the right to assign this Agreement or any
obligation hereunder without the written consent of the other, except that,
subject to Executive's rights under paragraph 5(g) above, if there is a Change
of Control, PMA Capital may assign this Agreement to a successor or assignee in
connection with a merger, consolidation, sale or transfer of assets of PMA
Capital, provided that such successor or assignee expressly assumes all
obligations of PMA Capital under this Agreement.

    


    16.           Indemnification.  PMA
Capital shall indemnify Executive or his estate to the full extent provided in
its articles of incorporation and/or its bylaws as of the date of this
Agreement.

    


    17.           No
Mitigation.  Executive shall not be required to mitigate the
amount of any payment or benefit provided for in this Agreement or the Benefits
plans by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Agreement or the Benefits plans be
reduced by any compensation or benefits earned by Executive either as a result
of his engaging in business or his employment by another employer, or by
retirement benefits payable after the termination of this
Agreement.

    


    18.           Indulgences.  The
failure of PMA Capital or Executive at any time or times to enforce its or his
rights under this Agreement strictly in accordance with the same shall not be
construed as having created a custom in any way or manner contrary to the
specific provisions of this Agreement or as having in any way or manner modified
or waived the same.

    


    19.           Notices.  Any
notice required or permitted to be given by this Agreement shall be in writing
and shall be sufficiently given to the parties if delivered in person or sent by
United States registered or certified mail or nationally recognized overnight
courier (return receipt requested) or by telefax (with evidence of successful
transmission) addressed to the respective 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    parties
at the following addresses or at such other addresses as may from time to time
be designated in writing by the parties:

     

    


    
      
        
          
            	 
      	
                    If
      to Executive:

                  	 
      	
                    If
      to PMA Capital:

                  
	 	 	 	 
	 
      	 
      	 
      	
                    PMA
      Capital Corporation

                  
	 
      	 
      	 
      	
                    c/o
      Chairman of the Board

                  
	 
      	 
      	 
      	
                    380
      Sentry Parkway

                  
	 
      	 
      	 
      	
                    Blue
      Bell, PA  19422-0754

                  
	 
      	 
      	 
      	
                    Telefax
      Number:  (610)
397-5334

                  


          

        

      

    

    


    20.           Entire
Agreement.  This Agreement, together with the attachments
hereto and PMA Capital's Benefits plans, sets forth the entire agreement between
the parties with respect to the matters covered herein, and supersedes all other
agreements and understandings.  No waiver or amendment to this
Agreement shall be effective unless reduced to writing and executed by the
parties hereto.

    


    21.           Arbitration.   In
order to obtain the many benefits of arbitration over court proceedings,
including speed of resolution, lower costs and fees and more flexible rules of
evidence, all disputes between Executive and PMA Capital (except those relating
to unemployment compensation and workers’ compensation and except as provided in
paragraph 12 of this Agreement) arising out of Executive’s employment or
concerning the interpretation or application of this Agreement or its subject
matter (including without limitation those relating to any claimed violation of
any federal, state or local law, regulation or ordinance, such as Title VII of
the Civil Rights Act, the Age Discrimination in Employment Act, the Americans
with Disabilities Act and their state and local counterparts, if any) shall be
resolved exclusively by binding arbitration in Philadelphia, Pennsylvania
pursuant to the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association, with PMA Capital bearing its own attorney’s
fees and costs and Executive being awarded his reasonable attorney’s fees and
costs so long as the Arbitrator determines that Executive’s claim(s) or
defense(s) 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (whichever
is applicable) is not frivolous. Any award of attorney’s fees and costs to
Executive shall not affect the award of any attorney’s fees and costs eligible
for reimbursement in any other calendar year and all such reimbursements must be
made on or before the last day of the calendar year following the calendar year
in which the expense was incurred.  The parties expressly waive their
rights to have any such claims resolved by jury trial.  The
arbitration opinion and award shall be final, binding and enforceable by any
court under the Federal Arbitration Act.

    


    22.           Controlling Law and Dispute
Resolution.  This Agreement shall be construed and applied in
accordance with the laws of the Commonwealth of Pennsylvania without giving
effect to the principles of conflicts of law under Pennsylvania
law.  The parties agree to submit to the jurisdiction and venue of the
state and federal courts located in Pennsylvania in the event that there is any
claim that this Agreement has been breached and that any such claim is not
subject to arbitration as provided in paragraph 21 of this
Agreement.

    


    23.           Affiliates and/or
Subsidiaries.  The affiliates and/or subsidiaries of PMA
Capital Corporation referred to in the first paragraph of this Agreement are:
Pennsylvania Manufacturers Association Insurance Company; Manufacturers Alliance
Insurance Company; Pennsylvania Manufacturers Indemnity Company; PMA Management
Corp. and any such other entity that is or becomes controlled by or under common
control with PMA Capital Corporation at the time of reference.  PMA
Capital and each such affiliate and/or subsidiary of PMA Capital Corporation
shall be jointly and severally liable for the obligations to Executive under
this Agreement.

    


    24.           409A. To the extent
necessary to avoid adverse tax consequences, and except as described below, any
payment to which Executive becomes entitled under this Agreement, or any
arrangement or plan referenced in this Agreement, that constitutes “deferred
compensation” under Section 409A of the Internal Revenue Code (“409A”), and is (a)
payable 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    upon your
termination; (b) at a time when Executive is a “specified employee” as defined
by 409A shall not be made until the earliest of:

    


    
      	
               
      

            	
              ·

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

            


    

    
      	
               
      

            	
              ·

            	
              the
      date of Executive’s death.

            


    

     

    Upon the
expiration of the Deferral Period, all payments that would have been made during
the Deferral Period (whether in a single lump sum or in installments) shall be
paid to Executive (or, if applicable, Executive’s estate) as a single lump
sum.  This section shall not apply to any payment which constitutes
“separation pay” as described in Internal Revenue Regulations Section
409A-1(b)(9) (in general, payments (i) that are made on an involuntary
separation from service which (ii) do not exceed the lesser of two times (x)
your annualized compensation for the taxable year preceding the year in which
the separation from service occurs or (y) the Code Section 401(a)(17) limit on
compensation for the year in which separation from service occurs and (iii) are
paid in total by the end of the second calendar year following the calendar year
in which the separation from service occurs.)  With regard to any provision
of this Agreement that provides for reimbursement of costs and expenses or of
in-kind benefits, except as permitted by Code Section 409A, (i) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit, (ii) the amount of expenses eligible for
reimbursement or in-kind benefits to be provided during any taxable year shall
not affect the expenses eligible for reimbursement or in-kind benefits to be
provided in any other taxable year, provided that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement
covered by Code Section 105(b) solely because such expenses are subject to a
limit related to the period the arrangement is in effect, and (iii) such
payments shall be made before the last day of your taxable year following the
year in which the expense occurred.  Each 

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    amount to
be paid or benefit to be provided to you shall be construed as a “separate
identified payment” for purposes of Code Section 409A to the fullest extent
permitted therein.

    


     

    IN
WITNESS WHEREOF, this Agreement has been duly executed by and on behalf of the
parties hereto as of the day and year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      	 
      	PMA
      CAPITAL CORPORATION	 
      
	 	 	 
	 	 	 
	 
      	
                              By:

                            	
                              /s/ Neal C. Schneider

                            	 
      
	 
      	 
      	
                              Name:
      Neal C. Schneider

                            	 
      
	 
      	 
      	
                              Title:
      Chairman

                            	 
      
	 
      	 
      	
                              Date:
      March 13, 2009

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              PENNSYLVANIA
      MANUFACTURERS 

                              ASSOCIATION
      INSURANCE COMPANY; 

                              MANUFACTURERS
      ALLIANCE INSURANCE

                               COMPANY;
      PENNSYLVANIA 

                              MANUFACTURERS
      INDEMNITY COMPANY; 

                              AND
      PMA MANAGEMENT CORP.

                            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              /s/ Stephen L. Kibblehouse

                            	 
      
	 
      	 
      	
                              Name:
      Stephen L. Kibblehouse

                            	 
      
	 
      	 
      	
                              Title:
      EVP and General Counsel

                            	 
      
	 
      	 
      	
                              Date:  March
      13, 2009

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                              /s/  Vincent T.
      Donnelly

                            	 
      
	 
      	 
      	
                              Name:
      VINCENT
      T. DONNELLY

                            	 
      
	 
      	 
      	
                              Date:
      March 13, 2009

                            	
                               

                            


                    

                  

                

              

            

          

        

      

    

     

    
 

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
       

       Exhibit
10.1



     

    EXHIBIT
A

     

    Executive
will be eligible for an annual incentive award with regard to 2009, 2010 and
2011 that will be targeted at sixty percent (60%) of base salary as of the
beginning of the year to which such incentive compensation relates for reaching
pre-defined targeted objectives with a maximum of ninety percent (90%) of base
salary as of the beginning of the year to which such incentive compensation
relates for reaching pre-defined goals over the targeted
objectives.  Such targeted objectives and goals will be set for 2009
by the Compensation Committee of the Board of Directors of PMA Capital, with
such targets and goals to be reviewed and adjusted, if appropriate, by the
Compensation Committee of the Board of Directors of PMA Capital for 2010 and
2011 based on market conditions.  Target objectives will be
established within 90 days following the beginning of the year to which they
relate.  Any cash portion of the annual incentive award will be paid
in the next year, during the period which begins on January 1 and ends on March
15, for successful achievement of the targeted objectives and goals as
determined by the Chairman and the Compensation Committee of the Board of
Directors of PMA Capital. Payment of the annual incentive compensation awards
will be in the amount and in the form(s) (e.g., stock options, restricted stock,
cash) as determined by the Chairman and the Compensation Committee of the Board
of Directors of PMA Capital, except that the payment for the 2009 incentive
compensation award will be in cash.

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
       

       Exhibit
10.1



     

    EXHIBIT
B

     

    Executive
will be entitled to a long-term incentive award under the 2007 Equity Incentive
Plan (or any successor plan) that will be targeted at one hundred percent (100%)
of $715,000 for achieving the pre-defined targeted objective for the year ending
December 31, 2011, with a maximum of one-hundred twenty percent (120%) of
$715,000 for reaching predefined goals over the targeted
objective.  Such targeted objectives and goals will be set for the
three-year period ending December 31, 2011 by the Compensation Committee of the
Board of Directors of PMA Capital, with targets and goals to be reviewed and
adjusted, if appropriate, as determined by the Compensation Committee of the
Board of Directors of PMA Capital for the three-year periods ending December 31,
2012 and December 31, 2013 based on market conditions.  Any long-term
incentive award shall be awarded no later than March 14th of the current year
and will vest following the end of the three-year performance period, based on
successful achievement of the targeted objectives and goals as determined by the
Chairman and the Compensation Committee of the Board of Directors of PMA
Capital.  The long-term incentive award for the three-year period
ending December 31, 2011 shall be payable in Stock, with the value determined by
the prior 6 month trading average of 6.05, with fractional shares paid as cash.
Such fractional shares to be paid during the period January 1, 2012 through
March 14, 2012, and the number of shares of Stock distributable to Executive
shall be determined on the date the Award is established.  Payment of
the long-term incentive awards for the performance periods ending December 31,
2012 and December 31, 2013 will be in the amount and in the forms (e.g. stock
options, restricted stock, cash) as determined by the Chairman and the
Compensation Committee of the Board of Directors of PMA Capital.

    


    To be
eligible for a payment of a long-term incentive award, Executive must remain
employed throughout the calendar year in which the pre-defined objective is set
and remain 

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    employed
throughout the last day of the three year performance period (the "Measurement
Date"), except as stated below.  In the event the Executive
experiences a termination under 5(g) above, he will be treated as if all targets
had been achieved at 100% and will be paid a pro-rata portion of the bonus
reflecting the period prior to the termination of this Agreement.

    


    If
Executive remains employed throughout the calendar year in which the predefined
objective for a long-term incentive award is set, but is not so employed as of
the Measurement Date due to circumstances that cause Executive to be entitled to
severance pay under paragraph 6(b)(1) or under paragraph 6(d)(1) and (2) of this
Agreement, then, so long as the pre-defined target is met on the Measurement
Date, Executive will be deemed to be an Eligible Person under the 2007 Equity
Plan or any successor plan and Executive will be entitled to receive a pro rata
portion of his long-term incentive award, determined by the length of time
Executive was employed during the applicable three year measurement
period.  Such a pro rata payment will be provided at the same time as
the payment would have been provided if Executive had remained an
employee.  For example, with respect to the 2009 long-term incentive
award, which is based on the pre-defined targeted objective for the year ending
December 31, 2011, if Executive's employment were to terminate on March 31, 2010
under circumstances that would qualify Executive for severance pay under this
Agreement and the pre-defined targeted objective were achieved on December 31,
2011, then Executive would receive a long-term incentive award of five-twelfths
of the payment that he would have received had he remained employed through the
Measurement Date.

    


    In the
event that a distribution of a long-term incentive award described in this
Exhibit B would be limited under the terms of the 2007 Equity Incentive Plan,
the undistributed amount so limited shall be provided in the first year in which
Executive is not so limited.  The number of 

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

     

    shares of
Stock, if any, attributable to the undistributed amount shall be determined as
of the initial distribution date.

     

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

     Exhibit
10.1


    


     

    EXHIBIT
C

    General Release
Agreement

     

    THIS
GENERAL RELEASE AGREEMENT (hereinafter "Release") is made and entered into as of
this ________ day of _____________, 20__, by and among PMA Capital
Corporation,  Pennsylvania Manufacturers Association Insurance
Company, Manufacturers Alliance Insurance Company, Pennsylvania Manufacturers
Indemnity Company, and PMA Management Corp. (collectively "PMA Capital") on the
one hand and Vincent T. Donnelly (hereinafter "Executive") on the other
hand.

    


    WHEREAS,
PMA Capital and Executive entered into the Amended and Restated Executive
Employment Agreement (the "Employment Agreement") effective as of March 15,
2009;

    


    WHEREAS,
under the terms of the Employment Agreement, Executive is entitled to severance
payments as provided therein;

    


    WHEREAS,
the Employment Agreement conditions receipt of the severance payments upon
Executive's signing and not revoking a valid General Release
Agreement.

    


    NOW,
THEREFORE, intending to be legally bound hereby and in consideration of receipt
of the severance payments provided for in the Employment Agreement and for other
good and valuable consideration, Executive, for himself, and his executors,
administrators, heirs and assigns, agrees as follows:

     

    1.           Executive
hereby fully waives, releases, and forever discharges PMA Capital and each and
all of its past and present subsidiaries, parent and related corporations,
companies and divisions, and their past and present respective officers,
directors, shareholders, trustees, employees, attorneys, agents and affiliates,
and their predecessors, successors and assigns (hereinafter collectively
referred to as "Releasees") of and from any and all rights, debts, claims,
actions, liabilities, agreements, damages, or causes of action (hereinafter
collectively 

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

    

     

    referred
to as "claims"), of whatsoever kind or nature, whether in law or equity, whether
known or unknown, that Executive ever had or now has in any capacity, either
individually, or as a director, officer, representative, agent or employee of
Releasees against any or all of the Releasees, for, upon, or by reason of any
cause, matter, thing or event whatsoever occurring at any time up to and
including the date Executive signs this Release.  Executive
acknowledges and understands that the claims and rights being released in this
paragraph include, but are not limited to, all claims and rights arising from or
in connection with any agreement of any kind Executive may have had with any of
the Releasees, or in connection with Executive's employment or termination of
employment, all claims and rights for wrongful discharge, breach of contract,
either express or implied, interference with contract, emotional distress, back
pay, front pay, benefits, fraud, misrepresentation, defamation, claims and
rights arising under the Civil Rights Acts of 1964 and 1991, as amended, (which
prohibits the discrimination in employment based on race, color, national
origin, religion or sex), the Americans with Disabilities Act (ADA), as amended
(which prohibits discrimination in employment based on disability), the Age
Discrimination in Employment Act (ADEA), as amended (which prohibits age
discrimination in employment), Worker Adjustment and Retraining Notification Act
(WARN), the National Labor Relations Act, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Family
and Medical Leave Act (FMLA), as amended, the Pennsylvania Wage and Hour Laws,
the Pennsylvania Wage Payment and Collection Law, the Pennsylvania Human
Relations Act, the Health Insurance Portability and Accountability Act (HIPAA),
and any and all other claims or rights, whether arising under federal, state, or
local law, rule, regulation, constitution, ordinance or public policy. Executive
agrees that he will not initiate any civil complaint or institute any civil
lawsuit, or file 

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

    

     

    any
arbitration against Releasees, or any one of them, based on the fact or
circumstance occurring up to and including the date of the execution by
Executive of this Release.  This Release and the foregoing covenant
not to sue do not cover claims relating to: (i) Executive's right to
indemnification under paragraph 16 of the Employment Agreement, or pursuant to
PMA Capital's articles of incorporation or bylaws as they may exist from time to
time, or pursuant to applicable law; (ii) Executive's right to benefits under
the Benefits plans; (iii) Executive's right to payments under the Employment
Agreement; or (iv) the validity or enforcement of this Release.

     

    2.           Executive
hereby agrees to waive any provisions of state or federal law that explicitly or
implicitly would prevent the application of this Release to claims of which
Executive does not know or expect to exist in Executive's favor at the time of
executing this Release which, if known by Executive, would have materially
affected his decision to execute this Agreement.  In addition,
Executive hereby agrees to waive any provisions of state or federal law which
might require a more detailed specification of the claims being released
pursuant to the provisions of this Release.

     

    3.           Executive
acknowledges that he has carefully read and understands the provisions of this
Release; that he has had twenty-one (21) days from the date he received a copy
of this Release to consider entering into this Release and accepting the
severance payments, that if he signs and returns this Release before the end of
the 21-day period, he will have voluntarily waived his right to consider this
Release for the full twenty-one (21) days and that he has executed this Release
voluntarily and with full knowledge of its significance, meaning and binding
effect.  Executive also acknowledges that PMA Capital has advised him
in writing to consult with an attorney of his own choosing with regard to
entering into this Release and accepting the severance
payments.  Finally, Executive acknowledges that his decision to sign
this 

     

    
      
        
        

      

      
        C-3

        
          

        

      

      
        
        

      

    

     

    Release
has not been influenced in any way by fraud, duress, coercion, mistake or
misleading information and that he has not relied on any information except what
is set forth in this Release and the Employment Agreement.

     

     

    4.           Executive
acknowledges that he may revoke this Release within seven (7) days of his
execution of this document by submitting written notice of his revocation to
________________________.  Executive also understands that this
Release shall not become effective or enforceable until the expiration of that
7-day period.

     

    5.           Executive
agrees that if any provision of this Release is or shall be declared invalid or
unenforceable by a court of competent jurisdiction, then such provision will be
modified only to the extent necessary to cure such invalidity and with a view to
enforcing the parties' intention as set forth in this Release to the extent
permissible and the remaining provisions of this Release shall not be affected
thereby and shall remain in full force and effect.

     

    


    
 

    
      
        
          	
                  Dated:
      _______________________

                	                                                              
       
	 
      	
                  VINCENT
      T. DONNELLY

                


        

      

    

     

     

     

     

     

     C-4