|   | “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.” |
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|   | “(e) | By      Executive’s voluntary resignation (before the end of the term), other than      during February 2009, for other than Good Reason upon not less than thirty      (30) days prior written notice to PMA Capital;  or” |
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|   | “(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” |
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|   | “(h) | By      Executive’s voluntary resignation for other than Good Reason during the      month of February 2009, upon not less than thirty (30) days prior written      notice to PMA Capital.” |
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|   | “(i) | By      Executive’s voluntary resignation for other than Good Reason after being      employed for at least 80% 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.” |
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|   | “(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 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)(1) shall be paid      no later than March 15 of the year following the year in which the      Executive’s employment terminates.” |
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|   | “(b)(1)     | Except      as stated in subparagraph 6(d) below, if Executive’s employment is      terminated under subparagraph 5(d), 5(f), 5(h) or 5(i) 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 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 no later than March 15      of the year following the year in which the Executive’s employment      terminates. In addition, PMA Capital shall pay Executive eighteen (18)      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, |
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|   |   | minus      any appropriate withholdings and deductions, without regard to whether      Executive obtains another position with a new employer. 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. |
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|   | (b)(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), 5(h) or 5(i) 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.” |
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|   | (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 eighteen (18) months 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 coverage required underCOBRA. |
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|   | (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.” |
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|   | “(c) | If      Executive’s employment is terminated under subparagraphs 5(b), (c), (d),      (f), (g), (h) or (i) above (and such termination constitutes a “separation      from service” within the meaning of section 409A of the      Code):” |
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|   | (1) | Executive      shall have a fully (100%) vested and nonforfeitable interest in his      “Retirement Benefit” under the EMPP or any successor or replacement plan,      except to the extent his Retirement Benefit is reduced pursuant to the      terms of the EMPP to take into account the twenty-five (25) year service      limit; and |
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|   | “(2) | Executive’s      benefit under the PMA Capital Corporation Retirement Savings Excess Plan      shall be increased to the extent necessary so that his aggregate 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 18-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 24-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 18-month anniversary following Executive’s      termination date (or, in the case of a termination under subparagraph      5(c), (d), (f), (g), (h) or (i), 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).” |
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|   | “(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      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 |
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|   |   | 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      no later than March 15 of the year following the year in which the      Executive’s employmentterminates.” |
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|   | “(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 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.” |
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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 |
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|   |   | 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      “409 A 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 the end of the calendar year following the calendar year in      which Executive remits the taxes to which such Gross-Up Payment      relates.” |
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|   | “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 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.” |
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|   | “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) (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.” |
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