Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT, made and entered into as
of the 15th day of March, 2004, by and between PMA Capital Corporation, a
Pennsylvania corporation, with its principal place of business at Mellon Bank
Center, Suite 2800, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
and/or such of its affiliates and/or subsidiaries as it designates (hereinafter
collectively referred to as "PMA Capital") and XXXXXXX X. XXXXXXXXXXXX, residing
at 0 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000 ("Executive").
WHEREAS, Executive has significant experience in the insurance
industry and currently serves as the Chief Financial Officer of PMA Capital;
WHEREAS, PMA Capital desires to continue to avail itself of
the expertise possessed by Executive and to employ Executive as Chief Financial
Officer and Executive Vice President, in which position he will have access to
confidential information of PMA Capital;
WHEREAS, Executive desires to be so employed by PMA Capital.
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein, and each intending to be legally bound hereby, the
parties agree as follows:
1. Employment. Subject to the terms of this Agreement, PMA
Capital hereby continues to employ Executive as Chief Financial Officer and,
effective as of April 16, 2004, also will employ Executive as Executive Vice
President. In this capacity, Executive will perform such duties as are
appropriate to the management of the financial and operational aspects of PMA
Capital's business and such other duties, consistent with the foregoing duties
and his position, as directed by the Board of Directors of PMA Capital and the
Chief Executive Officer of PMA Capital. Executive shall report directly to the
Chief Executive Officer of PMA Capital. Executive hereby accepts such employment
and agrees to serve PMA Capital on a full-time basis and to perform such duties
faithfully, diligently and to the best of his ability and in conformity with all
federal, state and local statutes, regulations and rules applicable to PMA
Capital. Executive further agrees not to engage in any outside for-profit
business, employment or commercial activity, without first obtaining approval in
writing from the Chief Executive Officer of PMA Capital.
2. Compensation. PMA Capital agrees to pay Executive, and
Executive agrees to accept from PMA Capital, in full payment for Executive's
services, compensation consisting of the following:
(a) A minimum base salary at an annual rate of $350,000 up to
and including April 15, 2004, at which time the salary will be increased to be
based on an annual rate of $425,000 for the remainder of the term, payable on a
semi-monthly basis or on such other basis that PMA Capital may adopt as its
regular payroll practice. The Compensation Committee of the Board of Directors
of PMA Capital will review the base salary on at least an annual basis at the
same time that it reviews the annual incentive compensation;
(b) The standard benefits PMA Capital makes available from
time to time to its senior executive employees and, in addition, Executive will
participate in the following employee benefit plans according to their terms:
the 401(k) Excess Plan dated March 2001; the Executive Deferred Compensation
Plan dated March 2001; the Executive Management Pension Plan dated March 2001
and the Supplemental Executive Retirement Plan dated March 2001;
(c) Annual incentive compensation based on performance
objectives established for 2004 and 2005 to be provided as described in Exhibit
A;
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(d) The nonqualified stock option award that was granted to
Executive under PMA Capital's 2002 Equity Incentive Plan as of May 6, 2004 to
purchase 128,500 shares of Class A common stock, exercisable at a price and for
a period of time and on such other terms as are set forth in the 2004 Stock
Option and Restricted Stock Grant, which is attached as Exhibit B; and
(e) The 17,700 shares of Restricted Stock that Executive was
granted under PMA Capital's 2002 Equity Incentive Plan as of May 6, 2004,
subject to such restrictions and other terms as set forth in the 2004 Stock
Option and Restricted Stock Grant, which is attached as Exhibit B.
3. Expenses. PMA Capital will reimburse Executive for such of
his out-of-pocket expenses as are reasonably necessary in connection with
services rendered by Executive pursuant to this Agreement, as provided in the
business expense policies adopted by PMA Capital from time to time.
4. Term. The term of this Agreement is from March 15, 2004
through March 14, 2006. During the first two weeks of January, 2006, Executive
shall inform the Chief Executive Officer of PMA Capital in writing whether or
not he is interested in negotiating an extension of this Agreement for a new
term and, if so, propose the terms and conditions for such an extension. Within
one week of receiving such written notice from Executive, PMA Capital will
inform Executive if it is willing to negotiate an extension of this Agreement.
If both parties are interested in negotiating an extension of this Agreement,
they then will engage in good faith negotiations for an extension of this
Agreement, with the negotiations to be concluded by no later than February 15,
2006; provided, however, that Executive's failure to negotiate in good faith
will not be deemed to be "Cause" for termination of Executive's employment
hereunder, and will not be the basis for PMA Capital's denial of or failure to
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pay any severance payments, compensation or benefits due to Executive pursuant
to the provisions of this Agreement.
5. Termination. Executive's employment may be terminated
before the end of the term of this Agreement as follows:
(a) By PMA Capital, at any time, for Cause, after providing
Executive with at least three (3) weeks written notice, specifying the
circumstances amounting to Cause and, if requested by Executive, the opportunity
for Executive and his counsel to appear before the Audit Committee of the Board
of Directors of PMA Capital to address those circumstances. "Cause" shall mean
Executive: (i) commits any act of fraud, embezzlement, theft or commission of a
felony in the course of his employment; (ii) engages in knowing and willful
misconduct or gross negligence in the performance of his duties; (iii)
unlawfully appropriates a corporate opportunity of PMA Capital or its affiliates
and subsidiaries (as defined in paragraph 24 below); or (iv) knowingly and
willfully breaches any of Executive's representations, warranties or covenants
contained in this Agreement in any material respect, each as reasonably
determined by the Audit Committee of the Board of Directors of PMA Capital after
the recommendation of the Chief Executive Officer of PMA Capital. In the event
that "Cause" is based on gross negligence, PMA Capital shall give Executive
written notice specifying in reasonable detail the conduct that it believes
amounts to gross negligence, and shall provide Executive with the three (3) week
notice period specified above to cease or correct such conduct;
(b) Automatically on the date of Executive's death;
(c) Automatically if Executive becomes disabled or otherwise
incapacitated so that Executive cannot perform the essential functions of his
job with or without reasonable accommodation for a continuous period of more
than one hundred eighty (180) days or for more than one hundred eighty (180)
cumulative days in any one (1) year period ("Permanent Disability"). Any
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question as to the existence of Permanent Disability upon which Executive and
PMA Capital cannot agree shall be determined by a qualified independent
physician selected by Executive (or, if Executive is unable to make such
selection, such selection shall be made by an adult member of Executive's
immediate family or Executive's legal representative) and approved by PMA
Capital, said approval not to be unreasonably withheld. The determination of
such physician shall be communicated in writing to PMA Capital and to Executive
and shall be final and conclusive for all purposes of this Agreement. Until the
date of termination as defined herein by reason of Permanent Disability,
Executive shall continue to receive the compensation and benefits as set forth
in paragraph 2 of this Agreement. No termination of this Agreement for Permanent
Disability shall impair any rights of Executive to collect benefits according to
the terms of any disability policy maintained by PMA Capital for that Permanent
Disability;
(d) By PMA Capital, at any time, for other than Cause upon
thirty (30) days written notice to Executive; or
(e) By Executive's voluntary resignation (before the end of
the term) for other than Good Reason upon not less than thirty (30) days prior
written notice to PMA Capital; or
(f) By Executive's voluntary resignation for Good Reason,
which shall mean Executive has given thirty (30) days prior written notice that
he intends to resign due to: (i) a change in his duties, authority or
responsibilities that is inconsistent with his role as Chief Financial Officer
and Executive Vice President; (ii) his being required to relocate his office
outside of an area within a fifty (50) mile radius of Philadelphia,
Pennsylvania; (iii) there being a Change in Control of PMA Capital; (iv) there
being a material reduction in the overall value of the employee benefits being
provided to him pursuant to paragraph 2(b); or (v) a material breach by PMA
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Capital of any of its obligations to Executive under this Agreement so long as
Executive gives such notice within sixty (60) days of the circumstances in
subparagraphs 5(f)(i), (ii), (iv) or (v) believed by Executive to constitute
Good Reason and PMA Capital fails to remedy those circumstances within three (3)
weeks.
For purposes of this Agreement, "Change in Control" has the
same definition as is set forth in paragraph 9(b) of the PMA Capital Corporation
2002 Equity Incentive Plan.
6. Incidents of Termination.
(a) If Executive's employment is terminated under subparagraph
5(a), (b), (c) or (e) above, PMA Capital shall have no further obligation under
this Agreement, except as provided under paragraph 17 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.
(b) If Executive's employment is terminated under subparagraph
5(d) or 5(f) above or if Executive's employment ends at the end of the term
(including by reason of Executive's decision not to review or extend his
employment for any reason), then PMA Capital shall pay Executive as described in
paragraph 6(a) above, plus it will pay any cash portion of the annual incentive
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compensation for the year in which termination occurs that is earned because
Executive accomplished certain identifiable tasks as of the date of termination.
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. In addition, PMA Capital shall pay Executive the
greater of: (i) eighteen (18) months of severance pay at one hundred twenty
percent (120%) of Executive's then current base salary, minus any appropriate
withholdings and deductions; or (ii) severance pay at one hundred percent (100%)
of the amount of Executive's then current base salary that otherwise would be
due for the remainder of the term of this Agreement; each 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. 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, through the earlier of the end of the severance period and
the date Executive becomes eligible to receive and/or obtain alternative health
insurance coverage through new employment. PMA Capital's obligation to provide
the severance pay and benefits provided in this paragraph is conditioned upon
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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 offset by any severance pay or benefits that are
actually paid to Executive upon termination of employment under the PMA Capital
Corporation and PMA Capital Insurance Company Severance Pay Plan or any other
applicable severance plan or severance policy of PMA Capital.
(c) If Executive's employment is terminated under
subparagraphs 5(b), (c), (d) or (f) above or if Executive's employment ends at
the end of the term: (i) Executive shall have a fully (100%) vested and
nonforfeitable interest in his "Past Service Retirement Benefit" under the PMA
Capital Corporation Executive Management Pension Plan ("Executive Management
Pension Plan") or any successor or replacement plan, notwithstanding anything in
the Executive Management Pension Plan to the contrary; and (ii) Executive's
benefit under the PMA Capital Corporation Supplemental Executive Retirement Plan
(the "SERP") shall be increased to the extent necessary so that his aggregate
retirement benefit payable under the PMA Capital Corporation Pension Plan, the
Executive Management Pension Plan and the SERP is not less than the aggregate
benefit that would have been payable under such plans if Executive's employment
had continued to the end of the term, assuming that Executive is paid at the
same salary rate during such period as in effect as of his termination of
employment.
7. Excise Taxes. If the value of any compensation (in whatever
form) provided pursuant to this Agreement is counted as a "parachute payment"
within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code") and the value of all such parachute payments would exceed
two hundred ninety-nine percent (299%) of the "base amount" applicable to
Executive under section 280G, then the amount of such parachute payments shall
be reduced to the extent necessary so that the sum of such parachute payments
equals exactly two hundred ninety-nine percent (299%) of Executive's "base
amount," provided, however, that this section shall not apply if the value of
all such parachute payments, after application of the excise tax under section
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4999 of the Code, is greater than two hundred ninety-nine percent (299%) of
Executive's "base amount."
8. Trade Secrets and Confidential Information. Executive shall
not disclose or use at any time either during or after employment by PMA
Capital, any Confidential Information (as defined below) of which he becomes
aware, whether or not any such information is developed by him, except to the
extent that such disclosure or use is required or appropriate in the performance
of the duties assigned to him by PMA Capital or if Executive is required to
testify under subpoena or court order after Executive gives sufficient advance
written notice of such requirement to PMA Capital so that it may seek to limit
or otherwise protect such testimony from public disclosure. Executive shall
follow all procedures established by PMA Capital to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss or
theft. "Confidential Information" shall mean information that is not generally
known or available to the public, which is used, developed or obtained by PMA
Capital, relating to its business and the businesses of its clients, vendors,
agents, brokers or customers including, but not limited to: business and
marketing strategies; distribution channels; products or services; fees, costs
and pricing structures; marketing information; advertising and pricing
strategies; analyses; reports; computer software, including operating systems,
applications and program listings; flow charts; manuals and documentation; data
bases; accounting and business methods; inventions and new developments and
methods, whether patentable or unpatentable and whether or not reduced to
practice; all copyrightable works; PMA Capital's existing and prospective
clients, vendors, agents, brokers or customers and their confidential
information; existing and prospective client, vendor, agent, broker or customer
lists and other data related thereto; all trade secret information protected by
the federal Economic Espionage Act of 1996, 18 U.S.C. ss.1831 et seq., the
Pennsylvania Uniform Trade Secrets Act and all similar and related information
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in whatever form. Confidential Information shall not include any information
that has been published in a form generally available to the public prior to the
date upon which Executive proposes to disclose such information.
9. Creative Works and Other Property.
(a) Executive will promptly disclose to PMA Capital all
inventions, concepts, processes, improvements, methodologies and other creative
works, including, without limitation, insurance products, whether or not they
can be patented or copyrighted, that during his employment were or were caused
to be conceived or developed by him, either solely or jointly with others,
relating to PMA Capital's business (collectively "Creative Works") and Executive
agrees that all such Creative Works shall be the sole property of PMA Capital.
Upon the request and at the expense of PMA Capital, Executive will at any time
(whether during his employment or after its termination for any reason) assist
PMA Capital and fully cooperate with it to protect PMA Capital's interest in
such Creative Works and to obtain, for PMA Capital's benefit, patents or
copyrights for any and all Creative Works in the United States and in any and
all foreign countries. This paragraph does not apply to any Creative Work that
Executive develops entirely on his own time and for which no equipment,
supplies, facility or Confidential Information of PMA Capital was used, unless:
(a) the Creative Work relates to PMA Capital's business or to the actual or
anticipated research or development activities of PMA Capital; or (b) the
Creative Work results from any work Executive performs for PMA Capital.
(b) Upon the termination of Executive's employment for PMA
Capital, Executive shall immediately, and without request, deliver to PMA
Capital all copies and embodiments, in whatever form, of all Confidential
Information and all other documents, materials or property belonging to PMA
Capital even if they do not contain Confidential Information, including but not
limited to: written records, notes, photographs, manuals, computers, cell
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phones, notebooks, reports, keys, credit cards, documentation, flow charts and
all magnetic media such as tapes, disks or diskettes, wherever located, and, if
requested by PMA Capital, shall provide PMA Capital with written confirmation
that all such materials have been returned. Executive has no claim or right to
the continued use, possession or custody of such information, documents,
materials or property following the termination of his employment with PMA
Capital.
10. Restrictive Covenants. While employed by PMA Capital and
through the period ending one (1) year after termination of employment (whether
voluntary or involuntary and regardless of the reason for termination),
Executive agrees that, unless he obtains written approval in advance from the
Chief Executive Officer of PMA Capital, he shall not, except on behalf of PMA
Capital, in any way, directly or indirectly:
(a) contact, employ, hire, solicit or attempt to persuade any
person or entity that has at any time within the one (1) year period before the
termination of Executive's employment been an employee, agent, broker or
independent contractor of PMA Capital to terminate his, her or its relationship
with PMA Capital or do any act that may result in the impairment of the
relationship between PMA Capital on the one hand and the employees, agents,
brokers or independent contractors of PMA Capital on the other hand;
(b) contact, solicit, serve or sell to, in furtherance of or
in the context of any business that directly competes with PMA Capital, any
person or entity that has at any time within the one (1) year period before the
termination of Executive's employment been a client, customer, agent, or broker
or a prospective client, customer, agent or broker of PMA Capital or attempt to
persuade any such person or entity to purchase or otherwise acquire or use any
product(s) or service(s) offered by any business of the same or similar nature
as products or services offered by PMA Capital. (For purposes of this
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sub-paragraph, a "prospective client, customer, agent or broker" means a person
or entity with whom or which PMA Capital has had direct contact and made a
proposal to provide products or services.); or
(c) engage in any activities or make any statements that may
disparage or reflect negatively on PMA Capital, its Directors, Officers or
employees, except as required to enforce the provisions of this Agreement or any
of the Benefits plans.
11. Reasonableness of Restrictions. Executive agrees and
acknowledges that the type and scope of restrictions described in paragraphs 8,
9 and 10 are fair and reasonable and that the restrictions are intended to
protect the legitimate interests of PMA Capital and not to prevent him from
earning a living. Executive recognizes that his key position as Chief Financial
Officer and Executive Vice President and his access to Confidential Information
make it necessary for PMA Capital to restrict his post-employment activities, as
set forth in this Agreement. Executive represents and warrants that the
knowledge, ability and skill he currently possesses are sufficient to enable him
to earn a livelihood satisfactory to him for a period of one (1) year in the
event his employment with PMA Capital terminates, without violating any
restriction in this Agreement. If, however, any of the restrictions set forth in
paragraphs 8, 9 or 10 are held invalid by a court by reason of length of time,
area covered, activity covered or any or all of them, then such restriction or
restrictions shall be reduced only to the minimum extent necessary to cure such
invalidity.
12. Remedies. Executive agrees that if he should breach any of
the covenants contained in paragraphs 8, 9 or 10, irreparable damage would
result to PMA Capital and that damages arising out of such breach may be
difficult to determine. Executive therefore further agrees that, in addition to
all other remedies provided at law or at equity, 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
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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).
13. Previous Employment. Executive represents and warrants
that he is not under any legal restraint or restriction that would prevent or
make unlawful his execution of this Agreement or his performing the obligations
under this Agreement and that Executive has disclosed to PMA Capital any and all
restraints, confidentiality commitments or employment restrictions that
Executive has with any other employer or organization.
14. Cooperation. At all times during the term of this
Agreement and for a period of three (3) years thereafter, Executive will
reasonably cooperate with PMA Capital in any litigation or administrative
proceedings involving any matters with which Executive was involved during his
employment by PMA Capital; provided that, following the term of this Agreement,
such activities will be scheduled at such times and locations as PMA Capital and
Executive may mutually agree. PMA Capital will reimburse Executive for his
reasonable out-of-pocket expenses, if any, incurred in providing such
assistance. In addition, if such assistance is provided by Executive after his
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employment has terminated and at a time when he is not receiving severance
payments under paragraph 6(b), then he also shall be paid $205 per hour.
15. Reimbursement of Attorney's Fees. PMA Capital will
reimburse Executive for the reasonable attorney's fees and costs, if any,
incurred by Executive in connection with the negotiation and preparation of this
Agreement, up to a maximum of $15,000.
16. Assignment. Neither PMA Capital nor Executive shall have
the right to assign this Agreement or any obligation hereunder without the
written consent of the other, except that, subject to Executive's rights under
paragraph 5(f) above if there is a change of control, PMA Capital may assign
this Agreement to a successor or assignee in connection with a merger,
consolidation, sale or transfer of assets of PMA Capital, provided that such
successor or assignee expressly assumes all obligations of PMA Capital under
this Agreement.
17. Indemnification. PMA Capital shall indemnify Executive or
his estate to the full extent provided in its articles of incorporation and/or
its bylaws as of the date of this Agreement.
18. No Mitigation. Executive shall not be required to mitigate
the amount of any payment or benefit provided for in this Agreement or the
Benefits plans by seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Agreement or the Benefits plans be
reduced by any compensation or benefits earned by Executive either as a result
of his engaging in business or his employment by another employer, or by
retirement benefits payable after the termination of this Agreement.
19. Indulgences. The failure of PMA Capital or Executive at
any time or times to enforce its or his rights under this Agreement strictly in
accordance with the same shall not be construed as having created a custom in
any way or manner contrary to the specific provisions of this Agreement or as
having in any way or manner modified or waived the same.
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20. Notices. Any notice required or permitted to be given by
this Agreement shall be in writing and shall be sufficiently given to the
parties if delivered in person or sent by United States registered or certified
mail or nationally recognized overnight courier (return receipt requested) or by
telefax (with evidence of successful transmission) addressed to the respective
parties at the following addresses or at such other addresses as may from time
to time be designated in writing by the parties:
If to Executive: If to PMA Capital:
Xxxxxxx X. Xxxxxxxxxxxx PMA Capital Corporation
0 Xxxxxxxxxx Xxxxx c/o Chief Executive Officer
Xxxx Xxxxxxx, XX 00000 Mellon Bank Center,
Telefax Number: (000) 000-0000 Suite 2800
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telefax Number: (000) 000-0000
21. Entire Agreement. This Agreement, together with the
attachments hereto and PMA Capital's Benefits plans, sets forth the entire
agreement between the parties with respect to the matters covered herein, and
supersedes all other agreements and understandings. No waiver or amendment to
this Agreement shall be effective unless reduced to writing and executed by the
parties hereto.
22. 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
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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 the prevailing
party being awarded its or his reasonable attorney's fees and costs. The parties
expressly waive their rights to have any such claims resolved by jury trial.
Arbitration must be demanded within three hundred (300) days of the time when
the demanding party knows or should have known of the events giving rise to the
claim. The arbitration opinion and award shall be final, binding and enforceable
by any court under the Federal Arbitration Act.
23. Controlling Law and Dispute Resolution. This Agreement
shall be construed and applied in accordance with the laws of the Commonwealth
of Pennsylvania without giving effect to the principles of conflicts of law
under Pennsylvania law. The parties agree to submit to the jurisdiction and
revenue of the state and federal courts located in Pennsylvania in the event
that there is any claim that this Agreement has been breached and that any such
claim is not subject to arbitration as provided in paragraph 22 of this
Agreement.
24. Affiliates and/or Subsidiaries. The affiliates and/or
subsidiaries of PMA Capital Corporation referred to in the first paragraph of
this Agreement are: PMA Capital Insurance Company; Pennsylvania Manufacturers
Association Insurance Company; Manufacturers Alliance Insurance Company;
Pennsylvania Manufacturers Indemnity Company; and such other entity that comes
into existence after the date of this Agreement that is controlled by or under
common control with PMA Capital Corporation at the time of reference. PMA
Capital and each such affiliate and/or subsidiary of PMA Capital Corporation
shall be jointly and severally liable for the obligations to Executive under
this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
and on behalf of the parties hereto as of the day and year first above written.
PMA CAPITAL CORPORATION; PMA CAPITAL
INSURANCE COMPANY; PENNSYLVANIA MANUFACTURERS
ASSOCIATION INSURANCE COMPANY; MANUFACTURERS
ALLIANCE INSURANCE COMPANY; AND PENNSYLVANIA
MANUFACTURERS INDEMNITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
Date: May 7, 2004
/s/ XXXXXXX X. XXXXXXXXXXXX
-------------------------------------
Name: XXXXXXX X. XXXXXXXXXXXX
Date: May 7, 2004
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EXHIBIT A
Executive will be eligible for a cash incentive award with
respect to 2004 under the 2002 PMA Capital Corporation Equity Incentive Plan
targeted at $106,250, to be paid no later than March 14, 2005, for successful
achievement of goals and performance criteria as determined by the Chief
Executive Officer and approved by the Compensation Committee of the Board of
Directors of PMA Capital.
Executive will be eligible for an incentive award with regard
to 2005 under the 2002 PMA Capital Corporation Equity Incentive Plan that will
be targeted at a minimum of 90% and a maximum of 110% of his annual base salary,
with any cash portion to be paid no later than March 14, 2006, for successful
achievement of goals and performance criteria as determined by the Chief
Executive Officer and approved by the Compensation Committee of the Board of
Directors of PMA Capital. Payment of the 2005 annual incentive compensation
award will be in the amount and in the form(s) (e.g., stock options, restricted
stock, cash) as determined by the Chief Executive Officer and approved by the
Compensation Committee of the Board of Directors of PMA Capital.
EXHIBIT B
May 6, 2004
Name:
SS#:
PMA Capital Corporation 2004 Stock Option And Restricted Stock Grant
PMA Capital Corporation (the "Company") has awarded you a Stock Option
and Restricted Stock under the Company's 2002 Equity Incentive Plan (the "Plan")
as follows:
Number of Shares of Class A
Date of Common Stock Per Share
Grant Type of Award Related to the Award Exercise Price
5/6/04 Nonqualified Stock 128,500 $7.02
Option
5/6/04 Restricted Stock 17,700 N/A
The Options and Restricted Stock are subject to the provisions of the
Plan, a copy of which can be found in this package, this letter and to the terms
and conditions listed in the Attachments to this letter. Also enclosed is a Plan
Prospectus. You have already received a copy of the Company's most recent Annual
Report and Proxy Statement. Please be aware that transactions in the Company's
stock are subject to the Company's Xxxxxxx Xxxxxxx Policy.
If you wish to accept your grant of Options and Restricted Stock,
please sign below where indicated and return only the signed copy of this letter
to me at the above address. You should retain a copy of this letter for your
records. If you have any questions about your Options or Restricted Stock,
please call me at the above telephone number.
Very truly yours,
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
By signing below, I hereby agree to the provisions of the Plan, this letter and
the terms and conditions set forth in the Attachments to this letter.
/s/ Xxxxxxx X. Xxxxxxxx
Name Date: May 7, 2004
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EXHIBIT C
General Release Agreement
THIS GENERAL RELEASE AGREEMENT (hereinafter "Release") is made
and entered into as of this ____ day of _______________, 20__, by and among PMA
Capital Corporation, PMA Capital Insurance Company, Pennsylvania Manufacturers
Association Insurance Company, Manufacturers Alliance Insurance Company, and
Pennsylvania Manufacturers Indemnity Company (collectively "PMA Capital") on the
one hand and Xxxxxxx X. Xxxxxxxxxxxx (hereinafter "Executive") on the other
hand.
WHEREAS, PMA Capital and Executive entered into the Executive
Employment Agreement (the "Employment Agreement") effective as of March 15,
2004;
WHEREAS, under the terms of the Employment Agreement,
Executive is entitled to severance payments as provided therein;
WHEREAS, the Employment Agreement conditions receipt of the
severance payments upon Executive's signing and not revoking a valid General
Release Agreement.
NOW THEREFORE, intending to be legally bound hereby and in
consideration of receipt of the severance payments provided for in the
Employment Agreement and for other good and valuable consideration, Executive,
for himself, and his executors, administrators, heirs and assigns, agrees as
follows:
1. Executive hereby fully waives, releases, and forever
discharges PMA Capital and each and all of its past and present subsidiaries,
parent and related corporations, companies and divisions, and their past and
present respective officers, directors, shareholders, trustees, employees,
attorneys, agents and affiliates, and their predecessors, successors and assigns
(hereinafter collectively referred to as "Releasees") of and from any and all
rights, debts, claims, actions, liabilities, agreements, damages, or causes of
action (hereinafter collectively referred to as "claims"), of whatsoever kind or
nature, whether in law or equity, whether known or unknown, that Executive ever
had or now has in any capacity, either individually, or as a director, officer,
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representative, agent or employee of Releasees against any or all of the
Releasees, for, upon, or by reason of any cause, matter, thing or event
whatsoever occurring at any time up to and including the date Executive signs
this Release. Executive acknowledges and understands that the claims and rights
being released in this paragraph include, but are not limited to, all claims and
rights arising from or in connection with any agreement of any kind Executive
may have had with any of the Releasees, or in connection with Executive's
employment or termination of employment, all claims and rights for wrongful
discharge, breach of contract, either express or implied, interference with
contract, emotional distress, back pay, front pay, benefits, fraud,
misrepresentation, defamation, claims and rights arising under the Civil Rights
Acts of 1964 and 1991, as amended, (which prohibits the discrimination in
employment based on race, color, national origin, religion or sex), the
Americans with Disabilities Act (ADA), as amended (which prohibits
discrimination in employment based on disability), the Age Discrimination in
Employment Act (ADEA), as amended (which prohibits age discrimination in
employment), Worker Adjustment and Retraining Notification Act (WARN), the
National Labor Relations Act, the Fair Labor Standards Act, the Employee
Retirement Income Act of 1974 (ERISA), as amended, the Family and Medical Leave
Act (FMLA), as amended, the Pennsylvania Wage and Hour Laws, the Pennsylvania
Wage Payment and Collection Law, the Pennsylvania Human Relations Act, the
Health Insurance Portability and Accountability Act (HIPPA), and any and all
other claims or rights whether arising under federal, state, or local law, rule,
regulation, constitution, ordinance or public policy. Executive agrees that he
will not initiate any civil complaint or institute any civil lawsuit, or file
any arbitration against Releasees, or any one of them, based on the fact or
circumstance occurring up to and including the date of the execution by
Executive of this Release. This Release does not cover claims relating to: (i)
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Executive's right to indemnification under paragraph 17 of the Employment
Agreement, or pursuant to PMA Capital's articles of incorporation or bylaws as
they may exist from time to time, or pursuant to applicable law; (ii)
Executive's right to benefits under the Benefits plans; (iii) Executive's right
to payments under the Employment Agreement; or (iv) the validity or enforcement
of this Release.
2. Executive hereby agrees to waive any provisions of state or
federal law that explicitly or implicitly would prevent the application of this
Release to claims of which Executive does not know or expect to exist in
Executive's favor at the time of executing this Release which, if known by
Executive, would have materially affected his decision to execute this
Agreement. In addition, Executive hereby agrees to waive any provisions of state
or federal law which might require a more detailed specification of the claims
being released pursuant to the provisions of this Release.
3. Executive acknowledges that he has carefully read and
understands the provisions of this Release, that he has had twenty-one (21) days
from the date he received copy of this Release to consider entering into this
Release and accepting the severance payments, that if he signs and returns this
Release before the end of the 21-day period, he will have voluntarily waived his
right to consider this Release for the full twenty-one (21) days and that he has
executed this Release voluntarily and with full knowledge of its significance,
meaning and binding effect. Executive also acknowledges that PMA Capital has
advised him in writing to consult with an attorney of his own choosing with
regard to entering into this Release and accepting the severance payments.
Finally, Executive acknowledges that his decision to sign this Release has not
been influenced in any way by fraud, duress, coercion, mistake or misleading
information and that he has not relied on any information except what is set
forth in this Release and the Employment Agreement.
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4. Executive acknowledges that he may revoke this Release
within seven (7) days of his execution of this document by submitting written
notice of his revocation to ___________________________________________.
Executive also understands that this Release shall not become effective or
enforceable until the expiration of that 7-day period.
5. Executive agrees that if any provision of this Release is
or shall be declared invalid or unenforceable by a court of competent
jurisdiction, then such provision will be modified only to the extent necessary
to cure such invalidity and with a view to enforcing the parties' intention as
set forth in this Release to the extent permissible and the remaining provisions
of this Release shall not be affected thereby and shall remain in full force and
effect.
Date: May 7, 2004 /s/ XXXXXXX X. XXXXXXXXXXXX
-----------------------------------
XXXXXXX X. XXXXXXXXXXXX
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