SEPARATION AGREEMENT AND GENERAL RELEASE

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (hereinafter "Agreement") is entered into by and among Penn Treaty Network America Insurance Company (hereinafter "PTNA"), Penn Treaty American Corporation (hereinafter "PTAC") and William Hunt, Jr. (hereinafter "Hunt").

WHEREAS, Hunt and PTNA were parties to an "Employment Agreement," dated December 19, 2007; and

WHEREAS, Hunt and PTAC were parties to a Change of Control Agreement dated June 18, 2001;

WHEREAS, PTNA is in receivership and Hunt's employment as President and Chief Executive Officer of PTNA was terminated effective March 27, 2009; and

WHEREAS, a good-faith dispute has arisen between PTNA, PTAC, and Hunt regarding what monetary and other benefits, if any, are or will be due and owing to Hunt as a result of the termination of his employment from PTNA, and the parties mutually desire to resolve amicably and permanently all matters relating to Hunt's Employment Agreement and employment relationship with PTNA and the termination thereof, as well as all issues relating to the Change of Control Agreement between Hunt and PTAC;

NOW, THEREFORE, in consideration of the promises contained herein, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

a.             Severance Pay Benefit.   In consideration for Hunt's execution of this Agreement and his fulfillment of the promises made in this Agreement, PTNA and PTAC agree to provide Hunt with compensation for twelve (12) months beyond his March 27, 2009 termination date from PTNA, at his final regular rate of pay. This payment will be made as follows: within thirty (30) days of the execution of this Agreement by Hunt: (1) PTNA will pay Hunt the gross sum of Three Hundred Thirty-Five Thousand Nine Hundred Fourteen dollars and Thirty-Five cents ($335,914.35), less standard payroll taxes and authorized deductions, which represents eleven (11) months' gross pay; and (2) PTAC will pay the gross sum of Thirty Thousand, Five Hundred Thirty-Seven dollars and Sixty-Five cents ($30,537.65), less standard payroll taxes and authorized deductions, which represents one (1) month's gross pay. These payments are subject to Hunt's obligation to comply with his obligations as set forth in this Agreement. Should Hunt materially violate his obligations, the General Release in section 5 below shall remain in full force and effect. Should either PTNA or PTAC materially violate their obligations under this Agreement, the General Release in section 5 below shall be void.

b.             Outplacement Assistance.   In further consideration for Hunt's execution of this Agreement and his fulfillment of the promises made in this Agreement, PTNA will make outplacement services available to Hunt through Right Management, at

PTNA's cost. Hunt shall be entitled to make use of these outplacement services for a period of six (6) months following the execution of this Agreement.

a.       In consideration of the benefits described in Sections 2 and 3 above, Hunt, on his own behalf and that of his heirs, executors, administrators, agents, representatives, and assigns, hereby forever releases PTNA, PTAC, and their parents, subsidiaries, or related companies (collectively referred to as the "Penn Treaty Companies"), including all of their shareholders, officers, directors, owners, employees, staff members, agents, representatives, predecessors, insurers, successors, and assigns (collectively referred to as "the Released Parties"), from any and all claims, demands, suits, or causes of action of any nature whatsoever, whether known or unknown,

including, without limitation, those relating in any way to Hunt's Employment Agreement with PTNA, his employment with PTNA and the termination thereof, and the Change of Control Agreement with PTAC, claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act ("ADEA"), the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Pennsylvania Human Relations Act, the Pennsylvania Wage Payment and Collection Law, and all other federal, state or local laws, all tort claims, all claims for breach of contract, claims for wrongful discharge, claims for emotional distress, defamation, fraud, misrepresentation or other personal injury, claims for unpaid compensation, claims relating to benefits, claims for attorneys' fees and costs, and claims under any federal, state, or local law through the date this Agreement is signed by Hunt.

b.           Hunt hereby waives and relinquishes each and every right or benefit that Hunt might now have under his Employment Agreement with PTNA, the Change of Control Agreement with PTAC, and any other prior or existing contract or agreement with any of the Penn Treaty Companies, as well as under the common law or any statutory or regulatory provision to the fullest extent that Hunt may lawfully waive such right or benefit. In furtherance of such waiver and relinquishment, Hunt expressly warrants and represents that Hunt intends that the release given herein shall be and remain in effect as a full and complete release, notwithstanding the discovery or existence of any additional claims or facts predating the date of the execution of this Agreement.

c.           Notwithstanding any other provision of this Agreement, Hunt shall retain the right to seek indemnification pursuant to, and in accordance with, the provisions

of PTNA's and PTAC's By-Laws and Article 10 of his Employment Agreement with PTNA, for any claims asserted against Hunt for acts or omissions during the time of Hunt's employment or service with PTNA or PTAC.

d.           In addition, for so long as PTAC continues to purchase Directors' and Officers Liability Insurance for the directors and officers of itself and its subsidiaries, Hunt will continue to receive the same coverage any such policy or policies provide to the other directors and officers of PTAC and its covered subsidiaries.

e.           Hunt agrees to resign, effective upon the date of his execution of this Agreement, from the following positions: (1) Chairman of the Board of PTNA; (2) President, CEO and Chairman of the Board of American Network Insurance Company; (3) President, CEO and Chairman of the Board of American Network Insurance Company of New York; and (4) Chairman of the Board of Network Insurance Senior Health Division, Inc.

f.           Hunt further forever waives and relinquishes any right that Hunt may have to reinstatement or reemployment with PTNA, agrees not to seek employment with PTNA now or in the future, and recognizes that PTNA has no obligation to reinstate or reemploy him.

g.           This release and waiver shall not be applicable to any claims which cannot be waived by law, including, but not limited to claims relating to the validity of enforcement of this Agreement, claims for unemployment compensation, or Hunt's right to file a charge of discrimination with or to testify, assist or participate in a discrimination

investigation conducted by the Equal Employment Opportunity Commission ("EEOC") or similar governmental agencies, commissions, or bodies. In this regard, however, Hunt is waiving his right to any monetary recovery should he or any such entity (such as the EEOC) pursue any claim on Hunt's behalf.