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PHILADELPHIA INSURANCE COMPANIES

STOCK APPRECIATION RIGHT GRANT AGREEMENT




     THIS STOCK APPRECIATION RIGHT (this “Grant”) is hereby granted as of February 7, 2006 (the
“Date of Grant”) by Philadelphia Consolidated Holding Corp., a Pennsylvania corporation (the
“Company”), to Craig P. Keller (the “Grantee”) pursuant to the Company’s Amended and Restated
Employees’ Stock Incentive and Performance Based Compensation Plan (the “Plan”), and subject to the
terms and conditions set forth therein and as set out in this Grant Agreement. Capitalized terms
used herein shall, unless otherwise required by the context, have the meaning ascribed to such
terms in the Plan.



     By action of the Committee, and subject to the terms of the Plan, the Grantee is hereby
granted a Stock Appreciation Right that is the economic equivalent of a Hypothetical Option to
acquire 20,000 shares of the Company’s Common Stock, no par value, on the terms and conditions set
forth below, which shall be settled upon exercise by delivery to the Grantee of shares of Common
Stock having a Fair Market Value, determined as of the date of such exercise (the “Exercise
Date”), equal to the excess of the Fair Market Value of a share of Common Stock as of such Exercise
Date over the hypothetical purchase price that would be paid for a share of Common Stock under the
terms of the Hypothetical Option, multiplied by the number of shares of Common Stock corresponding
to the portion of this Stock Appreciation Right being exercised.



     NOW, THEREFORE, in consideration of the promises and the mutual covenants contained in this
Agreement, the parties agree as follows:



W I T N E S S E T H




     1. Grant. The Company grants to the Grantee upon the terms and conditions
set forth in this Grant Agreement a Stock Appreciation Right upon the following terms and
conditions:



          (a) The Hypothetical Option shall be for 20,000 shares of Common Stock, which shall
become vested on the Vesting Date or Vesting Dates (as hereinafter defined) pursuant to the
schedule set forth below.




	 	 	 
	Vesting Date	 	Percent Vested
	February 7, 2011
	 	100%






          (b) The purchase price with respect to the Hypothetical Option shall be equal to
$98.99 per share, the closing price as of the Date of Grant.




          (c) The Hypothetical Option shall expire as of the close of business on February 7,
2016 (the “Expiration Date”), unless it expires earlier as provided herein. The following
provisions shall, if applicable, cause the expiration of the Hypothetical Option (of not previously
expired):




               (i) In the event the Grantee’s employment by the Company or its Subsidiaries shall be
terminated for cause, as determined by the Committee, while any portion of the Grantee’s Stock
Appreciation Right has not yet been exercised for any reason, the unexercised portion of the Stock
Appreciation Right (and the corresponding portion of the Hypothetical Option) shall expire
immediately.



 









 





               (ii) If the Grantee terminates his or her employment with the Company for any reason other
than death (and other than where the termination of employment is by the Company for cause,
resulting in immediate forfeiture of the unexercised portion of the Stock Appreciation Right (and
the corresponding portion of the Hypothetical Option)), then the portion, if any, of the Stock
Appreciation Right (and the corresponding portion of the Hypothetical Option) that has become
exercisable as of the date of such termination of employment, shall be exercisable by the Grantee
during the 30 days following the date of such termination of employment.



               (iii) If the Grantee’s employment terminates by reason of the Grantee’s death, this Stock
Appreciation Right (and the Hypothetical Option) shall, if not previously expired, be fully vested
and exercisable and shall, thereafter, be exercisable by the executor or administrator of the
Grantee’s estate or by the person or persons to whom the deceased Grantee’s rights thereunder shall
have passed by will or by the laws of descent or distribution until the earlier of the above stated
Expiration Date or the six month anniversary date of the Grantee’s death. In the event the Grantee
should die during the 30 day period following a termination of employment described in Section
1(c)(ii), above, the Grantee shall be treated as though he or she had remained employed through his
date of death for purposes of this Section 2(c)(iii).



               (iv) The unexercised portion of the Stock Appreciation Right that has not become exercisable
as of the date of the Grantee’s termination of employment (and the corresponding portion of the
Hypothetical Option) shall be immediately forfeited and the Grantee shall have no further rights
with respect to such forfeited portion of the Stock Appreciation Right (or corresponding portion of
the Hypothetical Option) after such date.



          (d) The term “Vesting Date” refers to the date or dates specified as Vesting Date(s)
in the schedule set forth in Section 1(a), above. This Grant shall become vested (in whole or in
part) as specified in such schedule. Any portion of this Grant that becomes vested shall,
effective as of the relevant Vesting Date, become exercisable until such date as this Grant expires
hereunder or pursuant to the terms of the Plan.




          (e) Unless and until shares of Common Stock are transferred to the Grantee pursuant
to the terms of this Grant, the Grantee shall have none of the rights of a shareholder with respect
to any Common Stock that may be transferred on its exercise or that are treated as subject to the
Hypothetical Option.




          (f) No dividends payable with respect to the Stock subject to the Hypothetical
Option shall be distributed to the Grantee at any time or treated as part of the benefit enjoyed by
the Grantee by reason of this Grant.




     2. Legends. Certificates representing the shares of Common Stock delivered
to the Grantee on exercise of all or any portion of this Grant shall bear such legends as the
Company shall deem appropriate to reflect any legal or other restrictions on transfer properly
imposed on such shares, whether pursuant to the terms of the Plan, or by reason of applicable
federal or state securities laws.



     3. Delivery of Shares. Upon proper exercise of all or any portion of this
Grant, the Company shall deliver shares of Common Stock as provided for under the terms of this
Grant, without payment from Grantee for such Common Stock (other than payment as may be required
pursuant to the Plan or otherwise for federal, state or local tax withholding) by means of delivery
of a certificate for such Common Stock or by such other means as the Committee determines to be
appropriate. The Company may condition delivery of such Common Stock upon the prior receipt from
Grantee of any undertakings which it may determine are required to assure that the Common Stock is
being issued in compliance with



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federal and state securities laws and that adequate arrangements have been made with respect
to any tax withholding requirements that may be applicable by reason of the Grantee’s exercise of
this Grant.



     In addition to any other appropriate mechanism for Grantee to make provisions for the payment
of all tax withholding obligations attributable to the exercise of this Grant, as may be acceptable
to the Committee, at its discretion, from time to time, Grantee shall have the right to satisfy the
minimum tax withholding obligation attributable to this Grant by electing to have a number of
shares that would otherwise be delivered to the Grantee withheld by the Company in satisfaction of
such minimum tax withholding obligation. The maximum number of shares that may be so withheld by
the Company shall be determined by dividing the dollar amount of Grantee’s minimum tax withholding
obligation attributable to the exercise of this Grant (as determined by the Committee) divided by
the Fair Market Value of a single shares of Common Stock as of the date of such exercise.



     4. Employment. Nothing in the Plan or in this Agreement shall confer upon
the Grantee any right to be continued as an employee of the Company or interfere in any way with
the right of the Company to remove the Grantee as an employee at any time for any cause.



     5. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of any successor of the Company, but except as provided above, this Grant shall not be
assigned or otherwise disposed of by the Grantee.



     6. The Plan. This Grant is subject to the terms and conditions of the Plan.
In the event of a conflict between the Plan and this Agreement, the terms of the Plan shall
control. A copy of the Plan has been provided to the Grantee or shall be made available at the
Grantee’s request.



     IN WITNESS WHEREOF, this Grant Agreement has been executed on this 10th day of February 2006.



	 	 	 	 	 
	 	 	PHILADELPHIA CONSOLIDATED HOLDINGS CORP.
	 
	 	 	 	 
	 

	 	By:
	 	James J. Maguire, Jr.
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ACKNOWLEDGED
	 
	 	 	 	 
	 	 	Craig P. Keller
	 	 	 
	 	 	GRANTEE






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