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 15 th
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:
|
|
|
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.”
|
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
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.
|
|
|
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 describe
|
