PMA CAPITAL CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective January 1, 1999)

MARCH 2001

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TABLE OF CONTENTS

PAGE         PREAMBLE 1   ARTICLE I - DEFINITIONS 1 1.1 Administrator 1 1.2
Affiliated Employer 1 1.3 Annual Distribution Period 2 1.4 Beneficiary 2 1.5
Board of Directors 2 1.6 Change of Control 2 1.7 Code 2 1.8 Compensation 2 1.10
Deferral Agreement 2 1.11 Deferred Benefit Account 2 1.12 Determination Date 3
1.13 Education Account 3 1.14 Eligible Dependent 3 1.15 Eligible Employee 3 1.16
Employment Termination Date 3 1.17 Enrollment Period 3 1.18 ERISA 3 1.19
Executive Deferral Contribution 3 1.20 Fixed Period Benefit Account 3 1.21
Investment Fund or Fund 3 1.22 Matching Contribution 3 1.23 Participant 3 1.24
Participating Company 3 1.25 Plan 3 1.26 Plan Sponsor 3 1.27 Plan Year 3 1.28
Restatement Effective Date 3 1.29 Retirement Account 3 1.30 Unforeseen Financial
Emergency 4 1.31 Vested 4   ARTICLE II - PARTICIPATION 4 2.1 Commencement of
Participation 4 2.2 Procedure For and Effect of Admission 4   ARTICLE III - PLAN
CONTRIBUTIONS 4 3.1 Executive Deferral Contribution 4 3.2 Rules Governing
Executive Deferral Contributions 4 3.3 No Matching Contribution 5   ARTICLE IV -
PARTICIPANTS' ACCOUNTS 5 4.1 Establishment of Accounts 5 4.2 Executive Benefit
Allocation 5 4.3 Irrevocable Allocation 5 4.4 Allocation Among Investment Funds
5 4.5 Administration of Investments 6

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        4.6 Valuation of Deferred Benefit Accounts 6 4.7 Suballocation Within
Deferred Benefit Accounts 6 4.8 Investment Obligation of the Plan Sponsor 6  
ARTICLE V - VESTING 6 5.1 Vesting Schedule 6   ARTICLE VI - BENEFITS 7 6.1
Normal Payment of Benefits 7 6.2 Special Payment of Benefits 8 6.3 Reduction of
Amount of Benefit Payment in Certain Cases 9   ARTICLE VII - ADMINISTRATION OF
THE PLAN 10 7.1 Administrator 10 7.2 Committee Action 10 7.3 Powers and Duties
of the Administrator 11 7.4 Decisions of Administrator 12 7.5 Expenses 12 7.6
Eligibility to Participate 12 7.7 Insurance and Indemnification for Liability 12
7.8 Agent for Service of Legal Process 12 7.9 Delegation of Responsibility 12
7.10 Claims Procedure 12   ARTICLE VIII - AMENDMENT AND TERMINATION 14 8.1
Amendment or Termination 14   ARTICLE IX - MISCELLANEOUS 14 9.1 Funding 14 9.2
Status of Employment 14 9.3 Payments to Minors and Incompetents 14 9.4
Inalienability of Benefits 14 9.5 Governing Law 15 9.6 Severability 15 9.7
Required Information to Administrator 15 9.8 Income and Payroll Tax Withholding
15 9.9 Application of Plan 15 9.10 No Effect on Other Benefits 15 9.11 Inurement
16 9.12 Notice 16 9.13 Captions 16 9.14 Acceleration of Payments 16 9.15
Reporting and Disclosure Requirements 16 9.16 Gender and Number 16   ARTICLE X -
ADOPTION BY AFFILIATED EMPLOYERS 17 10.1 Adoption of Plan 17 10.2 Withdrawal
from Plan 17 10.3 Application of Withdrawal Provisions 17 10.4 Plan Sponsor
Appointed Agent of Participating Companies 17   APPENDIX A - LIST OF
PARTICIPATING COMPANIES 18

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          PLAN EXHIBIT A - PLAN ADOPTION AGREEMENT 19   PLAN ADOPTION AGREEMENT
- PENNSYLVANIA MANUFACTURERS'
            ASSOCIATION INSURANCE COMPANY 20   PLAN ADOPTION AGREEMENT - PMA
CAPITAL INSURANCE COMPANY
            (FORMERLY PMA REINSURANCE CORPORATION) 21   PLAN ADOPTION AGREEMENT
- CALIBER ONE INDEMNITY COMPANY 22   PLAN ADOPTION AGREEMENT - CALIBER ONE
MANAGEMENT COMPANY, INC. 23   PLAN ADOPTION AGREEMENT - PMA MANAGEMENT
CORPORATION 24   PLAN ADOPTION AGREEMENT - PMA RE MANAGEMENT COMPANY 25

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PMA CAPITAL CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective January 1, 1999)

PREAMBLE

        WHEREAS, PMA CAPITAL CORPORATION, a Pennsylvania corporation (the “Plan
Sponsor”) (then known as the Pennsylvania Manufacturers Corporation) and certain
of its affiliated employers adopted the PMA CAPITAL CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN (the “Plan”) (then known as the PMC Executive
Deferred Compensation Plan) originally effective February 1, 1988, to permit
their eligible executives to defer receipt of a portion of their annual
compensation, provided such executives are members of a select group of
management and highly compensated employees within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”);
and

        WHEREAS, the Plan Sponsor’s Board of Directors has reserved the right,
in Article VIII of the Plan, to amend the Plan, provided that no amendment may
reduce a participant’s benefit accrued as of the date of the amendment and
further provided that written notice of such amendment is given to each
participant and the beneficiary of any deceased participant; and

        WHEREAS, the Plan has been amended and restated several times, most
recently in 1998; and

        WHEREAS, the Plan Sponsor desires to permit participants to defer
receipt of compensation on an annual basis as well as during the annual
enrollment period, to request the distribution of benefits in the event of
unexpected hardship, to freeze employer matching contributions and to provide
for immediate distribution of benefits under certain circumstances in the event
of a change of control of the Plan Sponsor, effective January 1, 1999; and

        WHEREAS, the Plan Sponsor desires to have the rights to benefits, if
any, of an eligible employee who neither renders personal services to the Plan
Sponsor or one of its affiliated employers after December 31, 1998, nor has a
balance credited to any account under the Plan as of December 31, 1998, to be
determined in accordance with the provisions of the Plan in effect on the date
that the employee’s personal services ceased;

        NOW THEREFORE, the Plan Sponsor hereby amends and restates the Plan,
effective January 1, 1999, as follows:

ARTICLE I —DEFINITIONS

        The following words and phrases shall have the following meanings unless
a different meaning is clearly required by the context:

        1.1 Administrator means the committee (hereinafter referred to as
“Committee”) appointed by the President of the Plan Sponsor to serve as the
Administrator of the Plan. If no such committee is appointed, the Plan Sponsor
shall be the Administrator of the Plan.

        1.2 Affiliated Employer means a member of a group of employers, of which
the Plan Sponsor is a member and which group constitutes:

 

     (a) A controlled group of corporations (as defined in Section 414(b) of the
Code);

 

     (b) Trades or businesses (whether or not incorporated) which are under
common control (as defined in Section 414(c) of the Code);

 

     (c) Trades or businesses (whether or not incorporated) which constitute an
affiliated service group (as defined in Section 414(m) of the Code); or

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     (d) Any other entity required to be aggregated with the Plan Sponsor
pursuant to Section 414(o) of the Code and the Treasury regulations thereunder.

        1.3 Annual Distribution Period means the first 60 days of a Plan Year.

        1.4 Beneficiary means the individual, trust or other entity, designated
in writing by a Participant, on a form filed with the Administrator, to receive
payments in the event of the Participant’s death. In the event there is no
designated beneficiary under the Plan, the beneficiary shall be (a) the
Participant’s surviving spouse, or (b) if there is no surviving spouse, the
Participant’s beneficiary under the Plan Sponsor’s group term life insurance
program, or (c) if neither (a) nor (b) is applicable, the executors and/or
administrators of the Participant’s estate.

        1.5 Board of Directors means the Board of Directors of the Plan Sponsor,
as from time to time constituted, or any committee thereof which is authorized
to act on behalf of the Board of Directors.

        1.6 Change of Control means a change of control of the Plan Sponsor of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or Item 1(a) of a Current Report on Form 8-K or any
successor rule, whether or not the Plan Sponsor is then subject to such
reporting requirements; provided that, without limitation, such a Change of
Control shall be deemed to have occurred if:

 

     (a) Any “person”(as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or first becomes the “beneficial owner”(as determined for
purposes of Regulation 13D-G under the Exchange Act as currently in effect),
directly or indirectly, in a transaction or series of transactions, of
securities of the Plan Sponsor representing more than 50% of the voting power of
the Plan Sponsor’s voting capital stock (the “Voting Stock”); or

 

     (b) The consummation of a merger, or other business combination after which
the holders of the Voting Stock do not collectively own 50% or more of the
voting capital stock of the entity surviving such merger or other business
combination, or the sale, lease, exchange or other transfer in a transaction or
series of transactions of all or substantially all of the assets of the Plan
Sponsor; or

 

     (c) At any time individuals who were either nominated for election by the
Plan Sponsor’s Board of Directors or were elected by the Plan Sponsor’s Board of
Directors cease for any reason to constitute at least a majority of the Plan
Sponsor’s Board of Directors.

        1.7 Code means the Internal Revenue Code of 1986, as amended. Reference
to a specific Section of the Code shall include such Section, any valid
regulation promulgated thereunder, and any comparable provision of any future
legislation amending, supplementing or superseding such Section.

        1.8 Compensation means a Participant’s salary and any incentive pay,
before reduction for employee contributions under this or any other nonqualified
savings plan, a savings plan qualified under Section 401(k) of the Code or a
cafeteria plan qualified under Section 125 of the Code and before reduction for
qualified transportation fringes described in Prop. Treas. Reg. § 1.132-9, Q and
A-11 et seq.

        1.9 Credit means additions to a Deferred Benefit Account.

        1.10 Deferral Agreement means a written agreement between a Participant
and the Participating Company that employs him/her, whereby the Participant
agrees to defer a portion of his/her Compensation and the Participating Company
agrees to provide benefits under the Plan.

        1.11 Deferred Benefit Account means a bookkeeping account that is
credited with a Participant’s Executive Deferral Contributions and, for Plan
Years before January 1, 1999, Matching Contributions.

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        1.12 Determination Date means March 31, June 30, September 30 and
December 31 of each Plan Year.

        1.13 Education Account means a Deferred Benefit Account established for
an Eligible Dependent of a Participant pursuant to Section 4.1.

        1.14 Eligible Dependent means a dependent of a Participant for federal
income tax purposes who is less than 16 years old at the time that an Education
Account is first established for him/her hereunder. An Eligible Dependent for
whom an Education Account is established shall remain an Eligible Dependent
until he/she attains age 18.

        1.15 Eligible Employee means an officer of a Participating Company,
provided such officer is a member of a select group of management and highly
compensated employees within the meaning of Section 201(2) of ERISA.

        1.16 Employment Termination Date means the date on which the
Participant’s status as an employee of any Participating Company terminates.

        1.17 Enrollment Period means, for a calendar year, the 60 day period
ending on the December 14th immediately preceding such calendar year.

        1.18 ERISA means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific Section of ERISA shall include such Section,
any valid regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such Section..

        1.19 Executive Deferral Contribution means the Plan contribution
described in Section 3.1.

        1.20 Fixed Period Benefit Account means a Deferred Benefit Account
established pursuant to Section 4.1.

        1.21 Investment Fund or Fund means any of the mutual funds which
comprise The Vanguard Group of Investment Companies, other than a fund offered
only to participants in tax-qualified retirement plans or a tax-advantaged fund
except as otherwise restricted by the Administrator.

        1.22 Matching Contribution means a Participating Company’s contribution
to the Plan for a Plan Year before 1999.

        1.23 Participant means an Eligible Employee who has met the conditions
for participation contained in Article II. An individual who ceases to be an
Eligible Employee shall nonetheless remain a Participant for purposes of benefit
payments only, until all amounts due him/her under the Plan have been paid.

        1.24 Participating Company means the Plan Sponsor and each of its
Affiliated Employers which, upon the approval of the Board of Directors, has
agreed to participate in this Plan in accordance with the provisions of Article
X. Each Participating Company is listed on Appendix A.

        1.25 Plan means the PMA CAPITAL CORPORATION EXECUTIVE DEFERRED
COMPENSATION PLAN, as set forth in this document and as it may be amended from
time to time.

        1.26 Plan Sponsor means PMA Capital Corporation, a Pennsylvania
corporation.

        1.27 Plan Year means the calendar year.

        1.28 Restatement Effective Date means January 1, 1999. The original
effective date of the Plan was February 1, 1988.

        1.29 Retirement Account means a Deferred Benefit Account established
pursuant to Section 4.1.

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        1.30 Unforeseen Financial Emergency means a Participant’s severe
financial hardship due to an unforeseeable emergency resulting from a sudden and
unexpected illness or accident of the Participant, or, a sudden and unexpected
illness or accident of a dependent (as defined by Section 152(a) of the Code) of
the Participant, or loss of the Participant’s property due to casualty, or other
similar and extraordinary unforeseeable circumstances arising as a result of
events beyond the control of the Participant. A need to send the Participant’s
child to college or a desire to purchase a home is not an unforeseeable
emergency. No Unforeseen Financial Emergency shall be deemed to exist to the
extent that the financial hardship is or may be relieved (a) through
reimbursement or compensation by insurance or otherwise, (b) by borrowing from
commercial sources on reasonable commercial terms to the extent that this
borrowing would not itself cause a severe financial hardship, (c) by cessation
of deferrals under the Plan, or (d) by liquidation of the Participant’s other
assets (including assets of the Participant’s spouse and minor children that are
reasonably available to the Participant) to the extent that this liquidation
would not itself cause severe financial hardship. For the purposes of the
preceding sentence, the Participant’s resources shall be deemed to include those
assets of his or her spouse and minor children that are reasonably available to
the Participant; however, property held for the Participant’s child under an
irrevocable trust or under a Uniform Gifts to Minors Act custodianship or
Uniform Transfers to Minors Act custodianship shall not be treated as a resource
of the Participant. The Administrator shall determine whether the circumstances
of the Participant constitute an unforeseeable emergency and thus an Unforeseen
Financial Emergency within the meaning of this Section. Following a uniform
procedure, the Administrator’s determination shall consider any facts or
conditions deemed necessary or advisable by the Administrator, and the
Participant shall be required to submit any evidence of the Participant’s
circumstances that the Administrator requires. The determination as to whether
the Participant’s circumstances are a case of an Unforeseen Financial Emergency
shall be based on the facts of each case; provided however, that all
determinations as to an Unforeseen Financial Emergency shall be uniformly and
consistently made according to the provisions of this Section for all
Participants in similar circumstances.

        1.31 Vested means the balance in a Participant’s Deferred Benefit
Accounts to which the Participant has a nonforfeitable right, as determined
under Section 5.1.

ARTICLE II —PARTICIPATION

        2.1 Commencement of Participation. Each employee who is a Participant in
the Plan on January 1, 1999, shall remain a Participant. Each other employee
shall become eligible to participate in the Plan when he/she becomes an Eligible
Employee.

        2.2 Procedure For and Effect of Admission. An Eligible Employee shall
become a Participant once he/she has completed such forms and provided such data
as are reasonably required by the Administrator. By becoming a Participant, an
Eligible Employee shall for all purposes be deemed conclusively to have assented
to the provisions of this Plan and all amendments hereto.

ARTICLE III —PLAN CONTRIBUTIONS

        3.1 Executive Deferral Contribution. Subject to the provisions of
Section 3.2, a Participant may authorize the Participating Company that employs
him/her to reduce his/her Compensation by any fixed dollar amount and to have a
corresponding amount credited to his/her Deferred Benefit Accounts, in
accordance with Section 4.2. Such deferral election shall be made prior to the
date on which the Participant performs services with respect to which the
Compensation is earned. A Participant may make a separate election to reduce the
amount of incentive pay paid to him/her by any percent of such incentive pay
awarded.

        3.2 Rules Governing Executive Deferral Contributions

 

     (a) The minimum amount that a Participant may elect to defer for a Plan
Year is $1,000.

 

     (b) A Participant may elect any Annual Distribution Period with respect to
a Fixed Period Benefit Account which is at least twenty-four months after the
Enrollment Period in which the Annual Distribution

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Period is elected. Notwithstanding the prior sentence, an individual who first
becomes a Participant after the first day of a Plan Year may make an election
under Section 3.1 effective as of the payroll period coincident with or next
following the date such election is received by the Administrator and may
further elect any Annual Distribution Period that is at least the second Annual
Distribution Period following the date on which the individual became a
Participant.

 

     (c) The amount of Compensation that a Participant elects to defer shall be
credited to the Participant’s Deferred Benefit Accounts on or about the date on
which the Participant is paid the nondeferred portion of the Compensation which
is the source of the deferral.

 

     (d) A Participant’s election to defer Compensation is irrevocable once the
Enrollment Period ends and shall remain in effect until the earlier of the
Participant’s Employment Termination Date, or the end of the Plan Year for which
the deferral is effective; provided, however, that once during the Plan Year the
Participant may modify his/her election to change the amount of Compensation
he/she elects to defer for the remainder of the Plan Year, such change to be
effective for the pay period which is at least two months after the date it is
received by the Plan Administrator.

 

     (e) Notwithstanding any provision to the contrary, once payments commence
to be made pursuant to Section 6.1(b), a Participant may not allocate credits to
the Education Account with respect to which such payments are made.

        3.3 No Matching Contribution. No Participating Company shall make a
Matching Contribution to the Plan for any Plan Year beginning after 1998.

ARTICLE IV —PARTICIPANTS’ACCOUNTS

        4.1 Establishment of Accounts. One or more of the following Deferred
Benefit Accounts shall be established with respect to each Participant:

 

     (a) Retirement Account;

 

     (b) Education Account; and

 

     (c) Fixed Period Benefit Account.

        All contributions on behalf of a Participant shall be credited to the
appropriate Deferred Benefit Accounts, in accordance with Section 4.2.

        4.2 Executive Benefit Allocation. A Participant's Deferral Agreement
shall contain a written statement specifying the allocation of his/her
anticipated Credits.

        4.3 Irrevocable Allocation. A Participant’s election to allocate
anticipated Credits shall remain in effect until the earlier of his/her
Employment Termination Date or the end of the Plan Year for which the election
is effective; provided, however, that a Participant may modify his/her election
to allocate Credits at any time he/she would be permitted to change the amount
of Compensation he/she elects to defer for subsequent calendar quarters pursuant
to Section 3.2(d) and subject to the limitations provided in Section 3.2(d).

        4.4 Allocation Among Investment Funds.

 

     (a) General. Except as provided in Section 4.4(b), a Participant may direct
that the Credits be valued, in accordance with Section 4.6, as if the balance
credited to the account were invested in one or more Investment Funds. The
Participant may select up to six (or such greater number as the Administrator
may

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determine). A Participant may make a separate selection with respect to each of
his/her Deferred Benefit Accounts, but overall the Participant may not have
investments in more than six (or such greater number as the Administrator may
determine) Investment Funds.

 

     (b) Deferred Incentive Pay. A Participant's election regarding the
allocation among investment options for valuation purposes in connection with a
deferral of incentive pay under the PMA Capital Corporation Annual Incentive
Plan shall be irrevocable, shall remain in effect until payment of the deferred
incentive pay and may not at any time be modified. This provision shall be
administered in accordance with Section 162(m) of the Code and Treas. Reg.ss.
1.162-27(e)(2)(iii)(B).

        4.5 Administration of Investments. The investment gain or loss with
respect to Credits on behalf of a Participant shall continue to be determined in
the manner selected by the Participant pursuant to Section 4.4. If any
Participant fails to file a designation, under either Section 4.4(a) or 4.4(b),
he/she shall be deemed to have elected to continue to follow the investment
designation, if any, in effect for the immediately preceding Plan Year as to all
amounts deferred under this Plan. A designation filed by a Participant changing
his/her Investment Funds, to the extent permitted under Section 4.4(a), shall
apply to either future contributions, amounts already accumulated in his/her
Deferred Benefit Accounts, or both. A Participant may change his/her investment
selection under Section 4.4(a) no more than once each calendar quarter.

        4.6 Valuation of Deferred Benefit Accounts. The Deferred Benefit
Accounts of each Participant shall be valued daily based upon the performance of
the Investment Fund or Funds selected by the Participant. Such valuation shall
reflect the net asset value expressed per share of each designated Investment
Fund. The fair market value of an Investment Fund shall be determined by the
Administrator. Each Deferred Benefit Account shall be valued separately. A
valuation summary shall be prepared on each Determination Date.

        4.7 Suballocation Within Deferred Benefit Accounts.

 

     (a) In the event a Participant allocates a portion of his/her anticipated
Credits to an Education Account, the Participant may further allocate among
subaccounts on behalf of any Eligible Dependent. In the absence of such
suballocation, all Credits to the Participant’s Education Account shall be
equally allocated among the Participant’s Eligible Dependents.

 

     (b) In the event a Participant allocates a portion of his/her anticipated
Credits to a Fixed Period Benefit Account, the Participant may further allocate
among subaccounts differentiated by benefit distribution dates.

 

     (c) Notwithstanding the foregoing, at any point in time a Participant may
not have more than a total of five Accounts and subaccounts.

        4.8 Investment Obligation of the Plan Sponsor. Benefits are payable as
they become due irrespective of any actual investments the Plan Sponsor may make
to meet its obligations. Neither the Plan Sponsor, nor any trustee (in the event
the Plan Sponsor elects to use a grantor trust to accumulate funds) shall be
obligated to purchase or maintain any asset, and any reference to investments or
Investment Funds is solely for the purpose of computing the value of benefits.
To the extent a Participant or any person acquires a right to receive payments
from the Plan Sponsor under this Plan, such right shall be no greater than the
right of any unsecured creditor of the Plan Sponsor. Neither this Plan nor any
action taken pursuant to the terms of this Plan shall be considered to create a
fiduciary relationship between the Plan Sponsor and the Participants or any
other persons or to establish a trust in which the assets are beyond the claims
of any unsecured creditor of the Plan Sponsor.

ARTICLE V —VESTING

        5.1 Vesting Schedule. A Participant shall, subject to Section 6.2(b), at
all times have a fully Vested

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interest with respect to the Executive Deferral Contributions to his/her
Deferred Benefit Accounts. A Participant shall also have shall, subject to
Section 6.2(b), a fully Vested interest in the Matching Contributions previously
made to his/her Deferred Benefit Accounts as of January 1, 1999.

ARTICLE VI —BENEFITS

        6.1 Normal Payment of Benefits. Except as provided in Section 6.2, a
Participant's benefits shall be paid as follows:

 

     (a) Retirement Account. If a Participant remains continuously employed by a
Participating Company until he/she satisfies the age and service requirements
for retirement under the PMA Capital Corporation Pension Plan, the Plan Sponsor
shall pay the Participant a benefit either:

 

     (1) In an amount equal to the balance in the Participant's Retirement
Account in two installments:

 

     (i) The first installment, in an amount equal to 50% of the balance in the
Retirement Account, shall be paid within 60 days following his/her Employment
Termination Date; and

 

     (ii) The second installment, in an amount equal to the remaining balance in
the Retirement Account, shall be paid during the first Annual Distribution
Period following the date on which the first installment was paid; or

 

     (2) If the Participant makes an irrevocable election at least 90 days prior
to the Plan Year in which he/she retires, in the following five annual
installments:

 

     (i) During the first Annual Distribution Period following the Participant’s
Employment Termination Date, an amount equal to 20% of the balance in the
Participant’s Retirement Account;

 

     (ii) During the second Annual Distribution Period following the
Participant’s Employment Termination Date, an amount equal to 25% of the then
balance in the Participant’s Retirement Account;

 

     (iii) During the third Annual Distribution Period following the
Participant’s Employment Termination Date, an amount equal to 33% of the then
balance in the Participant’s Retirement Account;

 

     (iv) During the fourth Annual Distribution Period following the
Participant’s Employment Termination Date, an amount equal to 50% of the then
balance in the Participant’s Retirement Account; and

 

     (v) During the fifth Annual Distribution Period following the Participant’s
Employment Termination Date, an amount equal to the then remaining balance in
the Participant’s Retirement Account.

 

     (b) Education Account. If a Participant who has established a subaccount in
his/her Education Account for an Eligible Dependent remains continuously
employed by a Participating Company until January 1st of the year in which the
Eligible Dependent reaches an age set forth below, the Plan Sponsor shall pay to
the Participant during the Annual Distribution Period for that year a benefit
determined as follows:

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Age Eligible Dependent
Will Attain During Year Percent of Eligible
Dependent's Subaccount     18  25 % 19  33 % 20  50 % 21  remainder

 

     In the event an Eligible Dependent, with respect to whom an Education
Account is maintained, dies prior to the payment of the balance to the credit of
such Education Account, then the Plan Sponsor shall pay an amount equal to the
remaining balance to the credit of such Education Account to the Participant
within a reasonable time following receipt of proof of such death.

 

     (c) Fixed Period Benefit Account. As long as the Participant remains
continuously employed by the Participating Company, the Plan Sponsor shall pay
to the Participant an amount equal to the balance in the Participant’s Fixed
Period Benefit Account in accordance with the pre-existing distribution schedule
applicable thereto.

 

     (d) Benefit Upon Termination of Employment or Following Death.

 

     (1) Benefit Upon Termination of Employment. Upon a Participant’s Employment
Termination Date, the Plan Sponsor shall pay to the Participant an amount equal
to the balance in the Participant’s Deferred Benefit Accounts in two
installments:

 

     (i) The first installment, in an amount equal to 50% of the balance in the
Deferred Benefit Accounts, shall be paid within 60 days following his/her
Employment Termination Date; and

 

     (ii) The second installment, in an amount equal to the then remaining
balance in the Deferred Benefit Accounts, shall be paid during the first Annual
Distribution Period following the date on which the first installment was paid.

 

     For purposes of this Section 6.1(d)(1), a Participant who has been out of
work for twenty-six weeks due to short-term disability shall be deemed to have
terminated his or her employment on the last day of the twenty-six week period
and such last day shall be deemed to be such Participant’s Employment
Termination Date.

 

     (2) Benefit Following Death. Upon a Participant’s date of death, the
Administrator shall reduce the balance in the Participant’s Retirement Account
by the amount that the Participant has previously received or shall receive
pursuant to Section 6.1(a). Thereafter, the Plan Sponsor shall pay to the
Participant’s Beneficiary a single sum payment, in cash, equal to the remaining
balance in the Participant’s Deferred Benefit Accounts. Payment under this
Section 6.1(d)(2) shall be made as soon as practicable following the receipt by
the Plan Sponsor of acceptable proof of the Participant’s death.

 

     (e) Earnings where Installment Payments Are Made.Where any benefit is paid
in annual installments, the undistributed balance credited to the Account during
the period of the installment payments and ending on the date of the last
installment payment shall be credited with investment earnings or debited with
investment losses in accordance with Section 4.6.

        6.2 Special Payment of Benefits.

 

     (a) Payment in Event of Unforeseen Financial Emergency. A Participant may
request an accelerated

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payment of some or all of his/her benefit under the Plan to meet an Unforeseen
Financial Emergency.

 

     (1) The request must be made in writing and filed with the Administrator
and must be supported by evidence of the Unforeseen Financial Emergency. It must
also specify the Deferred Benefit Accounts from which the benefit is to be paid.

 

     (2) The Administrator shall have sole and absolute discretion to grant or
deny the Participant’s request. If the request is granted, the accelerated
payment shall not be more than the amount deemed necessary by the Administrator
to meet the Unforeseen Financial Emergency.

 

     (3) Payments under this Section 6.2(a) shall reduce the remaining benefits
to, or related to, the Participant under this Plan.

 

     (b) Reduced Benefit Upon Request. A Participant may elect in writing at any
time to receive an immediate distribution of a reduced benefit under the Plan.
The Participant shall specify in his/her election the Deferred Benefit Accounts
from which the benefit shall be paid.

 

     (1) Except as otherwise provided in Section 6.2(b)(2), the amount of the
benefit shall equal the amount requested by the Participant, reduced by the
lesser of 10% of the amount the Participant requested or $50,000.

 

     (2) If the Participant’s election under this Section 6.2(b) is made within
60 days following a Change of Control, the amount of the benefit shall equal the
amount requested by the Participant, reduced by the lesser of 5% of the amount
the Participant requested or $25,000.

 

     (3) Upon receipt of a Participant’s election, the Administrator shall (i)
reduce the balance of the Participant’s Deferred Benefit Accounts by the full
amount that the Participant has requested, and (ii) direct the Plan Sponsor to
pay the Participant the reduced benefit. The amount by which the benefit is
reduced shall be automatically forfeited without any further action or consent
of the Participant.

 

     (c) Change of Control where Installment Payments Being Made. In the event
installment payments are being made to a Participant under Section 6.1 and a
Change of Control of the Plan Sponsor occurs prior to the Participant’s
receiving all installment payments under Section 6.1, any undistributed balance
credited to the Participant’s Deferred Benefit Accounts shall be paid by the
Plan Sponsor in a single sum payment, in cash, to the Participant as soon as
practicable following the Change of Control.

        6.3 Reduction of Amount of Benefit Payment in Certain Cases.

 

     (a) Reduction of Benefit Payments. Notwithstanding any provision of the
Plan to the contrary, the Administrator shall cause any payment under this Plan
to a Participant who is a “Covered Employee,”as defined below, to be reduced to
the extent that such Participant’s scheduled distribution under the Plan, when
added to such Participant’s estimated “Applicable Employee Remuneration,”as
defined below, from the Plan Sponsor and any other Participating Company for the
taxable year would exceed the “Code Section 162(m) Deduction Limitation,”as
defined below. The amount of any scheduled distribution which is not paid to the
Participant under this Section 6.3(a) shall be transferred to the Participant’s
Retirement Account and distributed in accordance with Section 6.1(a).

 

     (b) Definitions.

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     (1) Covered Employee. The term “Covered Employee”means an executive officer
of the Plan Sponsor or other Participating Company designated by the Plan
Administrator to be a “Covered Employee”.

 

     (2) Code Section 162(m) Deduction Limitation. The term “Code Section 162(m)
Deduction Limitation”means the Applicable Employee Remuneration of any Covered
Employee for the taxable year that exceeds $1,000,000 or any comparable limit
specified in any future legislation amending, supplementing or superseding Code
Section 162(m).

 

     (3) Applicable Employee Remuneration. The term “Applicable Employee
Remuneration,”except as otherwise provided below, means, with respect to any
Covered Employee for any taxable year, the aggregate amount allowable as a
deduction under Chapter 1 of Subtitle A of the Code for such taxable year
(determined without regard to section 162(m) of the Code) for “Remuneration,”as
defined below, for services performed by such Covered Employee (whether or not
during the taxable year). The term “Applicable Employee Remuneration”shall not
include:

 

     (i) Any Remuneration payable on a commission basis solely on account of
income generated directly by the individual performance of the individual to
whom such Remuneration is payable.

 

     (ii) Any Remuneration that is “qualified performance based
compensation”under Code Section 162(m).

 

     (iii) Any Remuneration payable under a written binding contract which was
in effect on February 17, 1993, and which was not modified thereafter in any
material respect before such Remuneration is paid.

 

     (4) Remuneration. The term "Remuneration" includes any remuneration
(including benefits) in any medium other than cash, but shall not include -

 

     (i) Any payment referred to in so much of Code section 3121(a)(5) as
precedes subparagraph (E) thereof , and

 

     (ii) Any benefit provided to or on behalf of an employee if at the time
such benefit is provided it is reasonable to believe that the employee will be
able to exclude such benefit from gross income under Chapter 1 of Subtitle A of
the Code.

 

For purposes of (i) above, Code section 3121(a)(5) shall be applied without
regard to Code section 3121(v)(1).

ARTICLE VII —ADMINISTRATION OF THE PLAN

        7.1 Administrator. The Committee appointed by the President of the Plan
Sponsor is hereby designated as the administrator of the Plan. If no Committee
is appointed by the Plan Sponsor as the Administrator, the Plan Sponsor shall be
the Administrator of the Plan. The Administrator shall have the authority to
control and manage the operation and administration of the Plan. The President
of the Plan Sponsor may appoint another person to be the Administrator at any
time. The President of the Plan Sponsor may also remove an Administrator and
fill any vacancy which may arise.

        7.2 Committee Action. If a Committee is appointed as Administrator, the
following rules apply:

 

     (a) On all matters within the jurisdiction of the Committee, the decision
of a majority of the members of the Committee shall govern and control. The
Committee may take action either at a meeting or in

 

writing without a meeting, provided that in the latter instance all members of
the Committee shall have been advised of the action contemplated and that the
written instrument evidencing the action shall be signed by a majority of the
members.

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     (b) The President of the Plan Sponsor shall appoint the Chair of the
Committee. The Committee may appoint, either from among its members or
otherwise, a secretary who shall keep a record of all meetings and actions taken
by the Committee. Either the Chair of the Committee or any member of the
Committee designated by the Chair shall execute any certificate, instrument or
other written direction on behalf of the Committee. Any action taken on matters
within the discretion of the Committee shall be final and conclusive as to the
parties thereto and as to all Participants or Beneficiaries claiming any right
under the Plan.

        7.3 Powers and Duties of the Administrator. The Administrator shall have
all powers necessary to supervise the administration of the Plan and to control
its operation in accordance with its terms, including, without limiting the
generality of the foregoing, the power to:

 

     (a) Appoint, retain, and terminate such persons as it deems necessary or
advisable to assist in the administration of the Plan or to render advice with
respect to the responsibilities of the Administrator under the Plan, including
accountants, attorneys and physicians;

 

     (b) Make use of the services of the employees of the Participating Company
in administrative matters;

 

     (c) Obtain and act on the basis of all valuations, certificates, opinions
and reports furnished by the persons described in (a) or (b) above;

 

     (d) Review the manner in which benefit claims and other aspects of the Plan
administration have been handled by the employees of the Participating Company;

 

     (e) Determine all benefits and resolve all questions pertaining to the
administration and interpretation of the Plan provisions, either by rules of
general applicability or by particular decisions; to the maximum extent
permitted by law, all interpretations of the Plan and other decisions of the
Administrator shall be conclusive and binding on all parties;

 

     (f) Adopt such forms, rules and regulations as it shall deem necessary or
appropriate for the administration of the Plan and the conduct of its affairs,
provided that any such forms, rules and regulations shall not be inconsistent
with the provisions of the Plan;

 

     (g) Remedy any inequity from incorrect information received or communicated
or from administrative error;

 

     (h) Commence or defend any litigation arising from the operation of the
Plan in any legal or administrative proceeding;

 

     (i) To determine all considerations affecting the eligibility of any
Eligible Employee to become a Participant or remain a Participant in the Plan;

 

     (j) To determine the status and rights of Participants and their Eligible
Dependents and Beneficiaries:

 

     (k) Direct the Plan Sponsor to pay benefits under the Plan, and to give
such other directions and instructions as may be necessary for the proper
administration of the Plan; and

 

     (l) Be responsible for the preparation, filing and disclosure on behalf of
the Plan of such documents and reports as are required by any applicable federal
or state law.

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        7.4 Decisions of Administrator. All decisions of the Administrator, and
any action taken by it in respect of the Plan shall be conclusive and binding on
all persons, subject to the claims and appeal procedure described in Section
7.10 hereof.

        7.5 Expenses. All expenses incident to the operation and administration
of the Plan reasonably incurred, including, without limitation by way of
specification, the fees and expenses of attorneys and advisors, and for such
other professional, technical and clerical assistance as may be required, shall
be paid by the Plan Sponsor.

        7.6 Eligibility to Participate. No member of the Administrator who is
also an officer shall be precluded from participating in the Plan if otherwise
eligible, but he or she shall not be entitled, as a member of the Administrator,
to act or pass upon any matters pertaining specifically to his or her own
benefit under the Plan.

        7.7 Insurance and Indemnification for Liability. The rules relating to
the insurance and indemnification for liability are as follows:

 

     (a) Insurance.The Plan Sponsor may, in its discretion, obtain, pay for, and
keep current a policy or policies of insurance, insuring members of the
Administrator and other employees to whom any responsibility with respect to
administration of the Plan has been delegated against any and all liabilities,
costs and expenses incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their duties, responsibilities and
obligations under the Plan and any applicable Federal or state law.

 

     (b) Indemnity.If the Plan Sponsor does not obtain, pay for, and keep
current the type of insurance policy or policies referred to in Section 7.7(a)
above, or if such insurance is provided but any of the members of the
Administrator or other employees referred to in Section 7.7(a) above incur any
costs or expenses which are not covered under such policies, then, in either
event, the Plan Sponsor shall, to the extent permitted by law, indemnify and
hold harmless such parties against any and all costs, expenses and liabilities
incurred by such parties in performing their duties and responsibilities under
this Plan, provided such party or parties were acting in good faith within what
was reasonably believed to have been in the best interests of the Plan and its
Participants.

        7.8 Agent for Service of Legal Process. The name and address of the
person designated as the agent for service of legal process are:

Plan Administrator
PMA Capital Corporation
1735 Market Street, 27th Floor
Philadelphia, PA 19103

        7.9 Delegation of Responsibility. The Administrator may designate a
committee of one or more persons to carry out any of the responsibilities or
functions assigned or allocated to the Administrator under the Plan. Each
reference to the Administrator in this Plan shall include the Administrator as
well as any person to whom the Administrator may have delegated the performance
of a particular function or responsibility under this Section 7.9.

        7.10 Claims Procedure.

 

     (a) Claim for Benefits.All claims for benefits under the Plan shall be made
in writing and shall be signed by the applicant. Claims shall be submitted to a
representative designated by the Administrator and hereinafter referred to as
the “Claims Coordinator”.

 

     Each claim hereunder shall be acted on and approved or disapproved by the
Claims Coordinator within 60 days following the receipt by the Claims
Coordinator of the information necessary to process the claim.

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     In the event the Claims Coordinator denies a claim for benefits, in whole
or in part, the Claims Coordinator shall notify the applicant in writing of the
denial of the claim and notify such applicant of his or her right to a review of
the Claims Coordinator’s decision by the Administrator. Such notice by the
Claims Coordinator shall also set forth, in a manner calculated to be understood
by the applicant, the specific reason for such denial, the specific Plan
provisions on which the denial is based, a description of any additional
material or information necessary to perfect the claim, with an explanation of
why such material or information is necessary, and an explanation of the Plan’s
claims review procedure as set forth in this Section 7.10.

 

     If no action is taken by the Claims Coordinator on an applicant’s claim
within 60 days after receipt by the Claim Coordinator, such application shall be
deemed to be denied for purposes of the following appeals procedure.

 

     (b) Appeals Procedure.Any applicant whose claim for benefits is denied in
whole or in part (“Claimant”) may appeal from such denial to the Administrator
for a review of the decision by the Administrator. Such appeal must be made
within six months after the Claimant has received written notice of the denial
as provided above in Section 7.10(a). An appeal must be submitted in writing
within such period and must:

 

     (1) Request a review by the Administrator of the claim for benefits under
the Plan;

 

     (2) Set forth all of the grounds upon which the Claimant's request for
review is based and any facts in support thereof; and

 

     (3) Set forth any issues or comments which the Claimant deems pertinent to
the appeal.

 

     The Administrator shall regularly review appeals by Claimants. The
Administrator shall act upon each appeal within 60 days after receipt thereof
unless special circumstances require an extension of the time for processing the
Claimant’s request for review. If such an extension of time for processing is
required, written notice of the extension shall be forwarded to the Claimant
prior to the commencement of the extension. In no event shall such extension
exceed a period of 120 days after the request for review is received by the
Administrator.

 

     The Administrator shall make a full and fair review of each appeal and any
written materials submitted by the Claimant and/or the Participating Company in
connection therewith. The Administrator may require the Claimant and/or the
Participating Company to submit such additional facts, documents or other
evidence as the Administrator in its discretion deems necessary or advisable in
making its review. The Claimant shall be given the opportunity to review
pertinent documents or materials upon submission of a written request to the
Administrator, provided the Administrator finds the requested documents or
materials are pertinent to the appeal.

 

     On the basis of its review, the Administrator shall make an independent
determination of the Claimant’s eligibility for benefits under the Plan. The
decision of the Administrator on any claim for benefits shall be final and
conclusive upon all parties thereto.

 

     In the event the Administrator denies an appeal, in whole or in part, the
Administrator shall give written notice of the decision to the Claimant, which
notice shall set forth, in a manner calculated to be understood by the Claimant,
the specific reasons for such denial and which shall make specific reference to
the pertinent Plan provisions on which the Administrator’s decision was based.

 

     (c) Compliance with Regulations.It is intended that the claims procedure of
this Plan be administered in accordance with the claims procedure regulations of
the Department of Labor set forth in 29 CFR § 2560.503-1.

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ARTICLE VIII —AMENDMENT AND TERMINATION

        8.1 Amendment or Termination.

 

     (a) The Board of Directors shall have the right to alter, amend, modify,
restate or terminate the Plan, or any part thereof, through the adoption of a
written resolution when in its absolute discretion, it determines such action to
be advisable; provided, however, that no such action by the Board of Directors
shall reduce the amount credited to any Account at the time of the adoption of
the amendment, modification or restatement and no such amendment, modification
or restatement or termination may occur as a result of a Change of Control,
within two years after a Change of Control, or as part of any plan to effect a
Change of Control. Each amendment shall be set forth in a written instrument.

 

     (b) In the event of termination, the Plan Sponsor, at its option, may pay
each Participant an amount equal to the total amount credited to the
Participant’s Accounts in a single sum payment of cash or, in the alternative,
pay such amount in accordance with the provisions of Article VI. Termination of
the Plan shall not serve to reduce the amount credited to a Participant’s
Accounts on the date of termination. Moreover, no such termination may occur as
a result of a Change of Control, within two years after a Change of Control, or
as part of any plan to effect a Change of Control.

ARTICLE IX —MISCELLANEOUS

        9.1 Funding. Nothing contained in this Plan and no action taken pursuant
to this Plan will create or be construed to create or require a funded
arrangement or any kind of fiduciary duty between the Plan Sponsor and/or the
Administrator and a Participant. Benefits payable under this Plan to a
Participant or Beneficiary, if applicable, shall be paid directly by each Plan
Sponsor from a grantor trust (the “Trust”) within the meaning of Section 671 of
the Code, to the extent that such benefits are not paid from the general assets
of the Plan Sponsor. The Trust must be an irrevocable grantor trust, the assets
of which are subject to the claims of the general creditors of the Plan Sponsor
in the event of its insolvency, defined for the purposes of this provision as
the Plan Sponsor’s inability to pay its debts as they become due or that the
Plan Sponsor is subject to a pending proceeding under the United States
Bankruptcy Code. Except as to any amounts paid or payable to the Trust, the Plan
Sponsor shall not be obligated to set aside, earmark or escrow any funds or
other assets to satisfy its obligations under this Plan, and the Participant and
his or her Beneficiary shall not have any property interest in any specific
assets of the Plan Sponsor other than an unsecured right to receive payments
from the Plan Sponsor as provided herein. To the extent any person acquires a
right hereunder, such right(s) shall be no greater than those of a general,
unsecured creditor of the Plan Sponsor. In the event that the amounts
accumulated in the Trust are not sufficient to pay the benefits payable under
this Plan, such benefits shall be paid directly from the general assets of the
Plan Sponsor.

        9.2 Status of Employment. Neither the establishment or maintenance of
the Plan, nor any action of the Plan Sponsor or any Participating Company or the
Administrator shall be held or construed to confer upon any individual any right
to be continued as an officer or other employee nor, upon dismissal, any right
or interest in any assets of the Plan Sponsor or a Participating Company nor to
affect any Participant’s right to terminate his/her employment at any time.

        9.3 Payments to Minors and Incompetents. If a Participant or Beneficiary
or Eligible Dependent entitled to receive any benefits hereunder is a minor or
is deemed by the Administrator or is adjudged to be legally incapable of giving
a valid receipt and discharge for such benefits, they will be paid to the duly
appointed guardian of such minor or incompetent or to such other legally
appointed person as the Administrator may designate. Such payment shall, to the
extent made, be deemed a complete discharge of any liability for such payment
under the Plan.

        9.4 Inalienability of Benefits.

 

     (a) Benefits payable under the Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind,

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whether voluntary or involuntary. Any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of any right to
benefits under the Plan shall be void. Neither the Plan Sponsor nor any other
Participating Company shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements or torts of any person entitled to
benefits under the Plan.

 

     (b) Notwithstanding Section 9.4(a), if a Participant is indebted to the
Plan Sponsor or any other Participating Company at any time when payments are to
be made by the Plan Sponsor to the Participant under the provisions of the Plan,
the Plan Sponsor shall have the right to reduce the amount of payment to be made
to the Participant (or the Participant’s Beneficiary or Eligible Dependent) to
the extent of such indebtedness. Any election by the Plan Sponsor not to reduce
such payment shall not constitute a waiver of its claim for such indebtedness.

        9.5 Governing Law. Except to the extent preempted by Federal law, the
Plan shall be governed by and construed in accordance with the internal laws of
the Commonwealth of Pennsylvania.

        9.6 Severability. In case any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if such illegal and invalid provisions had never been set forth.

        9.7 Required Information to Administrator. Each Participant will furnish
to the Administrator such information as the Administrator considers necessary
or desirable for purposes of administering the Plan, and the provisions of the
Plan respecting any payments thereunder are conditional upon the Participant’s
furnishing promptly such true, full and complete information as the
Administrator may request. The Administrator, in its sole discretion, may
request a Participant to submit proof of his/her age. The Administrator will, if
such proof of age is not submitted when requested, use as conclusive evidence
thereof such information as is deemed by it to be reliable, regardless of the
lack of proof. Any notice or information which, according to the terms of the
Plan or the rules of the Administrator, must be filed with the Administrator,
shall be deemed so filed if addressed and either delivered in person or mailed
to and received by the Administrator at the following address:

Plan Administrator
PMA Capital Corporation
1735 Market Street, 27th Floor
Philadelphia, PA 19103

Failure on the part of the Participant or Beneficiary or Eligible Dependent to
comply with any such request within a reasonable period of time shall be
sufficient grounds for delay in the payment of benefits under the Plan until
such information or proof is received by the Administrator.

        9.8 Income and Payroll Tax Withholding. To the extent required by the
laws in effect at the time payments are made under this Plan, the Plan Sponsor
shall withhold from such deferred compensation payments any taxes required to be
withheld for federal, state or local tax purposes.

        9.9 Application of Plan. The Plan, as set forth herein, shall apply to
any Participant terminating employment on or after the Restatement Effective
Date.

        9.10 No Effect on Other Benefits. No amount credited under this Plan
shall be deemed part of the total compensation for the purpose of computing
benefits to which a Participant may be entitled under any pension plan or other
supplemental compensation arrangement, unless such plan or arrangement
specifically provides to the contrary. The amounts payable to the Participant
hereunder will be in addition to any benefits paid or payable to the Participant
under any other pension, disability, annuity or retirement plan or policy
whatsoever. Nothing herein contained will in any manner modify, impair or affect
any existing or future rights of the Participant to participate in any other
employee benefits plan or receive benefits in accordance with such plan or to
participate in any current or future pension plan

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of a Participating Company or any supplemental arrangement which constitutes a
part of the Participating Company’s regular compensation structure.

        9.11 Inurement. The Plan shall be binding upon, and shall inure to, the
benefit of the Participating Company and its successors and assigns, and the
Participant and the Participant’s Beneficiaries, Eligible Dependents,
successors, heirs, executors and administrators.

        9.12 Notice. Any notices or elections required or permitted to be given
or made under this Plan will be sufficient if in writing and if sent by first
class, postage paid mail to the Participant’s last known address as shown on the
Participating Company’s personnel records or to the principal office of the
Participating Company, as the case may be. The date of such mailing shall be
deemed the date of notice, consent or demand. Either party may change the
address to which notice is to be sent by giving notice of the change of address
in the manner aforesaid.

        9.13 Captions. The captions contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience and for ease
of reference in no way define, limit, enlarge or describe the scope or intent of
this Plan or in any way affect the Plan or the construction of any provision
thereof.

        9.14 Acceleration of Payments. Notwithstanding any other provision of
the Plan, if the Administrator determines, based on a change in the tax or
revenue laws of the United States of America, a published ruling or similar
announcement issued by the Internal Revenue Service, a regulation issued by the
Secretary of the Treasury or his/her delegate, a decision by a court of
competent jurisdiction involving a Participant, or a closing agreement involving
a Participant made under Section 7121 of the Code that is approved by the
Commissioner, that such Participant or Beneficiary or Eligible Dependent has
recognized or will recognize income for federal income tax purposes with respect
to benefits that are or will be payable to the Participant under the Plan before
they otherwise would be paid to the Participant or the Beneficiary or Eligible
Dependent (as applicable), upon the request of the Participant or Beneficiary or
Eligible Dependent, the Administrator shall immediately make distribution to the
Participant or Beneficiary or Eligible Dependent of the amount so taxable.

        9.15 Reporting and Disclosure Requirements. In order to comply with the
requirements of Title I of ERISA, the Administrator shall:

 

     (a) File a statement with the Secretary of Labor that includes the name and
address of the employer, the employer identification number assigned by the
Internal Revenue Service, a declaration that the employer maintains the Plan
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees and a statement of the number of
such plans and the number of employees in each; and

 

     (b) Provide plan documents, if any, to the Secretary of Labor upon request
as required by Section 104(a)(1) of ERISA. It is intended that this provision
comply with the requirements of 29 CFR §2520.104-23.

        This method of compliance is available to the Plan only so long as the
Plan is maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees and for which benefits are paid as needed solely from the general
assets of the employer or are provided exclusively through insurance contracts
or policies, the premiums for which are paid directly by the employer from its
general assets, issued by an insurance company or similar organization which is
qualified to do business in any State, or both.

        9.16 Gender and Number. Whenever any words are used herein in any
specific gender, they shall be construed as though they were used in any other
applicable gender. The singular form, whenever used herein, shall mean or
include the plural form where applicable and vice versa.

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ARTICLE X —ADOPTION BY AFFILIATED EMPLOYERS

        10.1 Adoption of Plan. The following rules shall apply with respect to
the adoption of the Plan:

 

     (a) Adoption by Affiliated Employers. The terms of this Plan may be adopted
by any Affiliated Employer, provided:

 

     (1) The Board of Directors consents to such adoption by an appropriate
written resolution;

 

     (2) The board of directors of the Affiliated Employer adopts this Plan by
an appropriate written resolution which defines the Eligible Employees;

 

     (3) The Affiliated Employer executes a Plan Adoption Agreement in the form
attached hereto as Plan Exhibit A, applicable to the Eligible Employees of such
Affiliated Employer. The Affiliated Employer may elect in such Adoption
Agreement to have special provisions apply with respect to the Eligible
Employees of the Affiliated Employer which differ from the provisions of the
Plan applicable to other Eligible Employees; and

 

     (4) The Affiliated Employer executes such other documents as may be
required to make such Affiliated Employer a party to the Plan as a Participating
Company.

 

     (b) Effect of Adoption. An Affiliated Employer which adopts the Plan and
the Trust Agreement is thereafter a Participating Company with respect to its
Eligible Employees.

        10.2 Withdrawal from Plan. Any Participating Company may at any time
withdraw from the Plan upon giving the Board of Directors at least 30 days prior
written notice of its intention to withdraw.

        10.3 Application of Withdrawal Provisions. The withdrawal provisions
contained in Section 10.2 shall be applicable only if the withdrawing
Participating Company continues to cover its Participants under a plan similar
to this Plan. Otherwise the termination provisions of the Plan shall apply.

        10.4 Plan Sponsor Appointed Agent of Participating Companies. As a
condition precedent to the adoption of the Plan, each Affiliated Employer must
appoint the Board of Directors as its agent to exercise on its behalf all of the
power and authority conferred upon the Plan Sponsor by the Plan, including,
without limitation, the power to amend or to terminate the Plan.

        TO RECORD the adoption of this amendment and restatement of the Plan,
the Plan Sponsor has caused this document to be executed by its duly authorized
officers as of the 29th day of March, 2001.

ATTEST: PMA CAPITAL CORPORATION       /s/ Robert L. Pratter

--------------------------------------------------------------------------------

By: /s/ Francis W. McDonnell

--------------------------------------------------------------------------------

Robert L. Pratter, Secretary         Francis W. McDonnell, Senior Vice
President,         Treasurer & Chief Financial Officer

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APPENDIX A —LIST OF PARTICIPATING COMPANIES

(a)    PMA Capital Corporation

(b)    Pennsylvania Manufacturers’Association Insurance Company

(c)    PMA Capital Insurance Company (formerly PMA Reinsurance Corporation)

(d)    Caliber One Indemnity Company

(e)    Caliber One Management Company, Inc.

(f)    PMA Management Corporation

(g)    PMA Re Management Company

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PLAN EXHIBIT A —PLAN ADOPTION AGREEMENT

[INSERT NAME OF ADOPTING AFFILIATED EMPLOYER]

PMA CAPITAL CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN

[NOTE: Plan Exhibit A is not to be completed or executed. If an Affiliated
Employer adopts the Plan, a separate instrument following the form of this Plan
Exhibit A shall be completed and filed with the Administrator.]

By executing this Adoption Agreement, [ NAME OF ADOPTING AFFILIATED EMPLOYER],
on this ________ day of __________, ___________ hereby adopts the PMA CAPITAL
CORPORATION EXECUTIVE DEFERRED COMPENSATION PLAN (“Plan”), the terms of which
Plan are incorporated herein by reference, and by adopting said Plan hereby
becomes a Participating Company in said Plan effective __________, ____.

        1. The Effective Date of the Plan hereby created or continued is
__________, ____.

        2. The Board of Directors of PMA CAPITAL CORPORATION consented to the
adoption of the Plan by the Affiliated Employer named herein on __________,
____.

        3. The Board of Directors of [NAME OF ADOPTING AFFILIATED EMPLOYER]
adopted the Plan on __________, ___.

Attest: Name of Participating Company       [SEAL]      

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By

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Secretary President       Attest: ADOPTION CONSENTED TO BY:

PMA CAPITAL CORPORATION       [SEAL]      

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By

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Secretary President

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