Document:

Unassociated Document

    
      Exhibit
10.22

     

    AMENDMENT
TO EMPLOYMENT AGREEMENT

     

    This is
an Amendment dated December 17, 2008 to that certain Amended and Restated
Executive Employment Agreement (the “Employment Agreement”) made and entered
into as of the 15th day of
March, 2006, 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 (the “PMA Capital”), and VINCENT T. DONNELLY, RESIDING AT 174 Meadow
View Lane, Lansdale, Pennsylvania 19446 (“Executive”).

     

    W
I T N E S S T H:

     

    WHEREAS,
the Company wishes to amend certain provisions of the Employment Agreement to
satisfy the requirements of Section 409A of the Internal Revenue Code of 1986,
as amended and to make certain other changes; and

     

    WHEREAS,
Executive is willing to accept the changes desired by the Company.

     

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

     

    1. Paragraph
3 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “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.”

     

    2. Subparagraph
5(f) of the Employment Agreement be and as hereby described herein is amended
and restated in its entirety to read as follows:

     

    “(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 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.”

    

     

    3. Subparagraph
5(e) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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”

     

    4. Subparagraph
5(g) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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”

     

    5. A new
subparagraph 5(h) is hereby added to the Employment Agreement to read in its
entirety as follows:

     

    “(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.”

     

    6. Paragraph
5 of the Employment Agreement be and hereby is amended by adding new
subparagraph 5(i) to read as follows:

     

    
      	
               
      

            	
              “(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.”

            

    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

    7. Subparagraph
6(a) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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 terns 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.”

     

    8. Subparagraph
6(b) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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 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 $600,000 and
his minimum targeted 

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

    annual
incentive compensation at the time of his termination is $240,000, Executive's
monthly severance payment for each month of the severance period will equal
1/12th of $600,000 plus 1/12th of $240,000, or $70,000, 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.

     

    
      	
               
      

            	
              (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.

            

    

     

    
      	
               
      

            	
              (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 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.

            

    

     

    
      	
               
      

            	
              (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
      

            

    

     

    
       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

    

     

    
      	 	 	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.”

    

     

    9. Subparagraph
6(c) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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):”

            

    

     

    
      	
               
      

            	
              (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

            

    

     

    
      	
               
      

            	
              (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 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), (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).”

            

    

     

    10. Subparagraph
6(d)(1) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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
  

            

    

    
       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

       

    

    
      	 	 	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 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 employment
terminates.”

    

     

    11. Subparagraph
6(d)(3) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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 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.  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.

     

    12. Subparagraph
6(d)(4) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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
      

            

    

    
       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

       

    

    
      	 	 	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.”

    

     

    13. Paragraph
7 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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 the end of the calendar year following the
      calendar year in which Executive remits the taxes to which such Gross-Up
      Payment relates.”

            

    

     

    14. Paragraph
12 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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
      

            

    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

     

    
      	 	 	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.”

    

     

    15. Paragraph
21 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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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    IN
WITNESS WHEREOF, this Amendment 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:  12/17,
2008

    

    PMA
CAPITAL INSURANCE COMPANY;

    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:
Executive Vice President and General Counsel

    Date:  12/17,
2008

    

    

    /s/ Vincent T.
Donnelly______________

    Name: VINCENT T. DONNELLY

    

    Date:  12/17,
2008

    

    

    
9Unassociated Document

    
      Exhibit
10.23

     

    AMENDMENT
TO EMPLOYMENT AGREEMENT

     

    This is
an Amendment dated December 17, 2008 to that certain Amended and Restated
Executive Employment Agreement (the “Employment Agreement”) made and entered
into as of the 15th day of
March, 2006, 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 (the “PMA Capital”), and WILLIAM E. HITSELBERGER, residing at 7
Barrington Drive, West Windsor, New Jersey 08550 (“Executive”).

     

    W
I T N E S S T H:

     

    WHEREAS,
the Company wishes to amend certain provisions of the Employment Agreement to
satisfy the requirements of Section 409A of the Internal Revenue Code of 1986,
as amended and to make certain other changes; and

     

    WHEREAS,
Executive is willing to accept the changes desired by the Company.

     

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

     

    1. Paragraph
3 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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.”

            

    

     

    2. Subparagraph
5(e) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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”

            

    

     

    3. Subparagraph
5(f) of the Employment Agreement be and as hereby described herein is amended
and restated in its entirety to read as follows:

     

    “(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 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.”

     

    4. Subparagraph
5(g) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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”

            

    

     

    5. A new
subparagraph 5(h) is hereby added to the Employment Agreement to read in its
entirety as follows:

     

    
      	
               
      

            	
              “(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.”

            

    

     

    6. Paragraph
5 of the Employment Agreement be and hereby is amended by adding new
subparagraph 5(i) to read as follows:

     

    
      	
               
      

            	
              “(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.”

            

    

     

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

    7. Subparagraph
6(a) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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.”

            

    

     

    8. Subparagraph
6(b) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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, 

            

    

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

     

    
      	 	 	      
              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.

            

    

     

    
      	
               
      

            	
              (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.”

            

    

     

    
      	
               
      

            	
              (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 under
COBRA.

            

    

     

    
      	
               
      

            	
              (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.”

            

    

     

    9. Subparagraph
6(c) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              “(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):”

            

    

     

    
      	
               
      

            	
              (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

            

    

     

    
      	
               
      

            	
              “(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).”

            

    

     

    10. Subparagraph
6(d)(1) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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
    

            

    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

     

    
      	 	 	      
              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 employment
terminates.”

            

    

     

    11. Subparagraph
6(d)(3) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    “(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 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.  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.

    12. Subparagraph
6(d)(4) of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “(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.”

            

    

     

    13. Paragraph
7 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “7.

            	
              Excise
      Taxes. If the value of any compensation (in whatever form) provided
      pursuant to this Agreement (a) is counted as a
  “parachute

            

    

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

     

    
      	 	 	      
              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.”

            

    

     

    14. Paragraph
12 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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.”

            

    

     

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    15. Paragraph
21 of the Employment Agreement be and hereby is amended and restated in its
entirety to read as follows:

     

    
      	
               
      

            	
              “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.”

            

    

     

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
 

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

    

    

    PMA
CAPITAL CORPORATION

    PMA
CAPITAL INSURANCE COMPANY;

    PENNSYLVANIA
MANUFACTURERS

    ASSOCIATION
INSURANCE COMPANY;

    MANUFACTURERS
ALLIANCE INSURANCE

    COMPANY;
PENNSYLVANIA

    MANUFACTURERS
INDEMNITY COMPANY;

    AND PMA
MANAGEMENT CORP.

    

    

    

    By:/s/ Vincent T.
Donnelly

    Name: Vincent T. Donnelly

    Title:   Chief Executive
Officer

    Date:  12/17,
2008

    

    

    

    By: /s/ William E.
Hitselberger

    Name: WILLIAM E.
HITSELBERGER

    

    Date: 12/17, 2008

    
 

     

     

    9

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