SECOND AMENDED AND RESTATED LETTER OF CREDIT AGREEMENT

by and among

PMA CAPITAL CORPORATION,

THE BANKS PARTY HERETO

AND

PNC BANK, NATIONAL ASSOCIATION,

AS AGENT AND AS ISSUING BANK

_________________

$55,000,000

_________________

Dated as of November 22, 2000

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TABLE OF CONTENTS

|   |                                            |                                                                              | Page
|-- | ------------------------------------------ | ---------------------------------------------------------------------------- | ----
|  
|   |                                            | 2                                                                           
|1. | DEFINITIONS AND PRINCIPLES OF CONSTRUCTION | 2                                                                           
|   | 1.1                                        | Definitions                                                                  | 2   
|   | 1.2                                        | Principles of Construction                                                   | 18  
|  
|2. | AMOUNT AND TERMS OF LETTERS OF CREDIT      | 20                                                                          
|   | 2.1.                                       | Issuance of Letters of Credit                                                | 20  
|   | 2.2.                                       | Letter of Credit Participation and Funding Commitments                       | 21  
|   | 2.3.                                       | Interest Rate                                                                | 22  
|   | 2.4.                                       | Termination or Reduction of Commitment                                       | 23  
|   | 2.5.                                       | Amendments to Letters of Credit                                              | 23  
|   | 2.6.                                       | Extension of Commitment and Termination Date                                 | 24  
|   | 2.7.                                       | Extension of the Stated Expiration Date of Each Letter of Credit             | 24  
|   | 2.8.                                       | Reimbursement Obligations Absolute                                           | 25  
|   | 2.9.                                       | No Liability of the Issuing Bank                                             | 26  
|   | 2.10.                                      | Increased Costs: Capital Adequacy                                            | 26  
|   | 2.11.                                      | Taxes                                                                        | 27  
|   | 2.12.                                      | Agent's Records                                                              | 29  
|   | 2.13.                                      | Use of Proceeds                                                              | 30  
|   | 2.14.                                      | Collateral                                                                   | 30  
|   | 2.15.                                      | Replacement of Banks                                                         | 31  
|   | 2.16.                                      | Commitment Fee                                                               | 32  
|   | 2.17.                                      | Letter of Credit Commissions                                                 | 32  
|   | 2.18.                                      | Utilization of Commitment in Optional Currencies                             | 32  
|  
|3. | CONDITIONS PRECEDENT                       | 33                                                                          
|   | 3.1.                                       | Conditions to Effectiveness                                                  | 33  
|   | 3.2.                                       | Conditions for Issuance of All Letters of Credit and Extension and Increases |     
|   |                                            | thereof and Conditions to Effectiveness of Letters of Credit                 | 36  
|   | 3.3.                                       | Transitional Arrangements                                                    | 36  
|  
|4. | REPRESENTATIONS AND WARRANTIES             | 38                                                                          
|   | 4.1.                                       | Corporate Organization and Power                                             | 38  
|   | 4.2.                                       | Authorization                                                                | 38  
|   | 4.3.                                       | No Violation                                                                 | 38  
|   | 4.4.                                       | Governmental Authorization; Permits                                          | 39  
|   | 4.5.                                       | Litigation                                                                   | 39  
|   | 4.6.                                       | Taxes                                                                        | 39  
|   | 4.7.                                       | Subsidiaries                                                                 | 40  

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|   | 4.8.                  | Full Disclosure                                            | 40
|-- | --------------------- | ---------------------------------------------------------- | --
|   | 4.9.                  | Margin Regulations                                         | 40
|   | 4.10.                 | No Material Adverse Change                                 | 40
|   | 4.11.                 | Financial Matters                                          | 41
|   | 4.12.                 | Ownership of Properties                                    | 42
|   | 4.13.                 | ERISA                                                      | 42
|   | 4.14.                 | Environmental Matters                                      | 42
|   | 4.15.                 | Compliance With Laws                                       | 43
|   | 4.16.                 | Regulated Industries                                       | 43
|   | 4.17.                 | Insurance                                                  | 43
|   | 4.18.                 | Certain Contracts                                          | 44
|   | 4.19.                 | Reinsurance Agreements                                     | 44
|  
|5. | AFFIRMATIVE COVENANTS | 45                                                        
|   | 5.1.                  | GAAP Financial Statements                                  | 45
|   | 5.2.                  | Statutory Financial Statements                             | 46
|   | 5.3.                  | Other Business and Financial Information                   | 46
|   | 5.4.                  | Corporate Existence; Franchises; Maintenance of Properties | 49
|   | 5.5.                  | Compliance with Laws                                       | 49
|   | 5.6.                  | Payment of Obligations                                     | 50
|   | 5.7.                  | Insurance                                                  | 50
|   | 5.8.                  | Maintenance of Books and Records; Inspection               | 50
|   | 5.9.                  | Dividends                                                  | 51
|   | 5.10.                 | Ownership of Insurance Subsidiaries                        | 51
|   | 5.11.                 | Further Assurances                                         | 51
|  
|6. | FINANCIAL COVENANTS   | 51                                                        
|   | 6.1.                  | Capitalization Ratio                                       | 51
|   | 6.2.                  | Cash Coverage Ratio                                        | 51
|   | 6.3.                  | Statutory Surplus                                          | 52
|  
|7. | NEGATIVE COVENANTS    | 52                                                        
|   | 7.1.                  | Merger; Consolidation; Disposition of Assets               | 52
|   | 7.2.                  | Indebtedness                                               | 53
|   | 7.3.                  | Liens                                                      | 54
|   | 7.4.                  | Investments; Acquisitions                                  | 55
|   | 7.5.                  | Restricted Payments                                        | 55
|   | 7.6.                  | Transactions with Affiliates                               | 56
|   | 7.7.                  | Certain Amendments                                         | 56
|   | 7.8.                  | Lines of Business                                          | 56
|   | 7.9.                  | Limitations on Certain Restrictions                        | 57
|   | 7.10.                 | Fiscal Year                                                | 57
|   | 7.11.                 | Accounting Changes                                         | 57
|   | 7.12.                 | Reinsurance Agreements                                     | 57

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|8.  | DEFAULT          | 58                                        
|--- | ---------------- | ------------------------------------------
|    | 8.1.             | Events of Default                         
|   
|9.  | THE AGENT        | 62                                        
|    | 9.1.             | Appointment                               
|    | 9.2.             | Delegation of Duties                      
|    | 9.3.             | Exculpatory Provisions                    
|    | 9.4.             | Reliance by Agent                         
|    | 9.5.             | Notice of Default                         
|    | 9.6.             | Non-Reliance on Agent and Other Banks     
|    | 9.7.             | Indemnification                           
|    | 9.8.             | Agent in Its Individual Capacity          
|    | 9.9.             | Successor Agent                           
|   
|10. | OTHER PROVISIONS | 66                                        
|    | 10.1.            | Amendments and Waivers                    
|    | 10.2.            | Notices                                   
|    | 10.3.            | No Waiver; Cumulative Remedies            
|    | 10.4.            | Survival of Representations and Warranties
|    | 10.5.            | Payment of Expenses and Taxes             
|    | 10.6.            | Assignments and Participants              
|    | 10.7.            | Counterparts                              
|    | 10.8.            | Adjustments; Set-off                      
|    | 10.9.            | Construction                              
|    | 10.10.           | Indemnity                                 
|    | 10.11.           | Governing Law                             
|    | 10.12.           | Headings Descriptive                      
|    | 10.13.           | Severability                              
|    | 10.14.           | Integration                               
|    | 10.15.           | Consent to Jurisdiction                   
|    | 10.16.           | Service of Process                        
|    | 10.17.           | No Limitation on Service or Suit          
|    | 10.18.           | WAIVER OF TRIAL BY JURY                   
|    | 10.19.           | Confidentiality                           

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EXHIBITS

|Exhibit A        | List of Commitment Percentages                                    
|---------------- | ------------------------------------------------------------------
|Exhibit B        | Form of Assignment and Acceptance Agreement                       
|Exhibit C        | Form of Letter of Credit Request                                  
|Exhibit D        | Form of Letter of Credit                                          
|Exhibit E-1      | Form of Compliance Certificate (GAAP Financial Statements)        
|Exhibit E-2      | Form of Compliance Certificate (Statutory Financial Statements)   
|Exhibit F        | Form of Financial Condition Certificate                           
|Exhibit G        | Form of Opinion of Counsel to the Applicant                       
|Exhibit H        | Form of Extension Request                                         
|                 |                                                                   
|SCHEDULES        |                                                                   
|Schedule I       | Existing Letters of Credit                                        
|Schedule 1.1     | Management Group                                                  
|Schedule 3.1     | 2000 Reserve Loss                                                 
|Schedule 4.4     | Licenses                                                          
|Schedule 4.6     | Taxes                                                             
|Schedule 4.7     | Subsidiaries                                                      
|Schedule 4.14(a) | Environmental Matters                                             
|Schedule 4.14(b) | Environmental Matters                                             
|Schedule 4.18    | Material Contracts                                                
|Schedule 4.19    | Reinsurers and Collateral Securing Certain Reinsurers' Obligations
|Schedule 7.2     | Indebtedness                                                      
|Schedule 7.3     | Liens                                                             
|Schedule 7.6     | Transactions with Affiliates                                      
|Schedule 10.2    | List of Banks and their Addresses                                 

iv

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SECOND AMENDED
AND RESTATED LETTER OF CREDIT AGREEMENT, dated as of November 22, 2000, by and
among PMA CAPITAL CORPORATION, a Pennsylvania corporation (the
Applicant), each subsidiary of the Applicant which is or may
become a party hereto (each a Co-Applicant), the banks or
other lending institutions party hereto (together with their respective
successors and assigns, the Banks, and each a
Bank) and PNC BANK, NATIONAL ASSOCIATION, as agent for itself
and the other Banks (in such capacity, together with its successors and assigns
in such capacity, the Agent), and as issuing bank (in such
capacity, together as with its successors and assigns in such capacity, the
Issuing Bank) for the Letters of Credit (as defined in
Section 1).

RECITALS

A.   The Applicant
is a party to a Letter of Credit Agreement dated as of November 10, 1995, as
amended and restated as of March 14, 1997 and thereafter amended prior to the
date hereof (the Existing Credit Agreement), among the
Applicant, the lenders party thereto (collectively, the Existing
Banks), CoreStates Bank, N.A., as co-agent (the Exiting
Co-Agent), and The Bank of New York, as the administrative agent for
the Existing Banks and the issuing bank for the Letters of Credit (in such
capacity, together with its successors in such capacity, the Exiting
Agent and Issuing Bank).

B.   The parties
hereto have agreed to amend and restate the Existing Credit Agreement as
provided in this Agreement in order to effect the following: (i) to remove the
Exiting Agent and Issuing Bank and Exiting Co-Agent as parties hereto; (ii) to
substitute as Agent and Issuing Bank, PNC Bank, National Association; (iii) to
provide for the replacement of the outstanding Letters of Credit issued by the
Exiting Agent and Issuing Bank, described in Schedule I hereto
(Existing Letters of Credit), with Letters of Credit issued
by PNC Bank, National Association; (iv) to increase the amount of the aggregate
Commitments available hereunder to $55,000,000; (v) to remove certain of the
Existing Banks as parties hereto and add certain other lenders (the New
Banks) as parties; and (vi) to modify certain terms and conditions set
forth therein.

C.   The New Banks
are willing to become parties to this Agreement and to provide the Commitments
set forth for such New Banks herein, and otherwise to enjoy the benefits and be
subject to all the obligations of the Banks under this Agreement.

D.   For
convenience, this Agreement is dated as of November 22, 2000 (the
Restatement EffectiveDate), and references to certain
matters related to the period prior thereto have been deleted.

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1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

1.1.   Definitions

As used in this
Agreement, terms defined in the preamble have the meanings therein indicated,
and the following terms have the following meanings:

Affiliate
shall mean, as to any Person, each other Person that directly, or indirectly
through one or more intermediaries, owns or controls, is controlled by or under
common control with, such Person or is a director or officer of such Person. For
purposes of this definition, with respect to any Person, control
shall mean (i) the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, or (ii)
the beneficial ownership of securities or other ownership interests of such
Person having ten percent (10%) or more of the combined voting power of the then
outstanding securities or other ownership interests of such Person ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote in the election of directors or other governing body of such Person.

Agent
means PNC in its capacity as agent for the Banks hereunder, and its successors
and assigns in such capacity.

Agreement
means this Second Amended and Restated Letter of Credit Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.

Alternate
Base Rate means on any date, a rate of interest per annum equal to the
higher of (i) the Federal Funds Rate in effect on such date plus one half of one
percent (1⁄2 of 1%) or (ii) the Prime Rate in effect on such date.
Each change in the Alternate Base Rate resulting from a change in the Federal
Funds Rate or the Prime Rate shall take effect on the date when such change in
the Federal Funds Rate or the Prime Rate occurs.

Annual
Statement shall mean, with respect to any Insurance Subsidiary for any
fiscal year, the annual financial statements of such Insurance Subsidiary as
required to be filed with the Insurance Regulatory Authority of its jurisdiction
of domicile and in accordance with the laws of such jurisdiction, together with
all exhibits, schedules, certificates and actuarial opinions required to be
filed or delivered therewith.

Applicable
Fee Percentage means (i) with respect to the Letter of Credit
Commissions, 0.450% and (ii) with respect to Commitment Fees, 0.150%.

Assignment
and Acceptance Agreement means an assignment and acceptance agreement
executed by a Bank and an Eligible Assignee substantially in the form of Exhibit
B.

2

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Assignment
Fee has the meaning set forth in Section 10.6(b).

Authorized Signatory
means as to (i) any Person which is a corporation, the chairman of the board,
the president, any vice president, the chief financial officer or any other duly
authorized officer of such Person and (ii) any Person which is not a
corporation, the general partner or other managing Person thereof.

Available
Amount means at any time the amount of the Commitment less the Letter
of Credit Exposure.

Available
Dividend Amount shall mean, with respect to any Insurance Subsidiary
for any period of four consecutive fiscal quarters, the aggregate maximum amount
of dividends that is, or would be if such period were a fiscal year, permitted
by the Insurance Regulatory Authority of its jurisdiction of domicile, under
applicable Requirements of Law (without the necessity of any consent, approval
or other action of such Insurance Regulatory Authority involving the granting of
permission or the exercise of discretion by such Insurance Regulatory
Authority), to be paid by such Insurance Subsidiary to the Applicant or another
Subsidiary of the Applicant in respect of such four-quarter period as if such
period were a fiscal year (whether or not any such dividends are actually paid).

Bank
means each bank listed on the signature pages hereof and each assignee which
becomes a Bank pursuant to Section 10.6, and their respective assigns, each of
which shall meet the criteria of Eligible Assignee hereunder.

"Bankruptcy Code" shall
mean 11 U.S.C.§§101 et seq., as amended from time to time, and any successor statute.

Beneficiary
Notification Date shall mean, with respect to an Evergreen Letter of
Credit, the last day on which the beneficiary thereof may be notified in order
that such Stated Expiration Date is not to be automatically extended.

Benefit
Arrangement shall mean any time, an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.

Benefitted
Bank has the meaning set forth in Section 10.8.

"BNY" means The Bank of
New York.

Business
Day means any day other than a Saturday, a Sunday or other day on
which commercial banks located in Philadelphia or New York are authorized or
required by law or other governmental action to close; and with respect to draws
or reimbursements under a Letter of Credit denominated in an Optional Currency
such day shall be a day (i) on which dealings in deposits in the relevant
Optional Currency are carried on in the applicable interbank

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market, and (ii) on which foreign exchange markets are open for business
in the principal financial center of the country of the relevant Optional Currency.

Caliber
shall mean Caliber One Indemnity Company, a Delaware insurance company.

Capitalization
Ratio shall mean, as of the last day of any fiscal quarter, the ratio
of (i) Consolidated Indebtedness as of such date to (ii) the sum of Consolidated
Indebtedness and Consolidated Net Worth, each as of such date.

Cash
Coverage Ratio shall mean as of the last day of any period of four
consecutive fiscal quarters (the Measurement Period), the
ratio of:

(i)
   the aggregate of (y) the Available Dividend Amount for the Measurement Period for the
Insurance Subsidiaries, other than each Insurance Subsidiary that is a Subsidiary of
another Insurance Subsidiary plus (z) the Net Tax Sharing Payments (whether a
positive or negative number) for the Measurement Period, to

(ii)
   the aggregate of (x) Interest Expense incurred during the Measurement Period, (y) the
aggregate of all operating costs and expenses of the Applicant, including rent, utilities
and payroll expenses paid by the Applicant during the Measurement Period, and (z) all
dividends paid by the Applicant during the Measurement Period.

Cash
Equivalents shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof, backed by the full faith and credit of the United States of America and
maturing within one hundred eighty (180) days from the date of acquisition, (ii)
commercial paper issued by any Person organized under the laws of the United
States of America, maturing within one hundred eighty (180) days from the date
of acquisition and, at the time of acquisition, having a rating of at least A-1
or the equivalent thereof by Standard & Poors and at least P-1 or the
equivalent thereof by Moodys, (iii) time deposits, certificates of deposit
and bankers acceptances maturing within one hundred eighty (180) days from
the date of issuance and issued by a bank or trust company organized under the
laws of the United States of America or any state thereof that has combined
capital and surplus of at least $500,000,000 and that has (or is a subsidiary of
a bank holding company that has) a long-term unsecured debt rating of at least A
or the equivalent thereof by Standard & Poors or at least A-2 or the
equivalent thereof by Moodys, and (iv) repurchase obligations of a bank or
trust company described in clause (iii) above and having a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above.

CMOs
shall mean any security or certificate representing any interest or
participation in a pool of Mortgage Backed Securities (it being understood that
Mortgage Backed Securities themselves are not CMOs).

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Collateral
has the meaning set forth in Section 2.14.

Collateral
Accounts has the meaning set forth in Section 2.14 hereof.

Co-Applicant
means each Subsidiary of the Applicant which is or becomes a party hereto.

Combined
Annual Statement shall mean, with respect to PMACIC and the
Consolidated Affiliates, the combined annual statement of such entities on the
Fire and Casualty form (or any successor form thereto) as required to be filed
by any such entity with the Insurance Regulatory Authority of its jurisdiction
of domicile in accordance with the laws of such

jurisdiction, together with all exhibits, schedules, certificates and
actuarial opinions required to be filed or delivered therewith.

Commitment
means the commitment of PNC, as Issuing Bank, to issue Letters of Credit having
an aggregate outstanding Dollar Equivalent face amount up to $55,000,000 (as
reduced from time to time pursuant to Section 2.4), and with respect to the
Banks shall mean their commitment to participate in the Letter of Credit
Exposure in an amount equal to their respective Commitment Percentages as set
forth in Section 2.2 in an aggregate amount up to their respective Commitment
Amounts.

Commitment
Amount means as to any Bank, the maximum Dollar amount of its
Commitment set forth opposite the name of such Bank in Exhibit A under the
heading Commitment Amount.

Commitment
Fee has the meaning set forth in Section 2.16.

Commitment Percentage
means as to any Bank, the percentage set forth opposite the name of such Bank in
Exhibit A under the heading Commitment Percentage.

Commitment
Period means the period from the Original Effective Date through the
day preceding the Termination Date.

Compliance
Certificate shall mean a fully completed and duly executed certificate
in the form of Exhibit E-1 or Exhibit E-2, as applicable.

Consolidated
Affiliates shall mean, collectively, Caliber, the PMA Group and any
other fire and casualty insurance company that is or hereafter becomes an
Affiliate of PMACIC and the accounts of which are prescribed or permitted by
Statutory Accounting Principles to be consolidated with those of PMACIC for
purposes of any Combined Annual Statements.

Consolidated
Indebtedness shall mean, as of the last day of any fiscal quarter, the
aggregate (without duplication) of all Indebtedness of the Applicant and its
Subsidiaries as of

5

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such date, determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles but excluding reimbursement obligations with
respect to letters of credit issued hereunder.

Consolidated
Net Worth shall mean, at any time, the net worth of the Applicant and
its Subsidiaries at such time, determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles but (i) excluding any preferred
stock or other class of equity securities that, by its stated terms (or by the
terms of any class of equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, matures or is
mandatorily redeemable, or is redeemable at the option of the holders thereof,
in whole or in part, and (ii) without regard to the requirements of Statement of
Financial Accounting Standards No. 115 issued by the Financial Accounting
Standards Board.

Consolidated
Statutory Surplus shall mean, as to all Insurance Subsidiaries, as of
any date, the sum (without duplication) of the total amounts shown (i) with
respect to each Insurance Subsidiary not legally domiciled in the United States,
the shareholders equity of such Insurance Subsidiary as determined in
accordance with Generally Accepted Accounting Principles (without regard to the
requirements of Statement of Financial Accounting Standards No. 115 issued by
the Financial Accounting Standards Board), (ii) with respect to each other
Insurance Subsidiary that is a life and accident and health insurance company,
on line 38, column 1, page 3 of the Annual Statement of such Insurance
Subsidiary, and (iii) with respect to each other Insurance Subsidiary, on line
27, column 1, page 3 of the Annual Statement of such Insurance Subsidiary,
excluding in each case under clauses (i), (ii) and (iii) any finance Subsidiary
that is a Subsidiary of an Insurance Subsidiary, or the sum of amounts
determined in a consistent manner for any date other than one as of which an
Annual Statement is prepared.

Contingent
Obligation shall mean, with respect to any Person, (without
duplication) any direct or indirect liability of such Person with respect to any
Indebtedness, liability or other obligation (the primary obligation)
of another Person (the primary obligor), whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor, in respect
thereof, to make payment of such primary obligation or (d) otherwise to assume
or hold harmless the owner of any such primary obligation against loss or
failure or inability to perform in respect thereof; provided,
however, that, with respect to the Applicant and its Subsidiaries, the
term Contingent Obligation shall not include (w) guarantees or agreements issued
by the Applicant to Insurance Regulatory Authorities pursuant to which the
Applicant agrees to maintain the statutory surplus of PMAIC and MAIC in an
amount (in each case) not to exceed $7,500,000, (x) guarantees or agreements
issued by Applicant to PMAIC pursuant to which Applicant agrees to maintain the
statutory surplus of PMA Cayman in an amount not to exceed $15,000,000, (y)
endorsements for

6

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collection or deposit in the ordinary course of business or (z)
obligations entered into by an Insurance Subsidiary in the ordinary course of its
business under insurance policies or contracts issued by it or to which it is a party,
including reinsurance agreements (and security posted by any such Insurance Subsidiary in
the ordinary course of its business to secure obligations thereunder).

Control
Agreements shall mean those certain Notification and Control
Agreements among the Applicant and one or more Co-Applicants, the Agent and the
Custodian relating to the Pledge Agreement and the Collateral Accounts.

Covenant
Compliance Worksheet shall mean a fully completed worksheet in the
form of Attachment A to Exhibit E-1 or Exhibit E-2, as applicable.

Credit
Documents means collectively, this Agreement, each Letter of Credit
Request, the Pledge Agreement, the Control Agreements and all other agreements,
instruments, documents and certificates now or hereafter executed and delivered
to the Agent or any Bank by or on behalf of the Applicant or any of its
Subsidiaries with respect to this Agreement and the transactions contemplated
hereby, in each case as amended, modified, supplemented or restated from time to
time.

Credit
Party means the Applicant, each Co-Applicant and each other party
(other than the Agent, the Issuing Bank and the Banks) that is a signatory to a
Credit Document.

Custodian
shall mean PNC in its capacity as custodian of the Collateral Accounts and its
successors and assigns in such capacity.

Date of
Issuance means any Business Day specified in a Letter of Credit
Request as a date on which the Applicant and, if applicable, a Co-Applicant,
requests the issuance by the Issuing Bank of a Letter of Credit.

Default
means any condition or event which constitutes an Event of Default or which with
the giving of notice or lapse of time or both would, unless cured or waived,
become an Event of Default.

Discounted
Collateral Value means, in respect of Eligible Collateral consisting
of (i) cash, one hundred percent (100%) of the amount thereof, (ii) Treasury
Securities, ninety percent (90%) of the fair market value thereof, and (iii)
U.S. Federal Agency Obligations, eighty (80%) of the fair market value thereof,.
The fair market value of Treasury Securities and U.S. Federal Agency Obligations
shall be as determined in good faith by the Agent and the Agents good
faith determination thereof shall be conclusive absent manifest error.

Dollar
Equivalent shall mean, with respect to any amount of any currency, the
Equivalent Amount of such currency expressed in Dollars.

7

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Dollar
Roll Agreements shall mean, as to any Person, an agreement pursuant to
which such Person sells securities to another Person and agrees to repurchase
substantially the same securities (as determined by the Public
Securities Association and Generally Accepted Accounting Principles) at a
described or specified date and price.

Dollars
and $ means lawful currency of the United States of America.

"Duff & Phelps" shall mean
Duff & Phelps Credit Rating Co., Inc., its successors and assigns.

Eligible
Assignee shall mean and include a commercial bank or other financial
institution (other than a property or casualty insurance company) acceptable to
the Issuing Bank and the Agent.

"Eligible Collateral"
means cash (in Dollars), Treasury Securities and U.S. Federal Agency Obligations.

Environmental
Claims shall mean any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations (other than internal reports prepared by any Person
in the ordinary course of its business and not in response to any third party
action or request of any kind) or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (collectively, Claims), including, without
limitation, (i) any and at Claims by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to human health or the environment.

Environmental
Laws shall mean any and all federal, state and local laws, statutes,
ordinances, rules, regulations, permits, licenses, approvals, interpretations,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.

Equivalent
Amount shall mean, at any time, as determined by the Agent (which
determination shall be conclusive absent manifest error), with respect to an
amount of any currency (the Reference Currency) which is to
be computed as an equivalent amount of another currency (the Equivalent
Currency): (i) if the Reference Currency and the Equivalent Currency
are the same, the amount of such Reference Currency, or (ii) if the Reference
Currency and the Equivalent Currency are not the same, the amount of such
Equivalent Currency

8

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converted from such Reference Currency at Agents spot selling rate
(based on the rates quoted by Reuters) for the sale of such Equivalent Currency for such
Reference Currency at the open of Agents business on the Business Day on which such
calculation is made.

Equivalent
Currency shall have the meaning assigned to such term in the
definition of Equivalent Amount.

ERISA
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any successor statute, and all rules and regulations from time
to time promulgated thereunder.

ERISA
Group shall mean the Applicant and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Applicant, are treated as a single
employer under Section 414 of the Internal Revenue Code.

Event
of Default has the meaning set forth in Section 8.1.

Evergreen
Letter of Credit shall mean a Letter of Credit, the Stated Expiration
Date of which, by terms of such Letter of Credit, is automatically extended for
the period therein specified unless the beneficiary thereof is notified a
specified number of days prior to the then scheduled Stated Expiration Date that
such scheduled Stated Expiration Date will not be extended.

Exchange
Act shall mean the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute, and all rules and regulations from time
to time promulgated thereunder.

Existing
Banks has the same meaning set forth in the Recitals.

Existing Credit
Agreement has the same meaning set forth in the Recitals.

Existing
Letters of Credit has the same meaning set forth in the Recitals.

Exiting
Agent and Issuing Bank has the same meaning set forth in the Recitals.

Extension
Consent Period means the period which is less than thirty-five (35)
days, but equal to or greater than thirty (30) days, prior to the then current
Termination Date (provided, however, that if such thirtieth (30th)
prior day falls on a day that is not a Business Day, such date shall be extended
to the next following Business Day).

Extension
Request has the meaning set forth in Section 2.6.

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Federal
Funds Rate means, for any day, the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to PNC on such day on
such transactions as determined by the Agent.

Generally
Accepted Accounting Principles shall mean generally accepted
accounting principles, as followed in the United States and as set forth in the
statements, opinions and pronouncements of the Accounting Principles Board, the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board (or, to the extent not so set forth in such statements, opinions
and pronouncements, as generally followed by entities similar in size to the
Applicant and engaged in generally similar lines of business), consistently
applied and maintained and in conformity with those used in the preparation of
the most recent financial statements of the Applicant referred to in Section
4.1l(a).

Governmental
Authority shall mean any nation or government, any state or other
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

Hazardous
Substances shall mean any substances or materials (i) that are or
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any Environmental Law, (ii) that are
defined by any Environmental Law as toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous, (iii) the presence of
which require investigation or response under any Environmental Law,
(iv) that constitute a nuisance, trespass or health or safety hazard to
Persons or neighboring properties, (v) that consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance or (vi) that contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or wastes, crude oil, nuclear fuel, natural gas or synthetic
gas.

Hedge
Agreement shall mean any interest or foreign currency rate swap, cap,
collar, option, hedge, forward rate or other similar agreement or arrangement
designed to protect against fluctuations in interest rates or currency exchange
rates.

Historical
Statutory Statements shall have the meaning given to such term in
Section 4.11(b).

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Indebtedness
shall mean, with respect to any Person (without duplication), (i) all
indebtedness of such Person for borrowed money or in respect of loans or
advances, (ii) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (iii) all reimbursement obligations of such
Person with respect to surety bonds, letters of credit and bankers
acceptances (in each case, whether or not drawn or matured and in the stated
amount thereof), (iv) all obligations of such Person to pay the deferred
purchase price of property or services, (v) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, (vi) all obligations of such Person as lessee
under leases that are or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases, to the extent such
obligations are required to be so recorded, (vii) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of
any capital stock or other equity securities that, by their stated terms (or by
the terms of any equity securities issuable upon conversion thereof or in
exchange therefor), or upon the occurrence of any event, mature or are
mandatorily redeemable, or are redeemable at the option of the holder thereof,
in whole or in part, (viii) the net termination obligations of such Person under
any Hedge Agreements, other than any Hedge Agreement that qualifies as a hedge
of an exposure to an identifiable interest rate risk as determined in accordance
with Statement of Financial Accounting Standards No. 80 issued by the Financial
Accounting Standards Board, calculated as of any date as if such agreement or
arrangement were terminated as of such date, (ix) all indebtedness of such
Person in respect of Reverse Repurchase Agreements and Dollar Roll Agreements,
(x) all Contingent Obligations of such Person and (xi) all indebtedness referred to in clauses (i) through (x) above
secured by any Lien on any property or asset owned or held by such Person regardless of
whether the indebtedness secured thereby shall have been assumed by such Person or is
nonrecourse to the credit of such Person.

Indemnified
Person has the meaning set forth in Section 10.10.

Insurance
Agreement shall mean all contracts of insurance issued by any
Insurance Subsidiary.

Insurance
Regulatory Authority mean, with respect to any Insurance Subsidiary,
the insurance department or similar Governmental Authority charged with
regulating insurance companies or insurance holding companies, in its
jurisdiction of domicile and, to the extent that it has regulatory authority
over such Insurance Subsidiary, in each other jurisdiction in which such
Insurance Subsidiary conducts business or is licensed to conduct business.

Insurance
Subsidiary shall mean any Subsidiary of the Applicant the ability of
which to pay dividends is regulated by an Insurance Regulatory Authority or that
is otherwise required to be regulated thereby in accordance with the applicable
Requirements of Law of its jurisdiction of domicile, and shall mean and include,
without limitation, each of PMACIC and PMAIC.

Interest
Expense shall mean, for any period, total interest expense of the
Applicant for such period in respect of Indebtedness of the Applicant and its
Subsidiaries

11

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(including all such interest expense accrued or capitalized during such
period, whether or not actually paid during such period, and such portion of finance
leases properly characterized as interest), adjusted to give effect to all interest rate
swap, cap or other interest rate hedging arrangements and fees and expenses paid in
connection therewith, all as determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles.

Internal
Revenue Code shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.

Invested
Assets shall mean, with respect to any Person, the amount, on a
consolidated basis, of such Persons investments, cash and cash equivalents
as reflected on its most recent balance sheet.

Investment
Grade Securities shall mean (i) non-equity securities (other than
those issued by an Affiliate of the Applicant and other than CMOs and REMICS)
that, if rated by the NAIC, are rated NAIC 2 (or the equivalent
thereof) or better by the NAIC, or, if not rated by the NAIC, are rated
BBB- (or the equivalent thereof) or higher by Standard &
Poors, Baa3 (or the equivalent thereof) or higher by
Moodys, or BBB- (or the equivalent thereof) or higher by Duff
& Phelps, (ii) municipal bonds that, if rated by the NAIC, are rated
NAIC 2" (or the equivalent thereof) or better by the NAIC, or if not
rated by the NAIC, are rated SP-2 (or the equivalent thereof) or
higher by Standard & Poors, Baa3 or MIG4 (or
the equivalent

thereof) or higher by Moodys, or BBB-(or the equivalent
thereof) or higher by Duff &Phelps, and (iii) Permitted CMOs and Mortgage Backed
Securities that, if rated by the NAIC, are rated NAIC 2(or the equivalent
thereof) or higher by Standard &Poors, Baa3(or the equivalent
thereof) or higher by Moodys, or BBB-(or the equivalent thereof) or
higher by Duff &Phelps (or, in the case of clauses (i), (ii) and (iii) above, in the
event all such rating agencies cease to publish investment ratings, carrying an
equivalent rating of a nationally recognized rating agency).

Issuing
Bank means PNC in its capacity as issuing bank hereunder, and its
successors in such capacity.

Letters
of Credit shall mean letters of credit issued by the Issuing Bank for
the account of the Applicant and any Co-Applicant as defined in Section 2.1.

Letter
of Credit Commissions has the meaning set forth in Section 2.17.

Letter of
Credit Exposure means at any date, (i) in respect of all the Banks,
the Dollar Equivalent sum, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit at such date, (y) the aggregate
amount of unpaid drafts drawn on all Letters of Credit at such date, and (z) the
aggregate unpaid reimbursement obligations in respect of the Letters of Credit
at such date, and (ii) in respect of any Bank, a Dollar Equivalent

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amount equal to such Banks Commitment Percentage multiplied by the
amount determined under clause (i) of this definition.

Letter
of Credit Request means a request from the Applicant, or from the
Applicant and a Co-Applicant, for the issuance of a Letter of Credit,
substantially in the form of Exhibit C.

Licenses
shall have the meaning given to such term in Section 4.4(c).

Lien
shall mean any mortgage, pledge, hypothecation, assignment, security interest,
lien (statutory or otherwise), preference, priority, charge or other encumbrance
of any nature, whether voluntary or involuntary, including, without limitation,
the interest of any vendor or lessor under any conditional sale agreement, title
retention agreement, capital lease or any other lease or arrangement having
substantially the same effect as any of the foregoing, except as created under
the Credit Documents.

MAIC
shall mean Manufacturers Alliance Insurance Company, a Pennsylvania insurance
corporation.

Management
Group shall mean, collectively, the individuals listed on
Schedule 1.1; provided, however, each individual shall be
included in the Management Group only so long as such individual is a member of
the Applicants Board of Directors or is employed by the Applicant or any
Material Insurance Subsidiary in a senior management position.

Margin
Stockshall have the meaning given to such term in Regulation U.

Material
Adverse Change shall mean a material adverse change in the condition
(financial or otherwise), operations, business, properties or financial
prospects of the Applicant or the Applicant and its Subsidiaries, taken as a
whole.

Material
Adverse Effect shall mean a material adverse effect upon (i) the
condition (financial or otherwise), operations, business, properties or
financial prospects of the Applicant or the Applicant and its Subsidiaries,
taken as a whole, (ii) the ability of the Applicant to perform its obligations
under this Agreement or any of the other Credit Documents or (iii) the legality,
validity or enforceability of this Agreement or any of the other Credit
Documents.

Material
Insurance Subsidiary shall mean any Insurance Subsidiary that is a
Material Subsidiary.

Material
Plan shall mean, at any time, a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.

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Material
Subsidiary shall mean each of (i) PMACIC, (ii) Caliber, (iii) the
members of the PMA Group, (iv) at the relevant time of determination, any
Subsidiary of the Applicant having (after the elimination of intercompany
accounts) (y) assets constituting at least ten percent (10%) of the total assets
of the Applicant and its Subsidiaries on a consolidated basis, or (z) revenues
constituting at leastten percent (10%) of the total revenues of the
Applicant and its Subsidiaries on a consolidated basis, in each case as
determined as of the date of the financial statements of the Applicant and its
Subsidiaries most recently delivered under Section 5.1 prior to such time, and
(v) any Subsidiary that has one of the foregoing as a Subsidiary;

"Moody's" shall mean
Moody's Investors Service, Inc., its successors and assigns.

Mortgage
Backed Securities shall mean investment securities representing any
undivided interest or participation in or which are secured by, a pool of loans
secured by mortgages or deeds of trust.

Multiemployer
Plan shall mean, at any time, an employee pension benefit plan within
the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA
Group is then making or accruing an obligation to make contributions or has
within the preceding five (5) plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five (5) year period.

NAIC
shall mean the National Association of Insurance Commissioners and any successor
thereto.

Net Tax
Sharing Payments shall mean, for any period, (i) the aggregate
(without duplication) of all payments made or to be made to the Applicant by its
Subsidiaries pursuant to tax sharing or allocation agreements or arrangements or
otherwise in respect of taxable income realized during such period, minus(ii) the aggregate (without
duplication) of all foreign, federal, state or local income, franchise and other tax
payments made or to be made by the Applicant in respect of taxable income realized during
such period and any payments made or to be made by the Applicant during such period
pursuant to such tax sharing or tax allocation agreement or arrangement.

New
Banks has the same meaning set forth in the Recitals.

Obligations
means all of the obligations and liabilities of the Applicant and the
Co-Applicants under the Credit Documents, including, without limitation,
reimbursement obligations (whether absolute or contingent) under any Letter of
Credit or Credit Document and all obligations in respect of fees, expenses and
other amounts payable under any Credit Document, in each case whether fixed,
contingent, now existing or hereafter arising, created, assumed, incurred or
acquired.

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Optional
Currency shall mean any of the following currencies: (i) British
pounds, (ii) Canadian dollars, (iii) German marks, (iv) euros, (v) French
francs, (vi) Mexican pesos, (vii) Swiss francs and (viii) Japanese yen and any
other currency approved by Agent pursuant to Section 2.18(b).

"Original Effective Date"
means March 14, 1997.

Outstanding
Letters of Credit means at any time the Letters of Credit outstanding
at such time.

PAC
I shall means a planned amortization class bond which is a tranche or
class of CMO or REMIC that is retired according to a predetermined amortization
schedule independent of the prepayment rate on the underlying collateral and
which has the highest level of protection within the pool against prepayment or
extension.

Parent
means, with respect to any Bank, any Person controlling such Bank.

PBGC
shall mean the Pension Benefit Guaranty Corporation and any successor thereto.

Permitted
CMOs and Mortgage Backed Securities shall mean (i) mortgage
participation certificates issued by the Federal Home Loan Mortgage Corporation,
(ii) mortgage backed securities issued by the Federal National Mortgage
Association, (iii) securities guaranteed by the Government National Mortgage
Association, and (iv) other securities and certificates representing
participations in any CMO or REMIC which are PAC Is or which have
comparable priority in respect of the repayment thereof.

Permitted
Liens shall have the meaning given to such term in Section 7.3.

Person
shall mean any corporation, association, joint venture, partnership, limited
liability company, organization, business, individual, trust, Governmental
Authority or other entity of whatever nature.

Plan
shall mean, at any time, an employee Pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five (5) years been maintained, or contributed to, by any Person
which was at such a time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.

Pledge
Agreement shall mean that certain Pledge and Security Agreement from
the Applicant to the Agent relating to the Collateral Accounts, as the same may
be amended, supplemented or otherwise modified from time to time.

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"PMA Cayman" shall mean
PMA Holdings, Cayman Ltd., a Cayman Island corporation.

PMA
Group shall mean PMAIC, Manufacturers Alliance Insurance Company, a
Pennsylvania insurance corporation, and Pennsylvania Manufacturers Indemnity
Company, a Pennsylvania insurance corporation.

PMACIC
shall mean PMA Capital Insurance Company (formerly known as PMA Reinsurance
Corporation), a Pennsylvania insurance corporation.

PMAIC
shall mean Pennsylvania Manufacturers Association Insurance Company, a
Pennsylvania insurance corporation.

PNC
shall mean PNC Bank, National Association.

Prime
Rate means the rate of interest publicly announced by PNC in
Philadelphia from time to time as its Prime Rate.

Property
means all types of real, personal, tangible, intangible or mixed property.

Quarterly
Statement shall mean, with respect to any Insurance Subsidiary for any
fiscal quarter, the quarterly financial statements of such Insurance Subsidiary
as required to be filed with the Insurance Regulatory Authority of its
jurisdiction of domicile, together with all exhibits, schedules, certificates
and actuarial opinions required to be filed or delivered therewith.

Reference
Currency shall have the meaning assigned to such term in the
definition of Equivalent Amount.

Regulations
D, T, U and X shall mean Regulations D, T, U and X respectively, of
the Federal Reserve Board, and any successor regulations.

Reinsurance
Agreement shall mean any agreement, contract, treaty, certificate of
other arrangement whereby any Insurance Subsidiary agrees to transfer, cede or
retrocede to another insurer or reinsurer all or part of the liability assumed
or assets held by such Insurance Subsidiary under a policy or policies of
insurance issued by such Insurance Subsidiary.

REMIC
shall mean real estate mortgage investment conduit.

Replaced
Bank has the meaning set forth in Section 2.15.

Required Banks
means at any time Banks representing at least 51% of the Commitment or, if the
Commitment shall have been terminated, at least 51% of the Letter of Credit
Exposure at such time.

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Requirement
of Law shall mean, with respect to any Person, the charter, articles
or certificate of organization or incorporation and bylaws or other
organizational or governing documents of such Person, and any statute, law,
treaty, rule, regulation, order, decree, writ, injunction or determination of
any arbitrator or court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject or otherwise pertaining to any or all of the
transactions contemplated by this Agreement and the other Credit Documents.

"2000 Reserve Loss" shall
have the meaning set forth in Section 3.1(a)(ii) below

Restatement
Effective Date has the meaning set forth in the Recitals.

Reverse
Repurchase Agreement shall mean, as to any Person, an agreement
pursuant to which such Person sells securities to another Person (the
Counterparty) and agrees to repurchase such securities at a
described or specified date and price; provided, however, that
Reverse Repurchase Agreements shall not include any agreement
pursuant to which such Person lends securities pursuant to a securities lending
arrangement to a Counterparty who collateralizes such borrowing with cash, Cash
Equivalents, letters of credit or other collateral acceptable to the Required
Banks, and agrees to return such securities to such Person at a described or
specified date.

Revolving
Credit Agreement shall mean that certain Revolving Credit Agreement
among the Applicant and the lenders party thereto, The Bank of New York, as
administrative agent for the lenders, and First Union National Bank, as
documentation agent for the lenders, dated as of March 14, 1997, as amended.

"Standard & Poor's" shall
mean, Standard & Poor's Ratings Services, a division of McGraw-Hill Companies, Inc., its
successors and assigns.

Stated
Expiration Date means, with respect to each Letter of Credit, the date
occurring up to one year after the Date of Issuance, as such date may be
extended in accordance with the terms of this Agreement.

Statutory
Accounting Practices shall mean, with respect to any Insurance
Subsidiary, the statutory accounting practices prescribed or permitted by the
relevant Insurance Regulatory Authority of its state of domicile, consistently
applied and maintained and in conformity with those used in the preparation of
the most recent Historical Statutory Statements.

Subsidiary
with respect to any Person, any corporation or other Person of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors, in the case of a
corporation, or of the ownership or beneficial interests, in the case of a
Person not a corporation, is at the time, directly or indirectly, owned or
controlled by such Person and one or more of its other Subsidiaries or a
combination thereof (irrespective of whether, at the time, securities of any
other class or classes

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of any such corporation or other Person shall or might have voting power
by reason of the happening of any contingency). When used without reference to a parent
entity, the term Subsidiaryshall be deemed to refer to a Subsidiary of the
Applicant.

Surplus
Relief Reinsurance Agreement shall mean any agreement or other
arrangement whereby any Insurance Subsidiary cedes business under a reinsurance
agreement that would not be considered a transaction that indemnifies an insurer
against loss or liability relating to insurance risk, as determined in
accordance with Statement of Financial Accounting Standards No. 113 (FAS
113) issued by the Financial Accounting Standards Board.

Termination
Date means November 20, 2001, or such earlier date on which the
Commitment is terminated, or if the Commitment is extended with the consent of
the Banks pursuant to Section 2.6, such later date.

Trabaja
shall mean Trabaja Reinsurance Company, a Cayman Island insurance company.

Treasury
Security shall mean any Treasury security under, and as
such term is defined in, 31 C.F.R. part 306, subpart O, as amended.

United
States means the United States of America, including the States and
the District of Columbia, but excluding its territories and possessions.

Unfunded
Liabilities shall mean, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.

U.S.
Federal Agency Obligations shall mean bonds, debentures, notes or
other evidences of indebtedness issued by the Federal National Mortgage
Association or issued or guaranteed by the Government National Mortgage
Association.

Wholly
Owned shall mean, with respect to any Subsidiary of any Person, that
one hundred percent (100%) of the outstanding capital stock or other ownership
interests of such Subsidiary is owned, directly or indirectly, by such Person.

1.2. Principles of Construction.

(a)   All terms
defined in a Credit Document shall have the meanings given such terms therein
when used in the other Credit Documents or any certificate, opinion or other
document made or delivered pursuant thereto, unless otherwise defined therein.

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(b)   Except as
specifically provided otherwise in this Agreement, all accounting terms used
herein that are not specifically defined shall have the meanings customarily
given them, and all financial computations hereunder shall be made, in
accordance with Generally Accepted Accounting Principles (or, to the extent that
such terms apply solely to any Insurance Subsidiary or if otherwise expressly
required, Statutory Accounting Practices). Notwithstanding the foregoing, in the
event that any changes in Generally Accepted Accounting Principles or Statutory
Accounting Practices after the date hereof are required to be applied to the
transactions described herein and would affect the computation of the financial
covenants contained in Section 6.1 through 6.4, as applicable, such changes
shall be followed in the computation of such financial covenants only from and
after the date this Agreement shall have been amended to take into account any
such changes, provided the parties agree to negotiate in good faith to so
amend this Agreement as soon as practicable after such a change. References to
amounts on particular exhibits, schedules, lines, pages and columns of any
Annual Statement or Quarterly Statement are based on the format promulgated by
the NAIC for the 1999 Annual Statements and Quarterly Statements. In the event
such format is changed in future years so that different information is
contained in such items or they no longer exist, or if the Annual Statement or
Quarterly Statement is replaced by the NAIC or by any Insurance Regulatory
Authority after the date hereof such that different forms of financial
statements are required to be furnished by the Insurance Subsidiaries in lieu
thereof, such references shall be to information consistent with that reported
in the referenced item in the 1999 Annual Statements or Quarterly Statements, as
the case may be.

(c)   The words
hereof, herein, hereto and
hereunder and similar words when used in a Credit Document shall
refer to such Credit Document as a whole and not to any particular provision
thereof, and Section, schedule and exhibit references contained therein shall
refer to Sections thereof or schedules or exhibits thereto unless otherwise
expressly provided therein.

(d)   The phrase "may not"
is prohibitive and not permissive.

(e)   Unless the
context otherwise requires, words in the singular number include the plural, and
words in the plural include the singular.

(f)   Unless
specifically provided in a Credit Document to the contrary, references to a time
shall refer to Philadelphia city time.

(g)   Unless
specifically provided in a Credit Document to the contrary, in the computation
of periods of time from a specified date to a later specified date, the word
from means from and including and the words
to and until each means to but excluding.

(h)   References in any
Credit Document to a fiscal period shall refer to that fiscal period of the Applicant.

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2.  AMOUNT AND TERMS OF LETTERS OF CREDIT

2.1. Issuance of Letters of Credit

(a)   Subject to
the terms and conditions of this Agreement, the Issuing Bank agrees, in reliance
on the agreement of the other Banks set forth in Section 2.2, to issue standby
letters of credit (collectively, the Letters of Credit; each,
individually, a Letter of Credit) during the Commitment
Period for the account of the Applicant, or jointly and severally for the
account of the Applicant and each Co-Applicant delivering a Letter of Credit
Request. The aggregate Letter of Credit Exposure shall not at any time exceed
the amount of the Commitment at such time, and such Letters of Credit may be
denominated in either Dollars or an Optional Currency. In addition, the Letter
of Credit Exposure in respect of Letters of Credit issued during the Commitment
Period for the account of Subsidiaries of the Applicant which are not Material
Insurance Subsidiaries shall not at any time exceed $15,000,000 in the
aggregate. Each Letter of Credit issued pursuant to this Section shall have a
Stated Expiration Date. No Letter of Credit shall be issued if the Agent
determines that the conditions set forth in Section 3.2 have not been satisfied.

(b)   Each Letter
of Credit shall be issued for the account of the Applicant, individually, or for
the account of the Applicant and one or more Co-Applicants, jointly and
severally, in support of an obligation of the Applicant or of the Applicant and
one or more Co-Applicants in favor of a beneficiary which has requested the
issuance of such Letter of Credit as a condition to a transaction entered into
in connection with the Applicants or the Co-Applicants or
Co-Applicants reinsurance or insurance business or otherwise for the
general corporate purposes of the Applicant or Co-Applicant(s); provided,
however, that the Letter of Credit Exposure with respect to Letters of
Credit issued for the general corporate purposes of the Applicant or
Co-Applicant(s) shall not at any time exceed $15,000,000. The Applicant, and any
Co-Applicant, as the case may be, shall give the Agent a Letter of Credit
Request for the issuance of each Letter of Credit by 11:00 A.M., one Business
Day prior to the requested Date of Issuance. Each Letter of Credit Request
executed by a Co-Applicant shall provide that such Co-Applicant shall be, from
and after the Date of Issuance of the Letter of Credit which is requested, a
party hereto and shall have all the rights and obligations of a Co-Applicant
under this Agreement and under the other Credit Documents to which it is a party. Such Letter of
Credit Request shall specify (i) the beneficiary of such Letter of Credit and the
obligations of the Applicant and/or Co-Applicant in respect of which such Letter of
Credit is to be issued, (ii) the Applicants and/or Co-Applicants proposal as
to the conditions under which a drawing may be made under such Letter of Credit and the
documentation to be required in respect thereof, (iii) the maximum Dollar Equivalent
amount to be available under such Letter of Credit, (iv) the requested Date of Issuance,
(v) the requested Stated Expiration Date for such Letter of Credit which shall not be
more than one year from the requested Date of Issuance, (vi) whether such Letter of
Credit is to be an Evergreen Letter of Credit and, if so, the Beneficiary Notification
Date (which shall be at least thirty (30) days prior to the Stated Expiration Date
thereof), (vii) the account party with respect to such Letter of Credit and (viii)
whether such Letter of Credit shall be denominated in Dollars or an Optional Currency.
Upon receipt of such Letter of Credit

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Request, the Agent shall promptly notify the Issuing Bank and each other
Bank thereof. The Issuing Bank shall make every effort on the proposed Date of Issuance
and subject to the other terms and conditions of this Agreement, issue the requested
Letter of Credit. Each Letter of Credit shall be in form and substance reasonably
satisfactory to the Issuing Bank, with such provisions with respect to the conditions
under which a drawing may be made thereunder and the documentation required in respect of
such drawing as the Issuing Bank shall reasonably require. The parties agree that a
Letter of Credit substantially in the form of Exhibit D shall be deemed to be in form and
substance reasonably satisfactory to the Issuing Bank; provided, however,
that Letters of Credit issued pursuant hereto need not be in the form of said Exhibit D.
Each Letter of Credit shall be used solely for the purposes described therein.

(c)   Each payment
by the Issuing Bank of a draft drawn under a Letter of Credit shall give rise to
an immediate obligation on the part of the Applicant, or to an immediate joint
and several obligation on the part of the Applicant and the Co-Applicant, as the
case may be, to reimburse the Issuing Bank in Dollars for the Dollar Equivalent
amount thereof on the Business Day on which the payment of such draft has been
made to the beneficiary (which notice shall be given promptly and shall be
deemed to constitute a demand for reimbursement).

2.2. Letter of Credit Participation and Funding
Commitments.

(a)   Each Bank
hereby unconditionally and irrevocably, severally for itself only and without
any notice to or the taking of any action by such Bank, takes an undivided
participating interest in the obligations of the Issuing Bank under and in
connection with each Letter of Credit in an amount equal to such Banks
Commitment Percentage of the Dollar Equivalent amount of such Letter of Credit
provided that the aggregate Letter of Credit Exposure of such Bank shall not
exceed such Banks Commitment Amount. Each Bank shall be liable to the
Issuing Bank for its Commitment Percentage of the unreimbursed Dollar Equivalent
amount of any draft drawn and honored under each Letter of Credit. Each Bank
shall also be liable for a Dollar Equivalent amount equal to the product of its
Commitment Percentage and any amounts paid by the Applicant or any Co-Applicant
that are subsequently rescinded or avoided, or must otherwise be restored or
returned. Subject to the penultimate sentence of subsection (b) below, such
liabilities (i) shall be payable in Dollars and (ii) shall be unconditional and
without regard to  the occurrence, of any Default or Event of Default or the compliance by
the Applicant or any Co-Applicant with any of their obligations under the Credit
Documents.

(b)   The Agent
will promptly (and in no event later than two (2) Business Days) notify each
Bank (which notice shall be promptly confirmed in writing) of the date and the
Dollar Equivalent amount on the Business Day paid of any draft presented under
any Letter of Credit with respect to which full reimbursement of payment is not
made by the Applicant or any Co-Applicant immediately, and forthwith upon
receipt of such notice, such Bank (other than the Issuing Bank) shall make
available to the Agent for the account of the Issuing Bank its Commitment
Percentage of such amount of such unreimbursed draft at the office of the Agent
specified in Section 10.2, in lawful money of the United States and in
immediately available

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funds, before 4:00 P.M., on the day such notice was given by the Agent,
if the relevant notice was given by the Agent at or prior to 1:00 P.M., on such day, and
before 12:00 Noon, on the next Business Day, if the relevant notice was given by the
Agent after 1:00 P.M., on such day. The Agent shall distribute the payments made by each
Bank (other than the Issuing Bank) pursuant to the immediately preceding sentence to the
Issuing Bank promptly upon receipt thereof in like funds as received. Each Bank shall
indemnify and hold harmless the Agent and the Issuing Bank from and against any and all
losses, liabilities (including liabilities for penalties), actions, suits, judgments,
demands, costs and expenses) resulting from any failure on the part of such Bank to
provide, or from any delay in providing, the Agent with such Banks Commitment
Percentage of the Dollar Equivalent amount of any payment made by the Issuing Bank under
a Letter of Credit in accordance with this subsection (b) above (except in respect of
losses, liabilities or other obligations suffered by the Issuing Bank). If a Bank does
not make available to the Agent, when due, such Banks Commitment Percentage of any
unreimbursed payment made by the Issuing Bank under a Letter of Credit (other than
payments made by the Issuing Bank by reason of its gross negligence or willful
misconduct), such Bank shall be required to pay interest in Dollars to the Agent for the
account of the Issuing Bank on such Banks Commitment Percentage of such payment
from the date such Banks payment is due until the date such payment is received by
the Agent at a rate of interest per annum equal to (i) for the first three (3) days after
the due date of such payment, the Federal Funds Rate and (ii) thereafter, the Federal
Funds Rate plus two percent (2%). The Agent shall distribute such interest payments to
the Issuing Bank upon receipt thereof in like funds as received.

(c)   Whenever the
Agent is reimbursed by the Applicant or any Co-Applicant, for the account of the
Issuing Bank, for the Dollar Equivalent of any payment under a Letter of Credit
and such payment relates to an amount previously paid by a Bank in respect of
its Commitment Percentage of the amount of such payment under such Letter of
Credit, the Agent will pay over such payment in Dollars to such Bank (i) before
4:00 P.M. on the day such payment from the Applicant or the Co-Applicant is
received, if such payment is received at or prior to 1:00 P.M. on such day, or
(ii) before 12:00 Noon on the next succeeding Business Day, if such payment from
the Applicant or the Co-Applicant is received after 1:00 P.M. on such day.

2.3. Interest Rate

If all or any
portion of the Dollar Equivalent of any reimbursement obligation in respect of a
Letter of Credit shall not be paid on the Business Day on which payment of such
draft has been made, such overdue amount shall bear interest at a rate per annum
equal to the Alternate Base Rate plus two percent (2%) from the date of such
nonpayment until paid in full (whether before or after the entry of a judgment
thereon). All such interest shall be payable in Dollars and monthly in arrears
on the last day of each month of each year. Interest computed with reference to
the Prime Rate or the Federal Funds Rate shall be calculated on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed. The
Applicant acknowledges that to the extent interest is based on the Prime Rate,
such rate is only one of the bases for computing interest on extensions of
credit made by the Banks, and by basing interest on the Prime Rate, the Banks
have not committed to charge, and neither the Applicant nor any

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Co-Applicant has in any way bargained for, interest based on a lower or
the lowest rate at which the Banks may now or in the future make extensions of credit to
other Persons.

2.4. Termination or Reduction of Commitment

The Applicant
shall have the right, upon at least three (3) Business Days prior written
notice to the Agent, at any time to terminate or reduce the amount of the
Commitment in an amount of $10,000,000 or such amount plus multiples of
$5,000,000 in excess thereof, provided that after giving effect thereto,
the Commitment shall not be less than the Letter of Credit Exposure at such
time. Any reduction of the Commitment shall be applied pro rata according to the
Commitment Percentage of each Bank. Simultaneously with any reduction of the
Commitment the Applicant shall pay the Commitment Fee accrued on the amount by
which the Commitment has been reduced.

2.5. Amendments to Letters of Credit

(a)   At any time during
the Commitment Period:

(i)
   except as otherwise provided in Section 2.7(a), Evergreen Letters of Credit shall be
automatically extended unless at least two (2) Business Days prior to the Beneficiary
Notification Date, the Agent shall have received written notice from the Applicant, a
Co-Applicant or a Bank that a Default or an Event of Default has occurred and is
continuing in which event the Agent shall instruct the Issuing Bank to, and the Issuing
Bank shall, notify the beneficiary of such Evergreen Letter of Credit on or before the
Beneficiary Notification Date that the Stated Expiration Date of such Evergreen Letter of
Credit will not be extended;

(ii)
   the Applicant, together with the Co-Applicant, if any, with respect to an Outstanding
Letter of Credit, shall have the right to request in writing that such Outstanding Letter
of Credit be amended, including an amendment to increase or reduce the undrawn face
amount thereof and/or, in the case of a Letter of Credit other than an Evergreen Letter
of Credit, to extend for up to one year from the date of such amendment the then Stated
Expiration Date. Provided that (A) no Default or Event of Default shall exist and be
continuing and (B) after giving effect thereto (1) the Letter of Credit Exposure does not
exceed the Commitment and (2) the Letter of Credit Exposure with respect to Letters of
Credit issued for the account of Subsidiaries of the Applicant which are not Material Insurance
Subsidiaries does not exceed $15,000,000 in the aggregate, the Agent shall promptly
request that the Issuing Bank amend such Letter of Credit to give effect to such
increase, reduction, extension and/or other requested amendment, and the Issuing Bank
shall either amend such Letter of Credit or issue a substitute Letter of Credit
containing such amended terms. Notwithstanding the foregoing, in the event that a
requested amendment of a Letter of Credit would reduce the amount available to be drawn
thereunder, reduce the period during which drawings can be made thereunder or would
otherwise be adverse to the beneficiary thereof, such amendment or such substitute Letter
of Credit shall not, by its term, be effective unless and until such beneficiary shall
have consented in writing thereto.

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(b)   Following
the Termination Date, provided that no Default or Event of Default shall then
exist and be continuing, the Applicant, together with the Co-Applicant, if any,
with respect to an Outstanding Letter of Credit, may request that an Outstanding
Letter of Credit be amended, including an amendment to increase or reduce the
undrawn face amount but excluding any amendment which extends the Stated
Expiration Date which extensions are governed by Section 2.7, provided
that any such increase in the face amount of Outstanding Letters of Credit which
expire on the same date, after giving effect to any reductions which become
effective on the same date as such increase with respect to such Outstanding
Letters of Credit which expire on the same date, shall not cause an increase, at
such date, in the undrawn face amount of Outstanding Letters of Credit which
expire on the same date. Upon receipt of such request, the Agent shall promptly
request that the Issuing Bank amend such Letter of Credit to give effect to such
amendment, and the Issuing Bank, shall either amend such Letter of Credit or
issue a substitute Letter of Credit containing such amended terms.
Notwithstanding the foregoing (i) in the event that such requested amendment
would increase the amount available to be drawn therewith, the Agent shall not
request the Issuing Bank to either amend such Letter of Credit or issue a
substitute Letter of Credit, and the Issuing Bank shall not so amend or issue
unless all of the Banks shall have consented thereto and (ii) in the event that
a requested amendment of a Letter of Credit would reduce the amount available to
be drawn thereunder, reduce the period during which drawings can be made
thereunder or would otherwise be adverse to the beneficiary thereof, such
amendment or such substitute Letter of Credit shall not, by its terms, be
effective unless and until such beneficiary shall have consented in writing
thereto.

2.6. Extension of Commitment and
Termination Date

Provided that no
Default or Event of Default shall exist and be continuing, the Applicant may
request that the Commitment be extended for an additional period of three
hundred sixty-four (364) days by giving written notice of such request
substantially in the form of Exhibit H (an Extension Request)
to the Agent during the period not more than one hundred eighty (180) days but
not less than sixty (60) days prior to the then Termination Date, and upon the
receipt of such notice, the Agent shall promptly notify each Bank of such
request. If each Bank consents to such Extension Request during the Extension
Consent Period by giving written notice thereof to the Agent, then effective on
the first day of the Extension Consent Period, the then applicable Termination
Date shall be extended by three hundred sixty-four (364) days. If all of the
Banks have not consented to such Extension Request during the Extension Consent
Period and such nonconsenting Bank or Banks have not been replaced pursuant to
Section 2.15 during the Extension Consent Period, the Termination Date shall not be
extended.

2.7. Extension of the Stated Expiration Date of
Each Letter of Credit

The Stated
Expiration Date of each Letter of Credit shall be up to one year from its Date
of Issuance thereof, or, if extended during the Commitment Period as provided in
Section 2.5, such later date. In addition, with respect to a Letter of Credit
the Stated Expiration Date of which is after the Termination Date, such Stated
Expiration Date thereof may be extended as follows:

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(a)   Evergreen
Letters of Credit. In the case of an Evergreen Letter of Credit the
Beneficiary Notification Date for which is before the Termination Date, the
Stated Expiration Date for such Letter of Credit shall be automatically extended
for a term of up to one (1) year from the then Stated Expiration Date in
accordance with the provisions of this subsection (a) unless either (i) the
Applicant and/or Co-Applicant, if any, for such Letter of Credit have or
(ii) any bank has notified the Agent and the Issuing Bank at least ten (10)
days prior to such Beneficiary Notification Date that such Evergreen Letter of
Credit is not to be extended. The Agent shall advise each Bank of any such
extension of the Stated Expiration Date of such Letter of Credit.
Notwithstanding the foregoing, in the event that at least two (2) Business Days
prior to the Beneficiary Notification Date the Agent shall have received written
notice from the Applicant, a Co-Applicant or a Bank that a Default or an Event
of Default has occurred and is continuing, or if the Beneficiary Notification
Date for such Evergreen Letter of Credit is after the Termination Date, the
Agent shall instruct the Issuing Bank to, and the Issuing Bank shall, notify the
beneficiary of such Evergreen Letter of Credit on or before the Beneficiary
Notification Date that the Stated Expiration Date of such Evergreen Letter of
Credit will not be extended.

(b)   Other
Letters of Credit. In the case of a Letter of Credit other than an Evergreen
Letter of Credit, the Applicant and the Co-Applicants, if any, may request in
writing delivered to the Agent that the Stated Expiration Date thereof be
extended for a term of up to one (1) year from the then Stated Expiration Date,
and the Agent shall then elect, in its sole discretion, to extend such Stated
Expiration Date. Upon receipt of such request, the Agent will promptly notify
each Bank thereof. If all of the Banks consent to such extension, the Agent
shall notify the Issuing Bank and the Issuing Bank shall amend such Letter of
Credit to reflect such extended Stated Expiration Date. Each Bank will use its
best efforts to promptly respond to any such request; provided that no
Banks failure to so respond shall create any claim against it or have the
effect of extending the Stated Expiration Date of such Letter of Credit.
Notwithstanding the foregoing, in the event that the Agent shall have received
prior written notice from the Applicant, a Co-Applicant or Bank that a Default
or an Event of Default has occurred and is continuing, the Agent shall not
extend the Stated Expiration Date of such Letter of Credit.

(c)   In
General. Each Letter of Credit may be extended in the manner set forth
herein an unlimited number of times. In the event that the Termination Date is
extended pursuant to Section 2.6 after the procedures set forth in this
Section 2.7 have commenced, the provisions of Section 2.5 shall apply
and shall supercede the provisions of this Section 2.7.

2.8.   
Reimbursement Obligations Absolute. The reimbursement obligations of the
Applicant and each Co-Applicant, if any, in respect of a Letter of Credit (x)
shall be payable in Dollars, (y) shall be absolute, unconditional and
irrevocable, and (z) shall be performed strictly in accordance with the terms of
this Agreement, irrespective of any circumstances, including, without
limitation, the following:

(i)
   any lack of validity or enforceability of any Letter of Credit;

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(ii)
   any amendment or waiver of, or consent to departure from, all or any of the other Credit
Documents;

(iii)
   the existence of any claim, set-off, defense or other right which the Applicant, any
Co-Applicant, or any other Person may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Person or entity for whom any such beneficiary
or any such transferee may be acting), the Issuing Bank, the Agent, any Bank, any
participant or assignee, or any other Person or entity, whether in connection with this
Agreement, any other Credit Document or any unrelated transaction;

(iv)
   any statement or any other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;

(v)
   payment by the Issuing Bank under a Letter of Credit against presentation of a draft or
certificate which does not comply with the terms of the Letter of Credit; or

(vi)
   any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

2.9. No Liability of the
Issuing Bank

It is understood
that in making any payment under a Letter of Credit (i) the Issuing Banks
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the Dollar
Equivalent amount of any draft presented under such Letter of Credit, whether or
not the Dollar Equivalent amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever; and (ii) any noncompliance of the documents presented in an
immaterial respect under a Letter of Credit with the terms thereof shall in each
case not be deemed wilful misconduct or gross negligence of the Issuing Bank.

2.10. Increased Costs:
Capital Adequacy

(a)   If on or
after the Original Effective Date the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Issuing Bank or any Bank with any
request or directive after such date (whether or not having the force of law) of
any such authority, central bank or comparable agency shall impose,

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modify or deem applicable any reserve (including, without limitation, any
such requirement imposed by the Board of Governors of the Federal Reserve System),
special deposit, insurance assessment or similar requirement against assets of, deposits
with or for the account of, or credit extended by, the Issuing Bank or any Bank or shall
impose on any Bank any other condition affecting its Commitment or the term thereof or
its obligation to issue or participate in Letters of Credit and the result of any of the
foregoing is to increase the cost to the Issuing Bank or such Bank of issuing or
maintaining the Letters of Credit or its obligations pursuant to Section 2.2, or to
reduce the amount of any sum received or receivable by the Issuing Bank or such Bank
under this Agreement with respect thereto, by an amount deemed by the Issuing Bank or
such Bank to be material, then, within fifteen (15) days after demand by the Issuing Bank
or such Bank (with a copy to the Agent), the Applicant shall pay in Dollars to the
Issuing Bank or such Bank such additional amount or amounts as will compensate the
Issuing Bank or such Bank for such increased cost or reduction.

(b)   If any Bank
or the Issuing Bank shall have determined that, after the Original Effective
Date, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank or the Issuing
Bank (or its Parent) as a consequence of such Banks or the Issuing
Banks, obligations hereunder to a level below that which such Bank or the
Issuing Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank or the Issuing Bank to be
material, then from time to time, within fifteen (15) days after demand by such
Bank or the Issuing Bank (with a copy to the Agent), the Applicant shall pay in
Dollars to such Bank or the Issuing Bank such additional amount or amounts as
will compensate such Bank or the Issuing Bank (or its Parent) for such
reduction.

(c)   Each Bank or
the Issuing Bank, as the case may be, will promptly notify the Applicant and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section. A
certificate of any Bank or the Issuing Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Bank or the Issuing Bank may use any reasonable averaging and
attribution methods.

2.11. Taxes.

(a)   All
payments made by the Applicant and Co-Applicants hereunder shall be made free and clear
of and without deduction for any present or future taxes, levies, imposts, deductions,
charges, or withholdings, and all liabilities with respect thereto (excluding, in the
case of the Agent and each Bank, income taxes and franchise or gross receipts taxes or

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other revenue-based taxes imposed on the Agent or such Bank, as the case
may be, levied by any Governmental Authority or other taxing authority imposing such tax
(all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called Taxes)). If the Applicant and
Co-Applicants shall be required by applicable law to deduct any Taxes from or in respect
of any sum payable hereunder, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions applicable
to additional sums payable under this Section) the Agent and each Bank receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the
Applicant and Co-Applicants shall make such deductions and (iii) the Applicant and
Co-Applicants shall timely pay the full amount deducted to the relevant tax authority or
other authority in accordance with applicable law.

(b)   In addition, the
Applicant and Co-Applicants agree to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges, or similar levies which arise from any
payment made hereunder or from the execution, delivery, or registration of, or otherwise
with respect to, this Agreement or any Note (hereinafter referred to as Other
Taxes).

(c)   The Applicant and
Co-Applicants shall indemnify the Agent and each Bank for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this subsection) paid by the Agent or any Bank and
any liability (including penalties, interest, and expenses other than those arising
solely from the Agents or any such Banks failure to timely notify the
Applicant of such Taxes or Other Taxes payable hereunder) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days from the date the
Agent or a Bank makes written demand therefor.

(d)   Within thirty (30)
days after the date of any payment of any Taxes by the Applicant and Co-Applicants, if
available, the Applicant and Co-Applicants shall furnish to the Agent and each Bank, at
its address referred to herein, the original or a certified copy of a receipt evidencing
payment thereof.

(e)   Without prejudice to
the survival of any other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in subsections 2.11(a) through (d) shall survive
the payment in full of all payments due hereunder.

(f)   At least five (5)
Business Days prior to the first date on which interest or fees are payable hereunder,
each Bank that is not incorporated under the laws of the United States of America or a state thereof agrees that it will deliver
to the Applicant and Co-Applicants and the Agent (i) two duly completed copies of United
States Internal Revenue Service Form W-8ECI or W-8BEN or successor applicable form, as
the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Each such Bank also

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agrees to deliver to the Applicant and the Agent two further copies of
the said Form W-8ECI or W-BEN and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Applicant, and such extensions or
renewals thereof as may reasonably be requested by the Applicant or the Agent, unless in
any such case an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such Bank from
duly completing and delivering any such form with respect to it and such Bank so advises
the Applicant and the Agent. Each such Bank shall certify (i) in the case of a Form
W-8ECI or W-BEN, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in the case
of a Form W-8 or W-9 or successor applicable form, that it is entitled to an exemption
from United States backup withholding tax.

(g)   Notwithstanding the
foregoing subsections 2.11(a) through (e), the Applicant and Co-Applicants shall not be
required to pay any additional amounts to any Bank in respect of United States
withholding tax pursuant to such subsections if (i) the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank to comply with the
requirements of subsection 2.11(f) or (ii) such Bank shall not have furnished the
Applicant with such forms listed in subsection 2.11(f) and shall not have taken such
other steps as reasonably may be available to it under applicable tax laws and any
applicable tax treaty or convention to obtain an exemption from, or reduction (to the
lowest applicable rate) of, such United States withholding tax.

2.12. Agents Records

The Agents
records regarding the amount of each Letter of Credit, each payment by the
Applicant or any Co-Applicant of reimbursement obligations in respect of Letters
of Credit and other information relating to the Letters of Credit shall be
presumptively correct absent manifest error.

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2.13.   Use of Proceeds.
The Applicant and Co-Applicants will use the Letters of Credit only for the following
purposes:

(a)
   The collateralization of reinsurance liabilities assumed by direct and indirect Wholly
Owned Consolidated Subsidiaries of the Applicant;

(b)
   The collateralization of insurance liabilities of any direct and indirect Wholly Owned
Consolidated Subsidiaries of the Applicant;

(c)
   The collateralization of reinsurance recoverable from Trabaja, not to exceed $24,000,000;
and

(d)
   Otherwise for the Applicant's or Co-Applicant's general corporate purposes.

Notwithstanding
anything to the contrary contained in any Credit Document, the Applicant and each
Co-Applicant agrees that no part of the proceeds of any Letters of Credit will be used,
directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any Margin Stock.

2.14. Collateral

(a)
   In General.

(i)
   With respect to each Letter of Credit, on or prior to the Date of Issuance thereof, the
Applicant and/or any Co-Applicant, if applicable, shall deliver to the Custodian for
deposit in the Collateral Accounts (as defined below) Eligible Collateral, the Discounted
Collateral Value of which together with the Discounted Collateral Value of all other
Eligible Collateral then held in the Collateral Accounts shall not be less than the
Letter of Credit Exposure determined with respect to all Letters of Credit.

(ii)
   The Applicant hereby unconditionally agrees that at all times the Obligations
attributable to Letters of Credit shall be secured by a security interest in Eligible
Collateral, the Discounted Collateral Value of which equals or exceeds the Letter of
Credit Exposure attributable to all Letters of Credit at such time; provided, however,
that at no time shall U.S. Federal Agency Obligations issued by the Federal National
Mortgage Association represent more than fifty percent (50%) of the Eligible Collateral
securing the Obligations. In the event that the Discounted Collateral Value of the
Eligible Collateral is less than such amount, the Applicant or, if applicable, the
Co-Applicant(s), shall promptly (and in no event later than two (2) Business Days)
deliver to the Custodian additional Eligible Collateral as shall be necessary so that the
Discounted Collateral Value of all Eligible Collateral then held in the Collateral
Accounts shall equal or exceed the Letter of Credit Exposure attributable to all Letters
of Credit at such time.

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(iii)
In the event that the Discounted Collateral Value of the Eligible Collateral in the
Collateral Accounts is greater than one hundred five percent (105%) of the Letter of
Credit Exposure at such time and so long as no Default or Event of Default shall then
exist, the Applicant and/or Co-Applicant, if applicable, shall have the right to withdraw
from the Collateral Accounts Eligible Collateral in an amount such that after giving
effect to such withdrawal the Discounted Collateral Value of the Eligible Collateral
remaining in the Collateral Accounts is equal to or greater than the above one hundred
five percent (105%), subject to the terms of the Control Agreements and the Pledge
Agreement and the Agent agrees to direct the Custodian to make any such permitted
withdrawal.

(b)
   Collateral Accounts. To secure prompt and complete payment, observance and
performance of the Obligations, the Applicant and certain of the Co-Applicants have,
pursuant to the Pledge Agreement, pledged and granted to the Agent a security interest in
and to all of the Applicants and each such Co-Applicants right, title and
interest in and to the Collateral Accounts and all Property, including all money and
securities, at any time and from time to time on deposit therein, and all of the Proceeds
(which shall include all distributions and income on and in respect of all of the
foregoing and all other rights and benefits in respect thereof) of all of the foregoing,
whether now owned or existing or hereafter arising or acquired (collectively, the Collateral).
The Applicant and certain of the Co-Applicants have established and shall maintain, at
the offices of the Custodian located at 620 Liberty Avenue, 10thFloor,
Pittsburgh, PA 15222 in their names in favor of the Agent, one or more securities custody
accounts (collectively, the Collateral Accounts) pursuant to one or
more Custody Agreements between the Applicant, certain of the Co-Applicants and the
Custodian. Subject to the provisions of the Pledge Agreement and the Control Agreements,
the Custodian shall hold any Eligible Collateral delivered to it as Collateral.

(c)
   All Property in the Collateral Accounts shall be held by the Custodian as collateral for
the payment and performance of all Obligations. At the direction of the Agent, Collateral
may (A) be applied to reimburse the Issuing Bank for Letter of Credit payments and
disbursements, and (B) be held for the satisfaction of the reimbursement obligations of
the Applicant and Co-Applicants for the then outstanding Letter of Credit Exposure. After
the occurrence and during the continuation of an Event of Default, the Agent may, in
accordance with the provisions of this Agreement and the Pledge Agreement, apply or cause
the Custodian to apply all or any portion of the Collateral held in the Collateral
Accounts to the Obligations and shall have the power to sell, or cause the Custodian to
sell, any securities held therein in connection therewith.

2.15. Replacement
of Banks

(a)
   If any Bank does not consent to an Extension Request pursuant to Section 2.6, the
Applicant shall have the right, if no Default or Event of Default then exists, to replace
such Bank (any such Bank being referred to herein as Replaced Bank)
with one or more Eligible Assignee or Eligible Assignees, each of which shall be
acceptable to the Agent and the Issuing Bank, and such Replaced Bank shall assign to such
Eligible Assignee or Eligible

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Assignees who are willing to so purchase the same for such Replaced Bank,
all (but not less than all) of such Replaced Banks rights and obligations under
this Agreement, providedthat such Eligible Assignee or Eligible Assignee shall pay
to such Replaced Bank, an amount equal to all interest, fees and other amounts owing or
accrued to such Replaced Bank to the date of such assignment, but without any premium.

(b)
   For each assignment, the parties shall execute and deliver to the Agent an Assignment and
Acceptance Agreement. Upon such execution and delivery, from and after the effective date
specified in such Assignment and Acceptance Agreement, the assignee thereunder shall be a
party hereto and the assignor Bank released from its obligations hereunder to the extent
provided therein.

2.16. Commitment Fee

The
Applicant agrees to pay in Dollars to the Agent, for the account of the Banks in
accordance with each Banks Commitment Percentage, a fee (the Commitment Fee),
during the Commitment Period, equal to the Applicable Fee Percentage per annum on the
average daily Available Amount. The Commitment Fee shall be payable quarterly in arrears
on the last day of each March, June, September and December of each year and on the
Termination Date or other date on which the Commitment shall expire or otherwise
terminate, and upon each reduction of the Available Amount. The Commitment Fee shall be
calculated on the basis of a three hundred sixty-five (365) or three hundred sixty-six
(366) day year, as applicable, for the actual number of days elapsed.

2.17. Letter of
Credit Commissions

The Applicant
agrees to pay in Dollars to the Agent, for the account of the Banks in
accordance with each Banks Commitment Percentage, commissions (the
Letter of Credit Commissions) with respect to each Letter of
Credit for the period from and including the Date of Issuance thereof to and
including the expiration date thereof (giving effect to any extensions,
cancellations or other amendments thereto), at a rate per annum equal to the
Applicable Fee Percentage per annum on the average daily Dollar Equivalent
amount available to be drawn under such Letter of Credit. The Letter of Credit
Commissions shall be (i) calculated on the basis of a three hundred sixty-five
(365) or three hundred sixty-six (366) day year, as applicable, for the actual
number of days elapsed, (ii) payable quarterly in arrears on the last day of
each March, June, September and December of each year and on the date that the
Commitment shall expire and (iii) nonrefundable. In addition to the Letter of
Credit Commissions, the Applicant agrees to pay in Dollars to the Issuing Bank,
for its own account, its standard fees and charges customarily charged to
customers similar to the Applicant with respect to any Letter of Credit.

2.18. Utilization of
Commitment in Optional Currencies.

(a)   The Agent
will determine the Dollar Equivalent amount of (i) proposed Letter of Credit to
be denominated in an Optional Currency as of the Date of Issuance and (ii)

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Outstanding Letters of Credit denominated in an Optional Currency as of
the last Business Day of each month.

(b)
   The Applicant and/or Co-Applicant, if applicable, may deliver to Agent a written request
that Letters of Credit issued hereunder also be permitted to be made in any other lawful
currency (other than Dollars), in addition to the currencies specified in the definition
of Optional Currencyherein provided that such currency must be freely traded
in the offshore interbank foreign exchange markets, freely transferable, freely
convertible into Dollars and available to the Agent in the applicable interbank market.
The Agent will promptly notify the Banks of any such request promptly after the Agent
receives such request. The Agent may grant or accept such request in their sole
discretion. The requested currency shall be approved as an Optional Currency hereunder
only if the Agent approves of the Applicants and/or Co-Applicants request.

(c)
   If at any time the Agent determines that the Dollar Equivalent of the Letter of Credit
Exposure of all the Banks exceeds the aggregate of the Commitment Amounts of all the
Banks whether because of currency fluctuations or otherwise (the amount of such excess
being referred to as the Excess Letter of Credit Exposure), the
Applicant shall (i) promptly, and in any event not later than thirty (30) days from the
date the Agent notifies the Applicant of such Excess Letter of Credit Exposure, eliminate
any such Excess Letter of Credit Exposure by arranging for the surrender of, or reduction in amount available
to be drawn under, one or more Letters of Credit, and (ii) until such time as it
has taken the action required by subsection (i) above, cause the Eligible
Collateral at such time contained in the Collateral Accounts (x) to include an
amount of cash (in Dollars) equal to or greater than the Excess Letter of Credit
Exposure and (y) to otherwise meet the coverage requirements of Section 2.14(a).

3.   CONDITIONS PRECEDENT

3.1. Conditions to
Effectiveness

The
effectiveness of this Agreement and the obligation of the Issuing Bank to issue any
Letter of Credit on the Restatement Effective Date or any day thereafter, and the Banks
to participate therein shall be subject to the fulfillment of the following conditions
precedent:

(a)
   The Agent shall have received the following, each dated as of the Restatement Effective
Date (unless otherwise specified) and in sufficient copies for each Bank:

(i)
   counterparts of the Pledge Agreement and the Control Agreements duly executed by the
parties thereto and evidence satisfactory to the Agent of the establishment of the
Collateral Accounts and the transfer thereto of sufficient Eligible Collateral to satisfy
the requirements of Section 2.14;

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(ii)
   a certificate, signed by the chief executive officer, chief financial officer or an
executive vice president of the Applicant, in form and substance satisfactory to the
Agent, certifying that (A) all representations and warranties of the Applicant contained
in this Agreement and the other Credit Documents are true and correct in all material
respects as of the Restatement Effective Date, (B) no Default or Event of Default has
occurred and is continuing, (C) there are no insurance regulatory proceedings pending or,
to such individuals knowledge, threatened against any of the Insurance Subsidiaries
in any jurisdiction that, if adversely determined, would be reasonably likely to have a
Material Adverse Effect, and (D) except for the fiscal year 2000 third quarter reserve
loss by PMACIC (the 2000 Reserve Loss), as more fully described on
Schedule 3.1 attached hereto, both immediately before and after giving effect to the
consummation of the transactions contemplated by this Agreement, no Material Adverse
Change has occurred sinceDecember 31, 1999, and there exists no event, condition
or state of facts that could reasonably be expected to result in a Material Adverse
Change;

(iii)
  a certificate of the secretary or an assistant secretary of each of the
Applicant and its Material Subsidiaries, in form and substance satisfactory to the Agent,
certifying (A) that attached thereto is a true and complete copy of the articles or
certificate of incorporation and all amendments thereto of the Applicant or such
Subsidiary, as the case may be, certified as of a recent date by the Secretary of State
(or comparable Governmental Authority) of its jurisdiction of organization, and that the
same has not been amended since the date of such certification, (B) that attached thereto
is a true and complete copy of the bylaws of the Applicant or such Subsidiary, as the
case may be, as then in effect and as in effect at all times from the date on which the
resolutions referred to in clause (C) below were adopted to and including the date of
such certificate, and (C) as to the Applicant only, that attached thereto is a true
and complete copy of resolutions adopted by the board of directors of the Applicant
authorizing the execution, delivery and performance of this Agreement and the other
Credit Documents to which it is a party, and as to the incumbency and genuineness of the
signature of each officer of the Applicant executing this Agreement or any of the other
Credit Documents, and attaching all such copies of the documents described above;

(iv)
   a certificate of the Applicant's chief financial officer as to the financial condition of
the Applicant in the form of Exhibit F; and

(v)
   a favorable opinion of Charles A. Brawley, III, Esq., covering the matters set forth in
items 1 through 8 of Exhibit G and a favorable opinion of Duane, Morris & Heckscher LLP as
to item 9 of Exhibit G, in each case acceptable to the Agent, addressed to Agent and the
Banks.

(b)
   The Agent shall have received (i) a certificate as of a recent date of the good standing
of each of the Applicant and its Material Subsidiaries under the laws of its jurisdiction
of organization from the Secretary of State (or comparable Governmental Authority) of
such jurisdiction, and (ii) as to each Material Insurance Subsidiary, a certificate of
compliance

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as of a recent date, issued by the Insurance Regulatory Authority of its
jurisdiction of legal domicile and any other jurisdiction in which such Insurance
Subsidiary is reasonably likely to be commercially domiciled as defined under the laws
and revelations of such jurisdiction.

(c)
   All approvals, permits and consents of any Governmental Authorities (including, without
limitation, all relevant Insurance Regulatory Authorities) or other Persons required in
connection with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been obtained (without the imposition of
conditions that are not reasonably acceptable to the Agent), and all related filings, if
any, shall have been made, and all such approvals, permits, consents and filings shall be
in full force and effect and the Agent shall have received such copies thereof as it
shall have requested; all applicable waiting periods shall have expired without any
adverse action being taken by any Governmental Authority having jurisdiction; and no
action, proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before, and no order, injunction or decree shall have been entered
by, any court or other Governmental Authority, in each case to enjoin, restrain or
prohibit, to obtain substantial damages in respect of, or that is otherwise related to or
arises out of, this Agreement or the consummation of the transactions contemplated
hereby, or that, in the opinion of the Agent, would otherwise be reasonably likely to
have a Material Adverse Effect.

(d)
   Except for the 2000 Reserve Loss, since December 31, 1999, both immediately before and
after giving effect to the consummation of the transactions contemplated by this
Agreement there shall not have occurred any Material Adverse Change or any event,
condition or state of facts that could reasonably be expected to result in a Material
Adverse Change.

(e)
   The Agent shall be satisfied with the actuarial review and valuation statement of, and
opinion as to the adequacy of, each Insurance Subsidiarys loss and loss adjustment
expense reserve positions as of December 31, 1999, with respect to the insurance business
then in force, prepared and given by each Insurance Subsidiarys chief actuary.

(f)
   The Applicant shall have paid all fees and expenses of the Agent required hereunder or
under any other Credit Document to be paid on or prior to the Restatement Effective Date
(including fees and expenses of counsel) in connection with this Agreement and the
transactions contemplated hereby.

(g)
   Where applicable, the Agent shall have received an agreement in substantially the form of
the Letter of Credit Request from each Co-Applicant with respect to any Existing Letter
of Credit issued for the account of such Co-Applicant.

(h)
   The Agent and each Bank shall have received such other documents, certificates, opinions
and instruments as it shall have reasonably requested.

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3.2. Conditions for
Issuance of All Letters of Credit and Extension and Increases thereof and Conditions to
Effectiveness of Letters of Credit

The
obligation of the Issuing Bank to issue any Letter of Credit on a Date of Issuance and
each Bank to participate therein and any increase of the face amount of any Letter of
Credit or any extension of the Stated Expiration Date of any Letter of Credit is subject
to the satisfaction of the following conditions precedent as of such Date of Issuance or
the date of such increase or extension:

(a)
   On each Date of Issuance, and on each date on which the face amount of any Letter of
Credit is to be increased or the Stated Expiration Date of any Letter of Credit is to be
extended, and both before and after giving effect to the Letters of Credit to be issued
thereon or such increase or extension, as the case may be, (i) each of the
representations and warranties contained in Section 4 and in the other Credit Documents
shall be true and correct in all respects on and as of such date with the same effect as
if made on and as of such date (except to the extent any such representation or warranty
is expressly stated to have been made as of a specific date, in which case such
representation or warranty shall be true and correct in all respects as of such date),
(ii) no Default or Event of Default shall have occurred and be continuing on such date,
(iii) the aggregate Letter of Credit Exposure will not exceed the Commitment, (iv) the
aggregate Letter of Credit Exposure with respect to Letters of Credit issued for the
account of Subsidiaries of the Applicant which are not Material Insurance Subsidiaries
will not exceed $15,000,000 and (v) the aggregate Letter of Credit Exposure with respect to
Letters of Credit issued for the general corporate purposes of the Applicant or
a Co-Applicant shall not exceed $15,000,000. Each request by the Applicant for
the issuance of a Letter of Credit shall constitute a certification by the
Applicant as of such date that each of the foregoing matters is true and correct
in all material respects.

(b)
   All documents required by the provisions of the Credit Documents to be executed or
delivered to the Agent on or before the applicable Date of Issuance shall have been
executed and shall have been delivered at the office of the Agent set forth in Section
10.2 on or before such Date of Issuance.

(c)
   With respect to the issuance of each Letter of Credit, the Agent shall have received a
Letter of Credit Request duly executed by an Authorized Signatory of the Applicant and,
if applicable, the Co-Applicant.

(d)
   With respect to each Letter of Credit, the Applicant or the Co-Applicants, as the case
may be, shall have delivered Eligible Collateral to the Agent as required by Section
2.14.

3.3. Transitional
Arrangements.

(a)
   On the Restatement Effective Date, replacement Letters of Credit
issued by the Issuing Bank under this Agreement shall be substituted for
the Existing Letters of Credit

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issued by BNY under the Existing Credit Agreement, the
effectiveness of which replacement Letters of Credit shall be conditioned on the
surrender to BNY for cancellation of the corresponding Existing Letter of Credit. By
execution of this Agreement, the Applicant and each Co-Applicant, as applicable, requests
the Issuing Bank to issue such replacement Letters of Credit in substantially the same
form as the Existing Letters of Credit they are to replace. The Applicant agrees to use
its best efforts to cause each beneficiary of an Existing Letter of Credit to promptly
surrender such Existing Letter of Credit in exchange for the corresponding replacement
Letter of Credit.

(b)
   Each Letter of Credit substituted for an Existing Letter of Credit pursuant to Section
3.3(a) hereof shall supersede such Existing Letter of Credit in its entirety, shall be
deemed to be made under this Agreement and shall be governed by this Agreement and the
other Credit Documents.

(c)
   As of the Restatement Effective Date, except as otherwise provided in this Agreement, the
Existing Credit Agreement shall be superseded by this Agreement and the Credit Documents
and shall be of no further force and effect.

(d)
   Until such time as an Existing Letter of Credit is surrendered to BNY for cancellation,
such Existing Letter of Credit shall be deemed to be a Letter of Credit issued hereunder,
and BNY shall be entitled to the rights and benefits of the Issuing Bank hereunder in
respect of such Existing Letter of Credit for purposes of the
obligations (i) of the Applicant and Co-Applicant, as the case may be, to
reimburse BNY for any payments of drafts under such Existing Letter of Credit as
provided in Sections 2.1(c) and 2.3 hereof and to indemnify BNY as provided in
Section 10.10, and (ii) of each Bank, as defined herein, to participate in and
to make available for BNYs account such Banks Commitment Percentage
of the amount of any unreimbursed draft on such Existing Letter of Credit as
provided in Section 2.2 hereof. Each Existing Letter of Credit shall be entitled
to the benefits of the security otherwise provided under Section 2.14 for the
Letter of Credit issued hereunder in replacement for such Existing Letter of
Credit for so long as it remains outstanding or any draft thereunder has not
been fully reimbursed. In no event shall the maturity date of any Existing
Letter of Credit be extended by BNY and as to any Existing Letter of Credit
pursuant to the terms of which the Stated Expiration Date would be automatically
extended, unless the beneficiary thereof is notified in advance of the then
scheduled expiration date that such scheduled expiration date will not be
extended, BNY shall give such a notice of non-extension to the beneficiary at
the earliest permitted opportunity following the Restatement Effective Date if
such a notice has not been given prior to the Restatement Effective Date.

(e)
   All interest, commissions and all commitment and other fees and expenses owing or accrued
under or in respect of the Existing Credit Agreement and the Existing Letters of Credit
not replaced hereunder, shall be calculated as of the Restatement Effective Date
(prorated in the case of any fractional periods), and shall be paid on such date in
accordance with the method specified in the Existing Credit Agreement, as if it were
still in effect.

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4.   REPRESENTATIONS AND WARRANTIES

In order to
induce the Agent and the Banks to enter into this Agreement and the Issuing Bank
to issue the Letters of Credit and the Banks to participate therein, the
Applicant makes the following representations and warranties to the Agent, each
Bank and the Issuing Bank:

4.1. Corporate
Organization and Power

Each
of the Applicant and its Material Subsidiaries (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the full corporate power and authority to execute, deliver and
perform the Credit Documents to which it is or will be a party, to own and hold its
property and to engage in its business as presently conducted, and (iii) is duly
qualified to do business as a foreign corporation and is in good standing in each
jurisdiction where the nature of its business or the ownership of its properties requires
it to be so qualified except where the failure to be so qualified would not have a
Material Adverse Effect.

4.2. Authorization

The
Applicant has taken all necessary corporate action to execute, deliver and perform each
of the Credit Documents to which it is or will be a party, and has, or on the Restatement
Effective Date (or any later date of execution and delivery) will have, validly executed
and delivered each of the Credit Documents to which it is or will be a party. This
Agreement constitutes, and each of the other Credit Documents upon execution and delivery
by the Applicant will constitute, assuming the due execution of the other parties hereto,
the legal, valid and binding obligation of the Applicant, enforceable against it in
accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting creditorsrights
generally or by general equitable principles.

4.3. No Violation

The
execution, delivery and performance by the Applicant of this Agreement and each of the
other Credit Documents, and compliance by it with the terms hereof and thereof, do not
and will not (i) contravene any Requirement of Law applicable to the Applicant, (ii)
conflict with, result in a breach of or constitute (with notice, lapse of time or both) a
default under any material indenture, agreement or other instrument to which it is a
party, by which it or any of its properties is bound or to which it is subject, or (iii)
result in or require the creation or imposition of any Lien upon any of its properties or
assets except to the extent provided in the Credit Documents. No Subsidiary is subject to
any restriction or encumbrance on its ability to make dividend payments or other
distributions in respect of its capital stock, to make loans or advances to the Applicant
or any other Subsidiary, or to transfer any of its assets or properties to the Applicant
or any other Subsidiary, in each case other than such restrictions or encumbrances
existing under or by reason of the Credit Documents or the Revolving Credit Agreement or
applicable Requirements of Law.

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4.4. Governmental
Authorization; Permits

(a)   No
consent, approval, authorization or other action by, notice to, or registration or filing
with, any Governmental Authority or other Person is or will be required as a condition to
or otherwise in connection with the due execution, delivery and performance by the
Applicant of this Agreement or any of the other Credit Documents or the legality,
validity or enforceability hereof or thereof.

(b)   Each
of the Applicant and its Subsidiaries has, and is in good standing with respect to, all
governmental approvals, licenses, permits and authorizations necessary to conduct its
business as presently conducted and to own or lease and operate its properties except
where the failure to do so would not have a Material Adverse Effect.

(c)
   Schedule 4.4 lists with respect to each Material Insurance Subsidiary, as of the
Restatement Effective Date, all of the jurisdictions in which such Material Insurance
Subsidiary holds licenses (including, without limitation, licenses or certificates of
authority from relevant Insurance Regulatory Authorities), permits or authorizations to
transact insurance and reinsurance business (collectively, the Licenses),
and indicates the line or lines of insurance in which each such Material Insurance
Subsidiary is permitted to be engaged with respect to each License therein listed. To the
knowledge of the Applicant, (i) no such License is the subject of a proceeding for
suspension, revocation or limitation or any similar proceedings, (ii) there is no
sustainable basis for such a suspension, revocation or limitation, and (iii) no such
suspension, revocation or limitation is threatened by any relevant Insurance Regulatory
Authority. No Material Insurance Subsidiary transacts as of the Restatement Effective
Date any insurance business, directly or indirectly, in any jurisdiction other than those
listed on Schedule 4.4, where such business requires any license, permit or other
authorization of an Insurance Regulatory Authority of such jurisdiction.

4.5. Litigation

There
are no actions, investigations, suits or proceedings pending or, to the knowledge of the
Applicant, threatened, at law, in equity or in arbitration, before any court, other
Governmental Authority or other Person, (i) against or affecting the Applicant, any of
its Subsidiaries or any of their respective properties that would, if adversely
determined, be reasonably likely to have a Material Adverse Effect or (ii) with respect
to this Agreement or any of the other Credit Documents.

4.6. Taxes

Each
of the Applicant and its Subsidiaries has timely filed all federal and all material state
and local tax returns and reports required to be filed by it and has paid all taxes,
assessments, fees and other charges levied upon it or upon its properties that are shown
thereon as due and payable, other than those that are being contested in good faith and
by proper proceedings and for which adequate reserves have been established in accordance
with Generally

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Accepted Accounting Principles. Such returns accurately reflect in all
material respects all liability for taxes of the Applicant and its Subsidiaries for the
periods covered thereby. Except as set forth on Schedule 4.6, there is no ongoing audit
or examination or, to the knowledge of the Applicant, other investigation by any
Governmental Authority of the tax liability of the Applicant or any of its Subsidiaries;
and there is no unresolved claim by any Governmental Authority concerning the tax
liability of the Applicant or any of its Subsidiaries for any period for which tax
returns have been or were required to have been filed, other than claims for which
adequate reserves have been established in accordance with Generally Accepted Accounting
Principles.

4.7. Subsidiaries

Schedule
4.7 sets forth a list, as of the Restatement Effective Date, of all of the Subsidiaries
of the Applicant and, as to each such Subsidiary, the percentage ownership (direct and
indirect) of the Applicant in each class of its capital stock and each direct owner
thereof, and indicates in each case whether such Subsidiary is a Material Subsidiary.

4.8. Full Disclosure

All
factual information heretofore or contemporaneously furnished to the Agent or any Bank in
writing by or on behalf of the Applicant or any of its Subsidiaries for purposes of or in
connection with this Agreement and the transactions contemplated hereby is, and all other
such factual information hereafter furnished to the Agent or any Bank in writing by or on
behalf of the Applicant or any of its Subsidiaries will be, true and accurate in all
material respects on the date as of which such information is dated or certified (or, if
such information has been amended or supplemented, on the date as of which any such
amendment or supplement is dated or certified) and not made incomplete by omitting to
state a material fact necessary to make the statements contained therein, in light of the
circumstances under which such information was provided, not misleading.

4.9. Margin
Regulations

Neither
the Applicant nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of purchasing
or carrying Margin Stock. No Letter of Credit will be used, directly or indirectly, to
purchase or carry any Margin Stock, to extend credit for such purpose or for any other
purpose that would violate or be inconsistent with Regulations T, U or X or any provision
of the Exchange Act.

4.10. No Material
Adverse Change

Except
for the 2000 Reserve Loss, there exists no event, condition or state of facts that could
reasonably be expected to result in a Material Adverse Change.

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4.11. Financial
Matters

(a)
The Applicant has heretofore furnished to the Agent copies of the audited consolidated
balance sheets of the Applicant and its Subsidiaries as of December 31, 1999, 1998,
1997 and 1996, and the related statements of income, stockholdersequity and cash
flows for the fiscal years then ended, together with the opinions of
PricewaterhouseCoopers, L.L.P. (or its predecessor, Coopers &Lybrand, L.L.P.)
thereon. Such financial statements have been prepared in accordance with Generally
Accepted Accounting Principles (subject, with respect to the unaudited financial
statements, to the absence of notes required by Generally Accepted Accounting Principles
and to normal year-end audit adjustments) and present fairly the financial condition of
the Applicant and its Subsidiaries on a consolidated basis as of the respective dates
thereof and the consolidated results of operations of the Applicant and its Subsidiaries
for the respective periods then ended. Except as fully reflected in the most recent
financial statements referred to above and the notes thereto, there are no material
liabilities or obligations with respect to the Applicant or any of its Subsidiaries of
any nature whatsoever (whether absolute, contingent or otherwise and whether or not due).

(b)
The Applicant has heretofore furnished to the Agent copies of (i) the Annual Statements
of each of the Insurance Subsidiaries as of December 31, 1999, 1998 and 1997, and for the
fiscal years then ended, each as filed with the relevant Insurance Regulatory Authority
(collectively, the Historical Statutory Statements). The Historical
Statutory Statements (including, without limitation, the provisions made therein for
investments and the valuation thereof, reserves, policy and contract claims and statutory
liabilities) have been prepared in accordance with Statutory Accounting Practices (except
as may be reflected in the notes thereto), were in compliance with applicable
Requirements of Law when filed and present fairly the financial condition of the
respective Insurance Subsidiaries covered thereby as of the respective dates thereof and
the results of operations, changes in capital and surplus and cash flow of the respective
Insurance Subsidiaries covered thereby for the respective periods then ended. Except for
liabilities and obligations disclosed or provided for in the Historical Statutory
Statements (including, without limitation, reserves, policy and contract claims and
statutory liabilities), no Insurance Subsidiary had, as of the date of its respective
Historical Statutory Statements, any material liabilities or obligations of any nature
whatsoever (whether absolute, contingent or other-wise and whether or not due) that, in
accordance with Statutory Accounting Practices, would have been required to have been
disclosed or provided for in such Historical Statutory Statements. All books of account
of each Insurance Subsidiary fully and fairly disclose all of its material transactions,
properties, assets, investments, liabilities and obligations, are in its possession and
are true, correct and complete in all material respects.

(c)
Each of the Applicant and its Material Subsidiaries, after giving effect to the
consummation of the transactions contemplated hereby, (i) will have capital sufficient to
carry on its businesses as conducted and as proposed to be conducted, (ii) will have
assets with a fair saleable value, determined on a going concern basis, (y) not less than
the amount required to pay the probable liability on its existing debts as they become
absolute and matured and (z) greater than the total amount of its liabilities
(including identified contingent liabilities,

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valued at the amount that can reasonably be expected to become absolute
and matured), and (iii) will not intend to, and will not believe that it will, incur
debts or liabilities beyond its ability to pay such debts and liabilities as they mature.

4.12. Ownership of
Properties

Each
of the Applicant and its Material Subsidiaries (i) has good and marketable title to all
real property owned by it, (ii) holds interests as lessee under valid leases in full
force and effect with respect to all material leased real and personal property used in
connection with its business, and (iii) has good title to all of its other properties and
assets reflected in the most recent financial statements referred to in Section 4.11(a)
(except as sold or otherwise disposed of since the date thereof in the ordinary course of
business), in each case under (i), (ii) and (iii) above free and clear of all Liens other
than Permitted Liens.

4.13. ERISA

Each
member of the ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each Plan and is in
Compliance in all material respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue
Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to
any Plan or Benefit Arrangement, which has resulted or could result in the imposition of
a Lien or the posting of a bond or other security under ERISA or the Internal Revenue
Code or (iii) incurred any liability under Title IV of ERISA other than a liability to
the PBGC for premiums under Section 4007 of ERISA.

4.14. Environmental
Matters

(a)
Except as set forth in Schedule 4.14(a), no Hazardous Substances are or, to the knowledge
of the Applicant, have been generated, released, treated or disposed of by the Applicant
or any of its Subsidiaries or, to the knowledge of the Applicant, by any other Person or
otherwise, in, on or under any portion of any real property owned by the Applicant or any
of its Subsidiaries, except in material compliance with all applicable Environmental
Laws, and, to the knowledge of the Applicant, no portion of any such real property has
been contaminated by any Hazardous Substance. For purposes of this Section 4.14, contaminatedmeans
the presence of Hazardous Substances that require or required, as the case may be,
remediation under any Environmental Law.

(b)
Except as set forth on Schedule 4.14(b), to the knowledge of the Applicant, (i) no
portion of any real property owned by the Applicant or any of its Subsidiaries has been
used as or for a mine, a landfill, a dump or other disposal facility, a gasoline service
station, or (other than for petroleum substances stored in the ordinary course of
business) a

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petroleum products storage facility, (ii) no portion of such real
property or any other real property at any time owned by the Applicant or any of its
Subsidiaries has, pursuant to any Environmental Law, been placed on the National
Priorities Listor CERCLIS List(or any similar federal, state or local
list) of sites subject to possible environmental problems, and (iii) there are not
and have never been any underground storage tanks situated on any real property owned by
the Applicant or any of its Subsidiaries.

(c)
All activities and operations of the Applicant and its Subsidiaries are in compliance
with the requirements of all applicable Environmental Laws, except to the extent the
failure so to comply, individually or in the aggregate, would not be reasonably likely to
have a Material Adverse Effect. Other than normal claims in the ordinary course of
business pursuant to insurance policies written by an Insurance Subsidiary, neither the
Applicant nor any of its Subsidiaries is involved in any suit, action or proceeding, or
has received any notice, complaint or other request for information from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental Claims
that, if adversely determined, would be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect; and, to the knowledge of the Applicant,
there are no threatened actions, suits, proceedings or investigations with respect to any
such Environmental Claims, nor any basis therefor.

4.15. Compliance
With Laws

Each
of the Applicant and its Subsidiaries has timely filed all material reports, documents
and other materials required to be filed by it under all applicable Requirements of Law
with any Governmental Authority, has retained all material records and documents required
to be retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of its
business and the ownership and operation of its properties, except for such Requirements
of Law the failure to comply with which, individually or in the aggregate, would not be
reasonably likely to have a Material Adverse Effect.

4.16. Regulated
Industries

Neither
the Applicant nor any of its Subsidiaries is (i) an investment company,a
company controlledby an investment company,or an investment
advisor,within the meaning of the Investment Company Act of 1940, as amended, or
(ii) a holding company,a subsidiary companyof a holding
company,or an affiliateof a holding companyor of a subsidiary
companyof a holding company,within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

4.17. Insurance

The
assets, properties and business of the Applicant and its Subsidiaries are insured against
such hazards and liabilities (other than normal life insurance risk), under such
coverages and in such amounts, as are customarily maintained by prudent companies
similarly

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situated and under policies issued by insurers of recognized
responsibility. No notice of any pending or threatened cancellation or material premium
increase has been received by the Applicant or any of its Subsidiaries with respect to
any such insurance policies, and the Applicant and each of its Subsidiaries are in
substantial compliance with all conditions contained therein.

4.18. Certain
Contracts

Schedule
4.18 lists, as of the Restatement Effective Date, each material contract, agreement or
commitment, written or oral, other than Reinsurance Agreements and Insurance Agreements,
to which the Applicant or any of its Subsidiaries is a party, by which any of them or
their respective properties is bound or to which any of them is subject (other than
insurance policies written in the ordinary course of business) and that (i) relates to
employment or labor matters, (ii) involves aggregate consideration payable to or by any
party thereto of $1,000,000 or more or (iii) is otherwise material to the business,
condition (financial or otherwise), operations, performance or properties of the
Applicant or any of its Subsidiaries, and also indicates the parties, subject matter
thereof. As of the Restatement Effective Date, each such contract is in full force and
effect, and neither the Applicant nor any of its Subsidiaries or, to the knowledge of the
Applicant, any other party thereto, is in breach of or in default under any such
contract. As of the Restatement Effective Date, none of such other parties has notified
the Applicant that it has any presently exercisable right to terminate any such contract
nor will any such other party have any right to terminate any such contract on account of
the execution, delivery and performance of the Credit Documents.

4.19. Reinsurance
Agreements

(a)
Except as set forth on Schedule F to the Annual Statements for the Insurance Subsidiaries
for the fiscal year ending December 31, 1999, there are no material liabilities
outstanding as of the Restatement Effective Date under any Reinsurance Agreement. Each
Reinsurance Agreement is in full force and effect; none of the Insurance Subsidiaries or,
to the knowledge of the Applicant, any other party thereto, is in breach of or default
under any such contract; and the Applicant has no reason to believe that the financial
condition of any other party to any such contract is impaired such that a default
thereunder by such party could reasonably be anticipated. Each Reinsurance Agreement is
qualified under all applicable Requirements of Law to receive the statutory credit
assigned to such Reinsurance Agreement in the relevant annual Statement or Quarterly
Statement at the time prepared. Except as set forth on Schedule 4.19, each Person to whom
any of the Insurance Subsidiaries has ceded any material liability pursuant to any
Reinsurance Agreement on the Restatement Effective Date either: (i) has a rating of A-or
better by A.M. Best &Company or (ii) has provided collateral in favor of the
applicable Insurance Subsidiary of the type and in an amount described in Schedule 4.19.

(b)
As of the Restatement Effective Date, no Insurance Subsidiary is a party

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to any Surplus Relief Reinsurance Agreement.

5.   AFFIRMATIVE COVENANTS

The Applicant agrees that
so long as this Agreement is in effect, any reimbursement obligations (contingent or
otherwise) in respect of any Letter of Credit remain outstanding and unpaid, or any other
amount is owing under any Credit Document to the Issuing Bank, any Bank or the Agent:

5.1. GAAP Financial
Statements

The
Applicant will deliver to each Bank:

(a)
   As soon as available and in any event within sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year, beginning with the third fiscal quarter
ending September 30, 2000, unaudited consolidated balance sheets of the Applicant and its
Subsidiaries as of the end of such fiscal quarter and unaudited consolidated statements
of income, comprehensive income and cash flows for the Applicant and its Subsidiaries for
the fiscal quarter then ended and for that portion of the fiscal year then ended, in each
case setting forth comparative consolidated figures as of the end of and for the
corresponding period in the preceding fiscal year, all prepared in accordance with
Generally Accepted Accounting Principles (subject to the absence of notes required by Generally Accepted
Accounting Principles and subject to normal year-end audit adjustments) applied
on a basis consistent with that of the preceding quarter or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
quarter; and

(b)
   As soon as available and in any event within one hundred twenty (120) days after the end
of each fiscal year, beginning with the fiscal year ended December 31, 2000, (i) an
audited consolidated balance sheet of the Applicant and its Subsidiaries as of the end of
such fiscal year and audited consolidated statements of income, comprehensive income,
stockholdersequity and cash flows for the Applicant and its Subsidiaries for the
fiscal year then ended, including the applicable notes, in each case setting forth
comparative figures is of the end of and for the preceding fiscal year, certified by the
independent certified public accounting firm regularly retained by the Applicant or
another independent certified public accounting firm of recognized national standing
reasonably acceptable to the Required Banks, together with a report thereon by such
accountants that is not qualified as to going concern or scope of audit and to the effect
that such financial statements present fairly the consolidated financial condition and
results of operations of the Applicant and its Subsidiaries as of the dates and for the
periods indicated in accordance with generally accepted accounting principles, and (ii)
unaudited consolidating statements of income and cash flows for the Applicant and its
Subsidiaries for the fiscal year then ended, in reasonable detail, all prepared in
accordance with Generally Accepted Accounting Principles applied on a consistent basis
with that of the preceding fiscal year or containing disclosure of the effect on the
financial condition or results of operations of any

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change in the application of accounting principles and practices during such
fiscal year.

5.2. Statutory
Financial Statements

The
Applicant will deliver to each Bank:

(a)
   As soon as available and in any event within sixty (60) days after the end of each of the
first three fiscal quarters of each fiscal year, beginning with the first fiscal quarter
ending after the date hereof, a Quarterly Statement of each Insurance Subsidiary as of
the end of such fiscal quarter and for that portion of the fiscal year then ended, in the
form filed with the relevant Insurance Regulatory Authority, prepared in accordance with
Statutory Accounting Practices;

(b)
   As soon as available and in any event within sixty (60) days after the end of each fiscal
year, beginning with the fiscal year ended December 31, 2000, an Annual Statement of each
Insurance Subsidiary as of the end of such fiscal year and for the fiscal year then
ended, in the form filed with the relevant Insurance Regulatory Authority, prepared in
accordance with Statutory Accounting Practices; and

(c)
   As soon as available and in any event within one hundred twenty-one (121) days after the
end of each fiscal year, beginning with the fiscal year ended December 31, 2000, a
Combined Annual Statement of PMACIC and its Consolidated Affiliates as of the end of such
fiscal year and for the fiscal year then ended, in the form filed with the relevant
Insurance Regulatory Authority, prepared in accordance with Statutory Accounting
Practices.

5.3. Other Business
and Financial Information

The
Applicant will deliver to each Bank:

(a)
   Concurrently with each delivery of the financial statements described in Sections 5.1 and
5.2, a Compliance Certificate in the form of Exhibit E-1 (in the case of the financial
statements described in Section 5.1) or Exhibit E-2 (in the case of the financial
statements described in Section 5.2) with respect to the period covered by the financial
statements then being delivered, executed by the chief financial officer of the Applicant
(or a vice president of the Applicant having significant responsibility for financial
matters), together, in the case of the financial statements described in Section 5.1,
with a Covenant Compliance Worksheet reflecting the computation of the financial
covenants set forth in Sections 6.1 and 6.2 as of the last day of the period covered by
such financial statements, and in the case of the financial statements described in
Section 5.2, with a Covenant Compliance Worksheet reflecting the computation of the
financial covenants set forth in Sections 6.3 and 6.4 as of the last day of the period
covered by such financial statements;

(b)
   Promptly upon filing with the relevant Insurance Regulatory Authority and in any event
within ninety (90) days after the end of each fiscal year, beginning with the

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fiscal year ended December 31, 2000, a copy of each Insurance
Subsidiarys Statement of Actuarial Opinion(or equivalent information
should the relevant Insurance Regulatory Authority not require such a statement) as to
the adequacy of such Insurance Subsidiarys loss reserves for such fiscal year,
together with a copy of its management discussion and analysis in connection therewith,
each in the format prescribed by the applicable insurance laws of such Insurance
Subsidiarys jurisdiction of domicile;

(c)   Promptly
upon the sending or filing thereof, copies of any internal controlletter
filed by on behalf of the Applicant or any of its Subsidiaries with any Insurance
Regulatory Authority;

(d)
   Promptly upon the sending, filing or receipt thereof, copies of (i) all financial
statements, reports, notices and proxy statements that the Applicant or any of its
Subsidiaries shall send or make available generally to its shareholders, (ii) all
regular, periodic and special reports, registration statements and prospectuses that the
Applicant or any of its Subsidiaries shall render to or file with the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. or any national
securities exchange, (iii) all significant reports on examination or similar
significant reports, financial examinations reports or market conduct examination reports
by the NAIC or any Insurance Regulatory Authority or other Governmental Authority with
respect to any Insurance Subsidiarys insurance business, and (iv) all
significant filings made under applicable state insurance holding company acts by the
Applicant or any of its Subsidiaries, including, without limitation, filings seeking approval of
transactions with Affiliates;

(e)
   Promptly upon (and in any event within three (3) Business Days after) an officer of the
Applicant obtaining knowledge thereof, written notice of any of the following:

(i)
   the occurrence of any Default or Event of Default, together with a written statement of
the chief executive officer or chief financial officer of the Applicant specifying the
nature of such Default or Event of Default, the period of existence thereof and the
action that the Applicant has taken and proposes to take with respect thereto;

(ii)
   the institution or threatened institution of any action, suit, investigation or
proceeding against or affecting the Applicant or any of its Subsidiaries, including any
such investigation or proceeding by any insurance Regulatory Authority or other
Governmental Authority (other than routine periodic inquiries, investigations or
reviews), that would, if adversely determined, be reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect, and any material development in any
litigation or other proceeding previously reported pursuant to Section 4.5 or this
Section 5.3(e)(ii);

(iii)
   the receipt by the Applicant or any of its Subsidiaries from any Insurance Regulatory
Authority or other Governmental Authority of (A) any notice asserting any failure by the
Applicant or any of its Subsidiaries to be in compliance with applicable Requirements of
Law or that threatens the taking of any action against the Applicant or such

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Subsidiary or sets forth circumstances that, if taken or adversely
determined, would be reasonably likely to have a Material Adverse Effect, or (B) any
notice of any actual or threatened suspension, limitation or revocation of, failure to
renew, or imposition of any restraining order, escrow or impoundment of funds in
connection with, any license, permit, accreditation or authorization of the Applicant or
any of its Subsidiaries, where such action would be reasonably likely to have a Material
Adverse Effect;

(iv)
   the occurrence of any of the following, together with a reasonably detailed description
thereof and copies of any filings, communications, reports or other information relating
thereto made available to the Applicant or any of its Subsidiaries: (A) the assertion of
any Environmental Claim against or affecting the Applicant, any of its Subsidiaries or
any of their respective real property, leased or owned; (B) the receipt by the Applicant
or any of its Subsidiaries of notice of any alleged violation of or noncompliance with
any Environmental Laws by the Applicant or any of its Subsidiaries; or (C) the taking of
any remedial action by the Applicant, any of its Subsidiaries or any other Person in
response to the actual or alleged generation, storage, release, disposal or discharge of
any Hazardous Substances on, to, upon or from any real property leased or owned by the
Applicant or any of its Subsidiaries; but in each case under clauses (A), (B) and (C)
above, only to the extent the same would be reasonably likely to have a Material Adverse
Effect;

(v)
   the occurrence of any actual changes in any insurance statute or regulation governing the
investment or dividend practices of any Insurance Subsidiary that would be reasonably
likely to have a Material Adverse Effect;

(vi)
   if and when any member of the ERISA Group (A) gives or is required to give notice to the
PBGC of any reportable event(as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (B) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of
such notice; (C) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer, any Plan, a copy of such notice; (D) applies
for a waiver of the minimum funding standard under Section 412 of the Internal Revenue
Code, a copy of such application; (E) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with the
PBGC; (F) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (G) fails to make any payment or contribution to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a certificate of the
chief financial officer or the chief accounting officer of the Applicant setting forth
details as to such occurrence and action, if any, which the Applicant or applicable
member of the ERISA Group is required or

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proposes to take; and

(vii)
   any other matter or event that has, or would have a Material Adverse Effect together with
a written statement of the chief executive officer or chief financial officer of the
Applicant setting forth the name and period of existence thereof and the action that the
Applicant has taken and proposes to take with respect thereto;

(f)
   Promptly, notice of (i) the occurrence of any material amendment or modification to any
Reinsurance Agreement (whether entered into before or after the Restatement Effective
Date), including any such agreements that are in a runoff mode on the Restatement
Effective Date, which amendment or modification would be reasonably likely to have a
Material Adverse Effect, or (ii) the receipt by the Applicant or any of its Subsidiaries
of any written notice of any denial of coverage, litigation, claim or arbitration arising
out of any Reinsurance Agreement to which it is a party which would be reasonably likely
to have a Material Adverse Effect;

(g)
   As promptly as reasonably possible, such other information about the business, condition
(financial or otherwise), operations or properties of the Applicant or any of its
Subsidiaries (including, without limitation, financial, actuarial and other information
with respect to Reinsurance Agreements) as the Agent or any Bank may from time to time
reasonably request; and

(h)
   Upon the request of the Agent at the direction of the Required Banks (which absent a
showing of good cause shall not be more often than one time during any twelve-month
period), at the Applicants expense, deliver to each Bank within sixty (60) days of
such request an actuarial review of the liabilities and other items of each Insurance
Subsidiary prepared by an actuary or a firm of actuaries reasonably acceptable to the
Agent, such actuarial review to be in form and substance reasonably acceptable to the
Required Banks.

5.4. Corporate
Existence; Franchises; Maintenance of Properties

The
Applicant will, and will cause each of its Subsidiaries to, maintain and preserve in full
force and effect its corporate existence, except as expressly permitted otherwise by
Section 7.l. The Applicant will, and will cause each of its Subsidiaries to, (i) obtain,
maintain and preserve in full force and effect all other rights, franchises, licenses,
permits, certifications, approvals and authorizations required by Governmental
Authorities and necessary to the Ownership, Occupation or use of its properties or the
conduct of its business, except to the extent the failure to do so would not be
reasonably likely to have a Material Adverse Effect, and (ii) keep all material
properties in good working order and condition (normal wear and tear excepted) and from
time to time make all necessary repairs to and renewals and replacements of such
properties, except to the extent that any of such properties are obsolete or are being
replaced.

5.5. Compliance
with Laws

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The
Applicant will, and will cause each of its Subsidiaries to, comply in all respects with
all Requirements of Law applicable in respect of the conduct of its business and the
ownership and operation of its properties, except to the extent the failure so to comply
would not be reasonably likely to have a Material Adverse Effect.

5.6. Payment of
Obligations

The
Applicant will, and will cause each of its Subsidiaries to, (i) pay all liabilities and
obligations as and when due (subject to any applicable subordination provisions), except
to the extent failure to do so would not be reasonably likely to have a Material Adverse
Effect, and (ii) pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it, upon its income or profits or upon any of its properties, prior
to the date on which penalties would attach thereto, and all lawful claims that, if
unpaid, might become a Lien upon any of the properties of the Applicant or any of its
Subsidiaries; provided, however, that neither the Applicant nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim
that is being contested in good faith and by proper proceedings and as to which the
Applicant or such Subsidiary is maintaining adequate reserves with respect thereto in
accordance with Generally Accepted Accounting Principles.

5.7. Insurance

The
Applicant will, and will cause each of its Subsidiaries to, maintain with financially
sound and reputable insurance companies insurance with respect to its assets, properties
and business, against such hazards and liabilities (other than normal life insurance
risk), of such types and in such amounts, as is customarily maintained by companies in
the same or similar businesses similarly situated.

5.8. Maintenance of
Books and Records; Inspection

The
Applicant will, and will cause each of its Subsidiaries to, (i) maintain adequate books,
accounts and records, in which full, true and correct entries shall be made of all
financial transactions in relation to its business and properties, and prepare all
financial statements required under this Agreement, in each case in accordance with
Generally Accepted Accounting Principles or Statutory Accounting Practices, as
applicable, and in compliance with the requirements of any Governmental Authority having
jurisdiction over it, and (ii) permit employees or agents of the Agent or any Bank, at
the Agents or Banks expense (except as provided in Section 10.5), to inspect
its properties and examine or audit its books, records, working papers and accounts and
make copies and memoranda of them, and to discuss its affairs, finances and accounts with
its officers and employees and, with the prior consent of the Applicant (such consent not
to be unreasonably withheld), the independent public accountants of the Applicant and its
Subsidiaries (and by this provision the Applicant authorizes such accountants to discuss
the finances of the Applicant and its Subsidiaries), all at such times and from time to
time, upon reasonable notice and during business hours, as may be reasonably requested.

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5.9. Dividends

The
Applicant will take all action necessary to cause its Subsidiaries to make such
dividends, distributions or other payments to the Applicant as shall be necessary for the
Applicant to make payments of the Obligations. In the event the approval of any
Governmental Authority or other Person is required in order for any such Subsidiary to
make any such dividends, distributions or other payments to the Applicant, or for the
Applicant to make any such principal or interest payments, the Applicant will forthwith
exercise its best efforts and take all actions permitted by law and necessary to obtain
such approval.

5.10. Ownership of
Insurance Subsidiaries

The
Applicant will cause each of its Insurance Subsidiaries to remain at all times a Wholly
Owned Subsidiary of the Applicant, except as expressly permitted otherwise by Section 7.1.

5.11. Further
Assurances

The
Applicant will, and will cause each of its Subsidiaries to, make, execute, endorse,
acknowledge and deliver any amendments, modifications or supplements hereto and
restatements hereof and any other agreements, instruments or documents, and take any and
all such other actions, as may from time to time be reasonably requested by the Agent or
the Required Banks to effect, confirm or further assure or protect and preserve the
interests, rights and remedies of the Agent and the Banks under this Agreement and the
other Credit Documents.

6.   FINANCIAL COVENANTS

The Applicant agrees that
so long as this Agreement is in effect, any reimbursement obligations (contingent or
otherwise) in respect of any Letter of Credit remain outstanding and unpaid, or any other
amount owing under any Credit Document to the Issuing Bank, any Bank or the Agent:

6.1. Capitalization
Ratio

The
Applicant will not permit the Capitalization Ratio to be greater than 0.35 to 1.0 as of
the last day of any fiscal quarter, beginning with the fiscal quarter ending September 30,
2000.

6.2. Cash Coverage
Ratio

The
Applicant will not permit the Cash Coverage Ratio to be less than 2.75 to 1.0, with
respect to any four fiscal quarter period ending on or after September 30, 2000.

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6.3. Statutory
Surplus

The
Applicant will cause the Consolidated Statutory Surplus of the Insurance Subsidiaries to
be not less than $450,000,000 at all times from and after the Restatement Effective Date.

6.4. Risk-Based
Capital

The
Applicant will not permit total adjusted capital(within the meaning of the
Risk-Based Capital for Insurers Model Act as promulgated by the NAIC as of the date
hereof (the Model Act)) of the following Insurance Subsidiaries to be
less than the percentages set forth below, as of the dates set forth below, of the
applicable Company Action Level RBC(within the meaning of the Model Act):

(i)
   with respect to PMACIC, as of the last day of any fiscal year, beginning with the fiscal
year ending December 31, 1999, not less than one hundred fifty percent (150%);

(ii)
   with respect to any other Insurance Subsidiary (other than an Insurance
Subsidiary not required by the relevant Insurance Regulatory Authority to meet any RBC
requirements), as of the last day of any fiscal year beginning with the fiscal year
ending December 31, 1999, not less than, one hundred twenty percent (120%).

7.   NEGATIVE COVENANTS

The
Applicant agrees that, so long as this Agreement is in effect, any reimbursement
obligations (contingent or otherwise) in respect of any Letter of Credit remain
outstanding and unpaid, or any other amount is owing under any Credit Document to the
Issuing Bank, any Bank or the Agent:

7.1. Merger;
Consolidation; Disposition of Assets

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, liquidate,
wind up or dissolve, enter into any consolidation, merger or other combination, or sell,
assign, lease, convey, transfer, assumption reinsurance or otherwise dispose of (whether
in one or a series of transactions) all or any substantial portion of its assets,
business or properties outside of the ordinary course of its business, or agree to do any
of the foregoing; provided, however, that:

(i)
   any Subsidiary may merge or consolidate with, or sell or otherwise dispose of assets to,
another Subsidiary or the Applicant so long as (y) the surviving or transferee
corporation is the Applicant or a Wholly Owned Subsidiary and (z) immediately after
giving effect thereto, no Default or Event of Default would exist; and

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(ii)
   the Applicant and its Subsidiaries may (x) sell, or otherwise dispose of, the capital
stock or all or any portion of the assets, business or properties of a Subsidiary that is
not a Material Subsidiary, (y) liquidate, windup or dissolve any Subsidiary that is not a
Material Subsidiary, and (z) sell, or otherwise dispose of, any asset or group of assets
constituting less than (A) in any single transaction or series of related transactions,
ten percent (10%) of Consolidated Statutory Surplus as of the last day of the fiscal
quarter ending on or immediately prior to the date of such sale, and (B) during any
fiscal year, in the aggregate with all such other sales pursuant to this clause (ii),
thirty percent (30%) of Consolidated Statutory Surplus as of the end of the immediately
preceding fiscal year.

7.2. Indebtedness

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, create, incur, assume or suffer to exist, any Indebtedness other than:

(i)
   Indebtedness under the Revolving Credit Agreement and any other Credit Document (as
therein defined), provided the aggregate principal amount thereof does not exceed
$225,000,000;

(ii)
   Accrued expenses, current trade or other accounts payable and other current liabilities
arising in the ordinary course of business and not incurred through the borrowing of
money, provided that the same shall be paid when due except to the extent being
contested in good faith and by appropriate proceedings;

(iii)
   Indebtedness of any Wholly Owned Subsidiary of the Applicant to the Applicant or to
another Wholly Owned Subsidiary and of the Applicant to any Wholly Owned Subsidiary;

(iv)
   Indebtedness due under the Credit Documents and the Existing Letters of Credit;

(v)
Indebtedness existing on the Restatement Effective Date as set forth on Schedule 7.2; provided that
for so long as no Default or Event of Default has occurred and is continuing at such
time, such Indebtedness may be extended, renewed or refunded as long as the principal
amount of such renewed Indebtedness shall not exceed the principal amount of such
Indebtedness being extended, renewed or refunded together with any accrued interest with
respect thereto;

(vi)
Indebtedness in respect of any Hedge Agreement covering a notional principal amount not
in excess of the amount of the aggregate Commitments;

(vii)
Indebtedness (other than Indebtedness specified in clauses (i) through (vi) above) in the
aggregate principal amount outstanding not exceeding $15,000,000 at

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any time and constituting (y) unsecured Indebtedness of the Applicant or
(z) reimbursement obligations under letters of credit (whether or not drawn or matured in
the stated amount thereof) issued on behalf of an Insurance Subsidiary in the ordinary
course of such Insurance Subsidiarys business; and

(viii)
Indebtedness in respect of guarantees for officer loan programs for the purpose of
purchasing Applicant's common stock not to exceed $5,000,000 outstanding at any time.

7.3. Liens

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist, or enter into or suffer to
exist any agreement or restriction that prohibits or conditions the creation, incurrence
or assumption of, any Lien upon or with respect to any part of its property or assets,
whether now owned or hereafter acquired, or agree to do any of the foregoing, other than
the following (collectively, Permitted Liens):

(i)
   Liens (y) in existence on the Restatement Effective Date and set forth on Schedule 7.3
and (z) arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any such Lien, provided that such Indebtedness is not
increased and is not secured by any additional assets;

(ii)
   Liens imposed by law, such as Liens of carriers, warehousemen, mechanics, materialmen and
landlords, and other similar Liens incurred in the ordinary course of business for sums
not constituting borrowed money that are not overdue for a period of more than thirty
(30) days or that are being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with Generally Accepted
Accounting Principles;

(iii)
   Liens (other than any lien imposed by ERISA, the creation or incurrence of which would
result in an Event of Default under Section 8.1(k)) incurred in the ordinary course of
business in connection with workers compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure the performance of letters of
credit, bids, tenders, statutory obligations, surety and appeal bonds, leases, government
contracts and other similar obligations (other than obligations for borrowed money)
entered into in the ordinary course of business;

(iv)
   Liens for taxes, assessments or other governmental charges or statutory obligations, that
are not delinquent or remain payable without any penalty or that are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with Generally Accepted Accounting Principles;

(v)
   Liens in connection with pledges and deposits made pursuant to statutory

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and regulatory requirements of Insurance Regulatory Authorities by an
Insurance Subsidiary in the ordinary course of its business, for the purpose of securing
regulatory capital or satisfying other financial responsibility requirements;

(vi)
   with respect to any real property occupied by the Applicant or any of its Subsidiaries,
all easements, rights of way, licenses and similar encumbrances on title that do not
materially impair the use of such property for its intended purposes;

(vii)
   Liens in favor of the Agent and the Banks hereunder; and

(viii)
   Liens (other than Liens specified in clauses (i) through (vii) above)
securing obligations in the aggregate principal amount not exceeding, at any time, the
greater of (y) five percent (5 %) of Consolidated Net Worth as of the end of the
immediately preceding fiscal year or (z) $20,000,000.

7.4. Investments;
Acquisitions

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, purchase, own, invest in or otherwise acquire any capital stock, evidence of
indebtedness or other obligation or security or any interest whatsoever in any other
Person, or make or permit to exist any loans, advances or extensions of credit to, or any
investment in cash  or by delivery of property in, any other Person, or purchase or
otherwise acquire (whether in one or a series of related transactions) any
portion of the assets, business or properties of another Person, or create or
acquire any Subsidiary, or become a partner or joint venturer in any partnership
or joint venture (collectively, Investments), or make a
commitment or otherwise agree to do any of the foregoing, if, immediately after
any such Investment, the amount of the cash, Cash Equivalents and Investment
Grade Securities owned by the Applicant and its Subsidiaries, on a consolidated
basis, would be less than eighty-five percent (85%) of the total Invested Assets
of the Applicant and its Subsidiaries determined as of the end of the most
recent fiscal quarter.

7.5. Restricted
Payments

(a)
   The Applicant will not, and will not permit or cause any of its Subsidiaries to, directly
or indirectly, declare or make any dividend payment, or make any other distribution of
cash, property or assets, in respect of any of its capital stock or any warrants, rights
or options to acquire its capital stock, or purchase, redeem, retire or otherwise acquire
for value any shares of its capital stock or any warrants, rights or options to acquire
its capital stock, or set aside funds for any of the foregoing, except that:

(i)
   each Wholly Owned Subsidiary may declare and make dividend payments or other
distributions to the Applicant or another Wholly Owned Subsidiary to the extent permitted
under applicable Requirements of Law and, as to the Insurance Subsidiaries, by each
relevant Insurance Regulatory Authority, and

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(ii)
the Applicant may declare and make dividend payments or other distributions, and may
purchase, redeem, retire or otherwise acquire shares of its capital stock, in cash or
in-kind, in each case, provided that immediately after giving effect thereto, no
Default or Event of Default would exist.

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, make (or
give any notice in respect of) any voluntary or optional payment or prepayment on any
Indebtedness or, directly or indirectly, make any redemption (including pursuant to any
change of control provision), retirement, defeasance or other acquisition for value of
any Indebtedness, or make any deposit or otherwise set aside funds for any of the
foregoing purposes.

7.6. Transactions
with Affiliates

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, enter into
any transaction with any officer, director, stockholder or other Affiliate of the
Applicant or any Subsidiary, except in the ordinary course of its business and upon fair
and reasonable terms that are no less favorable to it than would obtain in a comparable
arms length transaction with a Person other than an Affiliate of the Applicant or
such Subsidiary; provided, however, that nothing contained in this Section shall
prohibit:

(i)
transactions described on Schedule 7.6 or otherwise expressly permitted hereunder; and

(ii)
the payment by the Applicant of reasonable and customary fees to members of its board of
directors.

7.7. Certain
Amendments

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, (i) amend,
modify or waive, or permit the amendment, modification or waiver of, any provision of any
agreement or instrument evidencing or governing any Indebtedness, including, without
limitation, the Revolving Credit Agreement, or (ii) amend or modify its articles or
certificate of incorporation or bylaws, in each case under clauses (i) and (ii) other
than any amendments or modifications that could not reasonably be expected to affect the
Banks adversely.

7.8. Lines of
Business

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, engage to
any substantial degree in any business other than the lines of property and casualty
insurance or reinsurance business and other businesses engaged in by the Applicant and
its Subsidiaries on the date hereof or a business reasonably related thereto.

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7.9. Limitations on
Certain Restrictions

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
restriction or encumbrance on (i) the ability of the Applicant and its Subsidiaries to
perform and comply with their respective obligations under the Credit Documents or the
Revolving Credit Agreement and the Credit Documents (as therein defined), (ii) the
ability of the Applicant or any Subsidiary to grant, assume or permit to exist any Lien
upon any of its assets or properties as security, directly or indirectly, for the
Obligations, other than the restrictions, set forth in the Credit Documents or the
Revolving Credit Agreement and the Credit Documents (as therein defined), or (iii) the
ability of any Subsidiary of the payments or other distributions in respect of its
capital to the Applicant or any other Subsidiary, or to transfer to the Applicant or any
other Subsidiary, in each case other existing under or by reason of the Credit Documents
or applicable Requirements of Law.

7.10. Fiscal Year

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, change the
ending date of its fiscal year to a date other than December 31 unless (i) the
Applicant shall have given the Banks written notice of its intention to change such
ending date at least sixty (60) days prior to the effective date thereof and (ii) prior
to such effective date this Agreement shall have been amended to make any changes in the
financial covenants and other terms and conditions to the extent necessary, in the reasonable
determination of the Required Banks, to reflect the new fiscal year ending date.

7.11. Accounting
Changes

The
Applicant will not, and will not permit or cause any of its Subsidiaries to, make or
permit any material change in its accounting policies or reporting practices, except as
may be required by Generally Accepted Accounting Principles or Statutory Accounting
Practices, as applicable, and any change to an accounting principle that can be
demonstrated by the Applicant to be preferablein accordance with Statements
on Auditing Standards No. 58 as promulgated by the Auditing Standards Board.

7.12. Reinsurance
Agreements

The
Applicant will not, and will not permit or cause any of its Insurance Subsidiaries to, (i) except
for the Reinsurance Agreements existing on the Restatement Effective Date with the
reinsurers set forth on Schedule 4.19, be or become a party to any Reinsurance Agreement
(whether in effect as of the Restatement Effective Date or at any time thereafter) with
any reinsurer not rated A-or better by A.M. Best &Company or an insurer
financial strength rating of BBB+", or better, by Standard and Poors,
unless (y) the aggregate amount of reinsurance recoverable due from such reinsurers with
ratings below such level does not exceed $5,000,000, or (z) such reinsurer has either (A) provided
a letter of credit issued by a United

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States bank having a long term senior debt rating of Aor
better by Standard &Poors and Moodys, in favor of the Applicant or the
applicable Insurance Subsidiary in an amount equal to or greater than the obligations
transferred pursuant to such Reinsurance Agreement, (B) placed the assets transferred by
the Insurance Subsidiary pursuant to such Reinsurance Agreement in a trust with a
fiduciary and under terms, including investment restrictions consistent with this
Agreement, satisfactory to the Agent, or (C) otherwise provided collateral in favor of
the Applicant or the applicable Insurance Subsidiary in form and amount satisfactory to
the Required Banks, (ii) enter into any Reinsurance Agreements, or make any
amendment or modification to or waiver of any Reinsurance Agreements, that would,
individually or in the aggregate, be reasonably likely to have a Material Adverse Effect,
or (iii) be or become a party to any Surplus Relief Reinsurance Agreement if the increase
in Consolidated Statutory Surplus as a result of or arising from such Surplus Relief
Reinsurance Agreement, when added to the increase in Consolidated Statutory Surplus as a
result of or arising from all other Surplus Relief Reinsurance Agreements theretofore
entered into by any Insurance Subsidiary, net of any surplus relief recaptured in respect
of such Surplus Relief Reinsurance Agreements, exceeds the lesser of (y) ten percent
(10%) of Consolidated Statutory Surplus as of the most recent fiscal year end, or (z) $45,000,000.

8.   DEFAULT

8.1. Events of
Default

The
following shall each constitute an Event of Default hereunder:

(a)
   The failure of the Applicant or any Co-Applicant to pay any reimbursement obligations in
respect of any Letter of Credit within one (1) Business Day after demand; or

(b)
   The failure of the Applicant or any Co-Applicant to pay any interest or any other fees or
expenses payable under any Credit Document or otherwise to the Agent with respect to the
credit facilities established hereunder within three (3) Business Days of the date when
due and payable; or

(c)
   The issuance of any Letter of Credit for a purpose inconsistent with or in violation of
Section 2.1(b) or the use of the proceeds of any Letter of Credit in a manner
inconsistent with or in violation of Section 2.13; or

(d)
   The Applicant shall fail to observe, perform or comply with any condition, covenant or
agreement contained in any of Sections 2.14(a), 5.3 or 5.4(i), Section 6 or Section 7 or
the failure of the Agent to have a perfected first priority security interest in the
Collateral (other than to the extent covered solely by the action or inactions of the
Agent); or

(e)
   The Applicant, any Co-Applicant or any of the Applicants Subsidiaries shall fail to
observe, perform or comply with any condition, covenant or agreement contained in

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this Agreement or any of the other Credit Documents other than those
enumerated in clauses (a), (b), (c), or (d) above and such failure shall continue
unremedied for any grace period specifically applicable thereto or, if no such grace
period is applicable, for a period after the Applicant acquires knowledge thereof of (i)
five (5) days with respect to covenants set forth in Sections 5.1 or 5.2 or (ii) thirty
(30) days with respect to any other condition, covenant or agreement; or

(f)
   Any representation, warranty, certification or statement made by the Applicant or any
Co-Applicant in this Agreement or in any Credit Document or any certificate, financial
statement or other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made); or

(g)
   The Applicant or any of its Subsidiaries shall (i) fail to pay when due (whether by
scheduled maturity, acceleration or otherwise and after giving effect to any applicable
grace period) any principal of or interest on any Indebtedness (other than the
Indebtedness incurred pursuant to this Agreement) having an aggregate principal amount of
at least $1,000,000; or (ii) fail to observe, perform or comply with any condition,
covenant or agreement contained in any agreement or instrument evidencing or relating to
any such Indebtedness, or any other event shall occur or condition exist in respect
thereof, and the effect of such failure, event or condition is to cause, or permit the
holder or holders of such Indebtedness (or a trustee or agent on its or their behalf) to
cause (with the giving of no lapse of time, or both), such Indebtedness to become due, or
to be prepaid, redeemed, purchased or defeased, prior to its stated maturity; or

(h)
   The Applicant or any of its Subsidiaries shall (i) file a voluntary petition or commence
a voluntary case seeking liquidation, winding-up, reorganization, dissolution,
arrangement, readjustment of debts or any other relief under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to controvert in a timely and
appropriate manner, any petition or case of the type described in subsection (i)
below, (iii) apply for or consent to the appointment of or taking possession by a
custodian, trustee, receiver or similar official for or of itself or all or a substantial
part of its properties or assets, (iv) fail generally, or admit in writing its inability,
to pay its debts generally as they become due, (v) make a general assignment for the
benefit of creditors or (vi) take any corporate action to authorize or approve any of the
foregoing; or

(i)
   Any involuntary petition or case shall be filed or commenced against the Applicant or any
of its Subsidiaries seeking liquidation, winding-up, reorganization, dissolution,
arrangement, readjustment of debts, the appointment of a custodian, trustee, receiver or
similar official for it or all or a substantial part of its properties or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, and such petition or case shall continue
undismissed and unstayed for a period of sixty (60) days; or an order, judgment or decree
approving or ordering any of the foregoing shall be entered in any such proceeding; or

(j)
   Any one or more money judgments, writs or warrants of attachment,

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executions or similar processes involving an aggregate amount (exclusive
of amounts fully bonded or covered by insurance as to which the surety or insurer, as the
case may be, has acknowledged its liability in writing) in excess of $1,000,000 (other
than a liability of an Insurance Subsidiary under an insurance contract written in the
ordinary course of business) shall be entered or filed against the Applicant or any of
its Subsidiaries or any of their respective properties, and the same shall not be
dismissed, stayed or discharged for a period of thirty (30) days; or

(k)
   Any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating
in excess of $1,000,000 which it shall have become liable to pay under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA
by any member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a Trustee to be appointed to administer any Material Plan; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or more members of the
ERISA Group to incur a current payment obligation in excess of $1,000,000; or

(l)
   Any Insurance Regulatory Authority or other Governmental Authority having jurisdiction
shall issue any order of conservation, supervision, rehabilitation or liquidation or any
other order of similar effect in respect of any Insurance Subsidiary, and such action,
individually or in the aggregate, would be reasonably likely to have a Material Adverse
Effect; or

(m)
   Any one or more licenses, permits, accreditations or authorizations of the Applicant or
any of its Subsidiaries shall be suspended, limited or terminated or shall not be
renewed, or any other action shall be taken, by any Governmental Authority in response to
any alleged failure by the Applicant or any of its Subsidiaries to be in compliance with
applicable Requirements of Law, and such action, individually or in the aggregate, would
be reasonably likely to have a Material Adverse Effect; or

(n)
   Any of the following shall occur: (i) any Person, including, without limitation, any
individual member of the Management Group, or group of Persons acting in concert as a
partnership or other group shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become, after the date
hereof, the beneficial owner(within the meaning of such term under Rule 13d-3
under the Exchange Act) of securities of the Applicant representing thirty percent (30%)
or more of the combined voting power of the then outstanding securities of the Applicant
ordinarily (and apart from rights accruing under special circumstances) having the right
to vote in the election of directors; provided, however, The PMA
Foundation, a Pennsylvania non-profit corporation, may become the beneficial owner of
securities of the Applicant representing fifty percent (50%) or

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less of the combined voting power of the then outstanding securities of
the Applicant so long as it remains a non-profit corporation that has no members with
voting rights and the Management Group collectively may become the beneficial owner of
securities of the Applicant representing fifty percent (50 %) or less of the combined
voting power of the then outstanding securities of the Applicant, or (ii) the Board of
Directors of the Applicant shall cease to consist of a majority of the individuals who
constituted the Board of Directors of the Applicant as of the date hereof or who shall
have become a member thereof subsequent to the date hereof after having been nominated,
or otherwise approved in writing, by at least a majority of individuals who constituted
the Board of Directors of the Applicant as of the date hereof (or their replacements
approved as herein required).

Upon
the occurrence of an Event of Default or at any time thereafter during the continuance
thereof, (a) if such event is an Event of Default specified in clause (h) or (i) above,
the Commitment shall immediately and automatically terminate and any reimbursement
obligations owing or contingently owing in respect of all Outstanding Letters of Credit
and all other amounts owing under the Credit Documents shall immediately become due and
payable, and the Agent may, and, upon the direction of the Required Banks shall, exercise
any and all remedies and other rights provided in the Credit Documents, and (b) if such
event is any other Event of Default, any or all of the following actions may be taken:
(i) with the consent of the Required Banks, the Agent may, and upon the direction of the
Required Banks shall, by notice to the Applicant, declare the Commitment to be
terminated forthwith, whereupon the Commitment shall immediately terminate, and
(ii) with the consent of the Required Banks, the Agent may, and upon the
direction of the Required Banks shall, by notice of default to the Applicant,
declare any reimbursement obligations owing or contingently owing in respect of
all Outstanding Letters of Credit and all other amounts owing under the Credit
Documents to be due and payable forthwith, whereupon the same shall immediately
become due and payable, and the Agent may, and upon the direction of the
Required Banks shall, exercise any and all remedies and other rights provided
pursuant to the Credit Documents. Except as otherwise provided in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. Each Credit Party hereby further expressly waives and
covenants not to assert any appraisement, valuation, stay, extension, redemption
or similar laws, now or at any time hereafter in force which might delay,
prevent or otherwise impede the performance or enforcement of any Credit
Document.

Upon
the occurrence of an Event of Default or at any time thereafter during the continuance
thereof, the Agent may and, at the direction of Required Banks, shall (i) exercise any
and all rights and remedies granted to a secured party by the Uniform Commercial Code in
effect in the State of Pennsylvania or otherwise allowed at law, and otherwise provided
by this Agreement, and (ii) dispose of the Collateral consisting of Treasury
Securities and U.S. Federal Agency Obligations as it may choose, so long as every aspect
of the disposition including the method, manner, time, place and terms are commercially
reasonable, and the Applicant and each Co-Applicant agrees that, without limitation, the
following are each commercially reasonable: (A) the Agent shall not in any event be
required to give more than five (5) days prior notice to the Applicant or any
Co-Applicant of any such disposition, (B) any place within the cities of

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New York, Philadelphia or Pittsburgh may be designated by the Agent for
disposition, and (C) the Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.

In
the event that the Commitment shall have been terminated pursuant to the provisions of
this Section, any funds received by the Agent and the Banks from or on behalf of the
Applicant and/or any Co-Applicant shall, in the event that any Letters of Credit remain
outstanding, either be held by the Agent or applied by the Agent in liquidation of the
obligations of the Applicant and the Co-Applicants under the Credit Documents in the Agents
discretion. Any such funds to be applied by the Agent and the Banks in liquidation of the
obligations of the Applicant and the Co-Applicants under the Credit Documents shall be
applied (i) first, to reimburse the Agent and the Banks for any expenses due from the
Applicant and/or any Co-Applicant, pursuant to the provisions of Section 10.5; (ii)
second, to the payment of the accrued and unpaid Commitment Fees, Letter of Credit
Commissions and all other fees, expenses and amounts due under the Credit Documents
(other than the reimbursement obligations); (iii) third, to the payment of interest due
on the reimbursement obligations, on a pro rata basis; (iv) fourth, to the payment of the
reimbursement obligations, on a pro rata basis; and (v) fifth, to the payment of any
other amounts owing to the Agent and the Banks under any Credit Document.

9.   THE AGENT

9.1. Appointment

Each
Bank and the Issuing Bank hereby irrevocably designates and appoints PNC as Agent
hereunder and under the other Credit Documents and each such Bank and the Issuing Bank
hereby irrevocably authorizes the Agent to take such action on its behalf under the
provisions of the Credit Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of the Credit Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in any Credit Document, the Agent shall not have any duties or
responsibilities other than those expressly set forth therein, or any fiduciary
relationship with any Bank or the Issuing Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the Credit
Documents or otherwise exist against the Agent.

9.2. Delegation of
Duties

The
Agent may execute any of its duties under the Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to rely upon the advice of counsel concerning all
matters pertaining to such duties.

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9.3. Exculpatory
Provisions

Neither
the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with the Credit Documents (except for its or their
own gross negligence or willful misconduct, including gross negligence or willful
misconduct in selecting a Person to whom duties are delegated pursuant to Section 9.2),
or (ii) responsible in any manner to any of the Banks for any recitals, statements,
representations or warranties made by any Credit Party or any officer thereof contained
in the Credit Documents, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection with, the
Credit Documents or for the value, validity, effectiveness, genuineness, perfection,
enforceability or sufficiency of any of the Credit Documents or for any failure of any
Credit Party or any other Person to perform its obligations thereunder. The Agent shall
not be under any obligation to any Bank or the Issuing Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or conditions of,
the Credit Documents, or to inspect the properties, books or records of any Credit Party.
The Agent shall not be under any liability or responsibility whatsoever, as Agent, to any
Credit Party or any other Person as a consequence of any failure or delay in performance,
or any breach, by any Bank or the Issuing Bank of any of its obligations under any of the
Credit Documents.

9.4. Reliance by
Agent

The
Agent shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram,
telegram, facsimile, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed, sent or
made by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitations counsel to any Credit Party), independent accountants and
other experts selected by the Agent. The Agent may treat each Bank and the Issuing Bank,
or the Person designated in the last notice filed with it under this Section, as the
holder of all of the interests of such Bank or Issuing Bank hereunder until written
notice of transfer, signed by such Bank or Issuing Bank (or the Person designated in the
last notice filed with the Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Agent, shall have been filed with the
Agent. The Agent shall not be under any duty to examine or pass upon the validity,
effective, enforceability, perfection or genuineness of the Credit Documents or any
instrument, document or communication furnished pursuant thereto or in connection
therewith, and the Agent shall be entitled to assume that the same are valid, effective
and genuine, have been signed or sent by the proper parties and are what they purport to
be. The Agent shall be fully justified in failing or refusing to take any action under
the Credit Documents unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate. The Agent shall in all cases be fully protected
in acting, or in refraining from acting, in accordance with a request or direction of the
Required Banks, and such request or direction and any action taken or failure to act
pursuant thereto shall be binding upon all the

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Banks, including all future Banks and the Issuing Bank.

9.5. Notice of
Default

The
Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Agent has received written notice thereof from the Issuing
Bank, a Bank or the Applicant or any Co-Applicant. In the event that the Agent receives
such a notice, the Agent shall promptly give notice thereof to the Issuing Bank, the
Banks and the Applicant. The Agent shall take such action with respect to such Default or
Event of Default as shall be directed by the Required Banks; provided, however, that
unless and until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem to be in the best interests of the
Banks.

9.6. Non-Reliance
on Agent and Other Banks

Each
Bank and the Issuing Bank expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the Agent hereinafter,
including any review of the affairs of any Credit Party, shall be deemed to constitute
any representation or warranty by the Agent to any Bank or the Issuing Bank. Each Bank
and the Issuing Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank or the Issuing Bank, and based on such
documents and information as it has deemed appropriate, made its own evaluation of and
investigation into the business, operations, Property, financial and other condition and
creditworthiness of the Credit Parties and made its own decision to enter into this
Agreement. Each Bank and the Issuing Bank also represents that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit
analysis, evaluations and decisions in taking or not taking action under any Credit
Document, and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and creditworthiness of the
Credit Parties. Except for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank or the Issuing Bank with any credit or other
information concerning the business, operations, Property, financial and other condition
or creditworthiness of the Credit Parties which may come into the possession of the Agent
or any of its officers, directors, employees, agent, attorneys-in-fact or affiliates.

9.7. Indemnification

Each
Bank agrees to indemnify and reimburse in Dollars the Agent in its capacity as such (to
the extent not promptly reimbursed by the Applicant or any Co-Applicant and without
limiting the obligation of any Credit Party to do so), in the Dollar Equivalent amount of
its pro rata share (based on its Commitment Percentage hereunder), from and against any
and all

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liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever including, without
limitation, any amounts paid to the Banks (through the Agent) by the Applicant or any
Co-Applicant pursuant to the terms of the Credit Documents, that are subsequently
rescinded or avoided, or must otherwise be restored or returned) which may at any time be
imposed on, incurred by or asserted against the Agent in any way relating to or arising
out of the Credit Documents or any other documents contemplated by or referred to therein
or the transactions contemplated thereby or any action taken or omitted to be taken by
the Agent under or in connection with any of the foregoing; provided, however, that no
Bank shall be liable for the payment of any portion, of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting primarily from the finally adjudicated gross negligence or
willful misconduct of the Agent (or any final settlement in which the Agent admits being
guilty of gross negligence or willful misconduct). Without limitation of the foregoing,
each Bank agrees to reimburse the Agent promptly upon demand for its pro rata share of
any unpaid fees owing to the Agent, and any costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) payable by the Applicant under
Section 10.5, to the extent that the Agent has not been paid such fees or has not been
reimbursed for such costs and expenses, by the Applicant or other Credit Party. The
failure of any Bank to reimburse the Agent promptly upon demand for its pro rata share of
any amount required to be paid by the Banks to the Agent as provided in this Section
shall not relieve any other Bank of its obligation hereunder to reimburse the Agent for
its pro rata share of such amount, but no Bank shall be responsible for the failure of
another Bank to reimburse the Agent for such other Banks pro rata share of such
amount. The agreements in this Section shall survive the payment of all amounts payable
under the Credit Documents.

9.8. Agent in Its
Individual Capacity

The
Agent and its respective affiliates may make loans to, accept deposits from, issue
letters of credit for the account of, and generally engage in any kind of business with,
any Credit Party as though the Agent were not Agent hereunder. With respect to its
Commitment and participation as a Bank with respect to Letters of Credit, the Agent, in
its individual capacity and not as Agent, shall have the same rights and powers under the
Credit Documents as any Bank and may exercise the same as though it were not the Agent,
and the terms Bankand Banksshall in each case include the Agent
in its individual capacity and not as Agent.

9.9. Successor Agent.

If
at any time the Agent deems it advisable, in its sole discretion, it may submit to each
of the Banks and the Issuing Bank a written notice of its resignation as Agent under the
Credit Documents, such resignation to be effective upon the earlier of (i) the written
acceptance of the duties of the Agent under the Credit Documents by a successor Agent and
(ii) on the thirtieth (30th) day after the date of such notice. Upon any such
resignation, the Required Banks shall have the right to appoint from among the Banks a
successor Agent. If no successor Agent shall have been so appointed by the Required Banks
and accepted such appointment in writing within thirty (30) days after retiring Agents
giving of notice of resignation, then the retiring

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Agent may, on behalf of the Banks, appoint a successor Agent, which
successor Agent shall be a commercial bank organized under the laws of the United States
of America or any State thereof and having a combined capital, surplus, and undivided
profits of at least $100,000.000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agents rights, powers, privileges and duties as Agent under the
Credit Documents shall be terminated. The Applicant, Co-Applicant, Issuing Bank and the
Banks shall execute such documents as shall be necessary to effect such appointment.
After any retiring Agents resignation as Agent, the provisions of the Credit
Documents shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under the Credit Documents. If at any time there shall not be a duly
appointed and acting Agent, the Applicant agrees to make each payment due under the
Credit Documents directly to the Issuing Bank and the Banks entitled thereto during such
time.

10.  OTHER PROVISIONS

10.1. Amendments
and Waivers

With
the written consent of the Required Banks, the Agent and the appropriate Credit Parties
may, from time to time, enter into written amendments, supplements or modifications of
the Credit Documents and, with the consent of the Required Banks, the Agent on behalf of
the Banks may execute and deliver to any such parties a written instrument waiving or a
consent to a departure from, on such terms and conditions as the Agent may specify in
such instrument, any of the requirements of the Credit Documents or any Default or Event
of Default and its consequences; provided, however, that:

(a)
   no such amendment, supplement, modification, waiver or consent shall, without the consent
of all of the Banks, (i) increase the Commitment Percentage of any Bank or the
Commitment, (ii) extend the Termination Date (except as provided in Section 2.6) or,
subject to Section 2.5, the Stated Expiration Date of any Letter of Credit, (iii) reduce
interest, any fees or other amounts payable hereunder, (iv) postpone any date fixed for
payment of reimbursement obligations, interest or any fees or other amounts payable
hereunder, (v) change the provisions of Sections 2.11, 2.12, 2.14, 10.1 or 10.6(a), (vi)
increase the sublimit applicable to Letters of Credit issued at the request of
Subsidiaries of the Applicant which are not Material Insurance Subsidiaries, (vii) change
the definition of Required Banks or (viii) release any Collateral other than as expressly
permitted hereunder;

(b)
   without the written consent of the Issuing Bank, no such amendment, supplement,
modification or waiver shall change the Commitment, change the amount or the time of
payment of the Letter of Credit Commissions or change any other term or provision which
relates to the Commitment or the Letters of Credit; and

(c)
   without the written consent of the Agent, no such amendment, supplement, modification or
waiver shall amend, modify or waive any provision of Section 9 or

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otherwise change any of the rights or obligations of the Agent hereunder
or under the Credit Documents.

Any
such amendment, supplement, modification or waiver shall apply equally to each of the
Banks and shall be binding upon the parties to the applicable Credit Document, the Banks,
the Agent, the Issuing Bank and all future Banks. In the case of any waiver, the parties
to the applicable Credit Document, the Banks and the Agent shall be restored to their
former position and rights hereunder and under the other Credit Documents to the extent
provided for in such waiver, and any Default or Event of Default waived shall not extend
to any subsequent or other Default or Event of Default, or impair any right consequent
thereon. The Credit Documents may not be amended orally or by any course of conduct.

10.2. Notices

All
notices, requests and demands to or upon the respective parties to the Credit Documents
to be effective shall be in writing and, unless otherwise expressly provided therein,
shall be deemed to have been duly given or made when delivered by hand, or when deposited
in the mail, first-class postage or, in the case of notice by facsimile, when sent,
addressed as follows in the case of the Applicant, the Issuing Bank, the Agent and to the
address of a Bank designated as such on Schedule 10.2 hereto and to the address of a
Credit Party set forth in a Credit Document, or to such other addresses as to which the
Agent may be hereafter notified by the respective parties thereto:

| |                                                         |                                      
| | ------------------------------------------------------- | -------------------------------------
| | The Applicant:                                         
| |                                                        
| | PMA Capital Corporation                                
| | Mellon Bank Center, 28th Floor                         
| | 1735 Market Street                                     
| | Philadelphia, Pennsylvania  19103-7590                 
| | Attention:                                              | Francis W. McDonnell,                
| |                                                         | Senior Vice President,               
| |                                                         | Chief Financial Officer and Treasurer
| | Telephone:                                              | (215) 665-5070                       
| | Facsimile:                                              | (215) 665-5043                       
| |                                                        
| | with a copy to in the case of notices to the Applicant:
| |                                                        
| | PMA Capital Corporation                                
| | Mellon Bank Center, 28th Floor                         
| | 1735 Market Street                                     
| | Philadelphia, Pennsylvania 19103-7590                  
| | Attention:                                              | Charles A. Brawley, III, Esq.        
| | Telephone:                                              | (215) 665-5039                       
| | Facsimile:                                              | (215) 665-5043                       
| |                                                        

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| |                                                                         |                            
| | ----------------------------------------------------------------------- | ---------------------------
| | The Agent:                                                             
| |                                                                        
| | PNC Bank, National Association                                         
| | 249 Fifth Street                                                       
| | Pittsburgh, Pennsylvania  15222                                        
| | Attention:                                                              | Patricia Sullivan          
| | Telephone:                                                              | (412) 768-0403             
| | Facsimile:                                                              | (412) 762-8672             
| |                                                                        
| | The Issuing Bank:                                                      
| |                                                                        
| | PNC Bank, National Association                                         
| | 237 Fifth Avenue                                                       
| | Third Floor, Annex Building                                            
| | Pittsburgh, Pennsylvania 15222                                         
| | Attention:                                                              | Letter of Credit Department
| | Telephone:                                                              | (412) 762-2078             
| | Facsimile:                                                              | (412) 705-0966,            
| |                                                                        
| | with a copy to in the case of notices to the Agent or the Issuing Bank:
| |                                                                        
| | PNC Bank, National Association                                         
| | 1600 Market Street                                                     
| | Philadelphia, Pennsylvania  19103                                      
| | Attention:                                                              | Kirk Seagers               
| | Telephone:                                                              | (215) 585-5393             
| | Facsimile:                                                              | (215) 585-7615,            
| |                                                                        

except that any notice, request or demand by the Applicant to or
upon the Agent, the Issuing Bank or the Banks pursuant to Sections 2.1, 2.5 or
2.6 shall not be effective until received, and any notice of payment or demand
for payment under Section 2.1(c) shall not be effective until received at the
facsimile number designated above for the Applicant. Any party to a Credit
Document may rely on signatures of the parties thereto which are transmitted by
facsimile or other electronic means as fully as if originally signed.

10.3. No Waiver;
Cumulative Remedies

No
failure to exercise and no delay in exercising, on the part of the Agent, the Issuing
Bank or any Bank, any right, remedy, power or privilege under any Credit Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege under any Credit Document preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges under the Credit Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

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10.4. Survival of
Representations and Warranties

All
representations and warranties made under the Credit Documents and in any document,
certificate or statement delivered pursuant thereto or in connection therewith shall
survive the execution and delivery of the Credit Documents.

10.5. Payment of
Expenses and Taxes

The
Applicant agrees, promptly upon presentation of a statement or invoice therefor, and
whether any Letter of Credit is issued (i) to pay or reimburse the Agent for all its
out-of-pocket costs and expenses reasonably incurred in connection with (A) the
development, preparation and execution of, the Credit Documents and any amendment,
supplement or modification thereto (whether or not executed), any documents prepared in
connection therewith and the consummation of the transactions contemplated thereby,
including syndication, and (B) any costs incurred in connection with any confirmation of
any Letters of Credit and, including, in each case without limitation, the reasonable
attorneysfees and disbursements, (ii) to pay or reimburse the Agent or the Issuing
Bank for the cost of any confirmation of any Letter of Credit, (iii) to pay or reimburse
the Agent, the Issuing Bank and the Banks for all of their respective costs and expenses,
including, without limitation reasonable fees and disbursements of counsel, incurred in
connection with (A) any Default or Event of Default and any enforcement or collection
proceedings resulting therefrom or in connection with the negotiation of any
restructuring or work-out(whether consummated or not) of the obligations of
the Credit Parties under any of the Credit Documents, and (B) the enforcement of this
Section, (iv) to pay, indemnify, and hold each Bank, the Issuing Bank and the Agent
harmless from and against any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp, excise and
other similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any of the directions
contemplated by, or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, the Credit Documents and any such other documents, and
(v) to pay, indemnify and hold each Bank, the Issuing Bank and the Agent and each of
their respective officers, directors and employees harmless from and against any and all
other liabilities, obligations, claims, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or name whatsoever (including,
without limitation reasonable counsel fees and disbursements) with respect to the
enforcement and performance of the Credit Documents, the issuance and use of the Letters
of Credit (all the foregoing, collectively, the indemnified liabilities)
and, if and to the extent that the foregoing indemnity may be unenforceable for any
reason, the Applicant agrees to make the maximum payment permitted or not prohibited
under applicable law; provided, however, that the Applicant shall have no obligation
hereunder to pay indemnified liabilities to the Agent, the Issuing Bank or any Bank
arising from the finally adjudicated gross negligence or willful misconduct of the Agent,
the Issuing Bank or such Bank or claims between one indemnified party and another
indemnified party (or any final settlement in which the Agent, the Issuing Bank, or such
Bank admits being guilty of gross negligence or willful misconduct). The Applicant
further agrees that all payments made pursuant to this Section 10.5 shall be made in
Dollars. The agreements in this

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Section shall survive the termination of the Commitment and the payment
of all amounts payable under the Credit Documents.

10.6. Assignments
and Participants

(a)
   The Credit Documents shall be binding upon and inure to the benefit of the Applicant, the
Co-Applicants, the Banks, the Issuing Bank, the Agent, all future Banks and their
respective successors and assigns, except that no Credit Party may assign, delegate or
transfer any of its rights or obligations under the Credit Documents without the prior
written consent of the Agent and each Bank.

(b)
   Each Bank shall have the right at any time, upon written notice to the Agent of its
intent to do so, to sell, assign, transfer or negotiate all or any part of such Banks
rights under the Credit Documents to one or more of its affiliates which would otherwise
be Eligible Assignees, to one or more of the other Banks (or to affiliates of such other
Banks which would be an Eligible Assignee) or, with the prior written consent of the
Applicant, the Issuing Bank and the Agent (which consent shall not be unreasonably
withheld and which consent of Applicant shall not be required upon the occurrence and
during the continuance of an Event of Default), to sell, assign, transfer or negotiate
all or any part of such Banks rights and obligations under the Credit Documents to
any other bank, insurance company, pension fund, mutual fund or other financial
institution which meets the criteria of Eligible Assignee, provided that (i) each such
sale, assignment, transfer or negotiation (other than sales, assignments, transfers or
negotiations to affiliates of such Bank) shall be in a minimum amount of $5,000,000, and
(ii) there shall be paid to the Agent by the assigning Bank a fee (the Assignment
Fee) of $3,000. For each assignment, the parties to such assignment shall
execute and deliver to the Agent for its acceptance and recording an Assignment and
Acceptance Agreement. Upon such execution, delivery, acceptance and recording by the
Agent, from and after the effective date specified in such Assignment and Acceptance
Agreement, the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance Agreement, the assignor Bank thereunder shall be released
from its obligations under the Credit Documents. Upon any such sale, assignment or other
transfer, the Commitment Percentages set forth in Exhibit A shall be adjusted accordingly
by the Agent and a new Exhibit A shall be distributed by the Agent to the Applicant and
each Bank.

(c)
   Each Bank may grant participations in all or any part of its Commitment Percentage to one
or more banks, insurance companies (other than property and casualty insurance
companies), financial institutions, pension funds or mutual funds, provided that (i) such
Banks obligations under the Credit Documents shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties to the Credit Documents for the
performance of such obligations, (iii) the Applicant, the Issuing Bank, the Agent and the
other Banks shall continue to deal solely and directly with such Bank in connection with
such Banks rights and obligations under the Credit Documents, (v) no
sub-participations shall be permitted and (vi) the voting rights of any holder of any
participation shall be limited to decisions that only do any of the following: (A)
subject the participant to any additional obligation, (B) reduce interest, any

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fees or other amounts payable hereunder, or (C) postpone any date fixed
for the payment of reimbursement obligations, interest or any fees or other amounts
payable hereunder. The Applicant acknowledges and agrees that any such participant shall
for purposes of Sections 2.11 and 2.12 be deemed to be a Bank; provided,
however, the Applicant shall not, at any time, be obligated to pay any participant
in any interest of any Bank hereunder any sum in excess of the sum which the Applicant
would have been obligated to pay to such Bank in respect of such interest had such Bank
not sold such participation.

(d)
   No Bank shall, as between and among the Applicant, any Co-Applicant, the Issuing Bank,
the Agent and such Bank, be relieved of any of its obligations under the Credit Documents
as a result of any sale, assignment, transfer or negotiation of, or granting of
participations in, all or any part of its Commitment Percentage, except that a Bank shall
be relieved of its obligations to the extent of any such sale, assignment, transfer or
negotiation of any Commitment Percentage.

(e)
   Notwithstanding anything to the contrary contained in this Section, any Bank may at any
time or from time to time assign all or any portion of its rights under the Credit
Documents to a Federal Reserve Bank, provided that any such assignment shall not release
such assignor from its obligations thereunder.

(f)
   Any Bank may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section, disclose to the Assignee or Participant or
proposed Assignee or Participant any information relating to the Applicant and its
Subsidiaries furnished to it by or on behalf of any other party hereto, provided that
such Assignee or Participant or proposed Assignee or Participant agrees in writing to
keep such information confidential to the same extent required of the Banks under Section
10.19.

10.7. Counterparts

Each
Credit Document may be executed by one or more of the parties thereto on any number of
separate counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same document. It shall not be necessary in making proof of any
Credit Document to produce or account for more than one counterpart signed by the party
to be charged. A counterpart of any Credit Document, and of any amendment, modification,
consent or waiver to or of any Credit Document transmitted by facsimile shall be deemed
to be an originally executed counterpart. A set of the copies of the Credit Documents
signed by all the parties thereto shall be deposited with each of the Applicant and the
Agent. Any party to a Credit Document may rely upon the signatures of any other party
thereto which are transmitted by facsimile or other electronic means to the same extent
as if originally signed.

10.8. Adjustments;
Set-off

(a)
   If any Bank (a Benefitted Bank) shall at any time receive any payment
or collateral in respect of the Obligations in excess of its pro rata share (based on its

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Commitment Percentage) (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8.1(h) or (i), or
otherwise), such Benefitted Bank shall purchase from each of the other Banks such portion
of each such other Banks participation in the Obligations, and shall provide each
of such other Banks with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Bank to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Banks, provided, however, that if
all or any portion of such excess payment or benefits is thereafter recovered from such
Benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The Applicant and
Co-Applicants agree that each Bank so purchasing a portion of another Banks
percentage of Obligations may exercise all rights of payment (including, without
limitation, rights of set-off, to the extent not prohibited by law) with respect to such
portion as fully as if such Bank were the direct holder of such portion.

(b)
   In addition to any rights and remedies of the Banks provided by law,
upon the occurrence of and during the continuance of an Event of Default under Section
8.1(a) or (b), each Bank shall have the right, without prior notice to the Applicant, any
such notice being expressly waived by each Credit Party to the extent not prohibited by
applicable law, to set-off and apply against any indebtedness, whether contingent,
matured or unmatured of such Credit Party to such Bank, any amount owing from such Bank
to such Credit Party, at, or at any time after, the happening of any of the above
mentioned events. To the extent not prohibited by applicable law, the aforesaid right of
set-off may be exercised by such Bank against such Credit Party or against any trustee in
bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of such Credit Party, or against
anyone else claiming through or against such Credit Party or such trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors, receivers or
execution, judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Bank prior to the making, filing or
issuance, or service upon such Bank of, or of notice of, any such petition, assignment
for the benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant. Each Bank agrees promptly
to notify the applicable Credit Party, the Issuing Bank and the Agent after any such
set-off and application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such set-off and application.

10.9. Construction

Each
Credit Party represents that it has been represented by counsel in connection with the
Credit Documents and the transactions contemplated thereby and that the principle that
agreements are to be construed against the draftsman shall be inapplicable.

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10.10. Indemnity

The
Applicant agrees to indemnify and hold harmless the Agent, the Issuing Bank and each Bank
and their affiliates, directors, officers, employees, attorneys and agents (each an Indemnified
Person) from and against any loss, cost, liability, claim, damage or expense
(including the reasonable fees and disbursements of counsel of such Indemnified Person,
including all local counsel hired by any such counsel) incurred by such Indemnified
Person in investigating, preparing for, defending against, or providing evidence,
producing documents or taking any-other action in respect of, any commenced or threatened
litigation, administrative proceeding or investigation under any federal securities law
or any other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon (i) any untrue statement or
alleged untrue statement of any material fact by any Credit Party in any document or
schedule executed or filed with any governmental body, agency or authority, by or on
behalf of any Credit Party; (ii) any omission or alleged omission to state any material
fact required to be stated in such document or schedule, or necessary to make the
statements made therein, in light of the circumstances under which made, not misleading;
(iii) any acts, practices or omissions or alleged acts, practices or omissions of any
Credit Party or its agents relating to the issuance and maintenance of any or all Letters
of Credit or the use of any or all Letters of Credit by the Applicant which are alleged
to be in violation of Section 2.13, or in violation of any federal securities law or of
any other statute, regulation or other law of any jurisdiction applicable thereto or (iv)
the violation of, noncompliance with or liability under any applicable environmental laws
applicable to the Credit Parties. The indemnity set forth herein shall be in addition to
any other obligations or liabilities of the Applicant and/or Co-Applicant to each
Indemnified Person under the Credit Documents or at common law or otherwise, and shall
survive any termination of the Credit Documents, the expiration of the Commitment and the
payment of all obligations of the Applicant and Co-Applicants under the Credit Documents,
provided that the Applicant shall have no obligation under this Section to an Indemnified
Person with respect to any of the foregoing to the extent found in a final judgment of a
court having jurisdiction to have resulted primarily out of the gross negligence or
wilful misconduct of such Indemnified Person or arising solely from claims between one
such Indemnified Person and another such Indemnified Person.

10.11. Governing Law

The
Credit Documents and the rights and obligations of the parties thereunder shall be
governed by, and construed and interpreted in accordance with, the internal laws of the
Commonwealth of Pennsylvania, without regard to principles of conflict of laws.

10.12. Headings
Descriptive

Section
headings have been inserted in the Credit Documents for convenience only and shall not be
construed to be a part thereof.

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10.13. Severability

Every
provision of the Credit Documents is intended to be severable, and if any term or
provision thereof shall be invalid, illegal or unenforceable for any reason, the
validity, legality and enforceability of the remaining provisions thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability in any
jurisdiction shall not affect the validity, legality or enforceability of any such term
or provision in any other jurisdiction.

10.14. Integration

All
exhibits to a Credit Document shall be deemed to be a part thereof. The Credit Documents
embody the entire agreement and understanding among the Credit Parties, the Agent, the
Issuing Bank and the Banks with respect to the subject matter thereof and supersede all
prior agreements and understandings among the Credit Parties, the Agent, the Issuing Bank
and the Banks with respect to the subject matter thereof.

10.15. Consent to
Jurisdiction

Each
Credit Party hereby irrevocably submits to the jurisdiction of any Pennsylvania State or
Federal court sitting in the City of Philadelphia over any suit, action or proceeding
arising out of or relating to the Credit Documents. Each Credit Party hereby irrevocably
waives, to the fullest extent permitted or not prohibited by law, any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum. Each Credit Party
hereby agrees that a final judgment in any such suit, action or proceeding brought in
such a court, after all appropriate appeals, shall be conclusive and binding upon it.

10.16. Service of
Process

Each
Credit Party hereby irrevocably consents to the service of process in any suit, action or
proceeding by sending the same by first class mail, return receipt requested or by
overnight courier service, to the address of such Credit Party set forth in or referred
to in Section 10.2 or in the applicable Credit Document executed by such Credit Party.
Each Credit Party hereby agrees that any such service (i) shall be deemed in every
respect effective service of process upon it in any such suit, action, or proceeding, and
(ii) shall to the fullest extent enforceable by law, be taken and held to be valid
personal service upon and personal delivery to it.

10.17. No
Limitation on Service or Suit

Nothing
in the Credit Documents or any modification, waiver, consent or amendment thereto shall
affect the right of the Agent or any Bank to serve process in any manner permitted by law
or limit the right of the Agent, the Issuing Bank or any Bank to bring

74

---

proceedings against any Credit Party in the courts of any jurisdiction or
jurisdictions in which such Credit Party may be served.

10.18. WAIVER OF TRIAL BY
JURY

THE
AGENT, THE ISSUING BANK, THE BANKS AND EACH CREDIT PARTY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE AGENT, THE ISSUING BANK, OR THE BANKS, OR COUNSEL TO THE
AGENT, THE ISSUING BANK OR THE BANKS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT, THE ISSUING BANK OR THE BANKS WOULD NOT, INTHE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH CREDIT PARTY
ACKNOWLEDGES THAT THE AGENT, THE ISSUING BANK AND THE BANKS HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, INTERALIA, THE PROVISIONS OF THIS SECTION.

10.19.
Confidentiality

Each
Bank agrees to keep confidential, pursuant to its customary procedures for handling
confidential information of a similar nature and in accordance with safe and sound
banking practices, all nonpublic information provided to it by or on behalf of the
Applicant or any of its Subsidiaries in connection with this Agreement or any other
Credit Document; provided, however, that any Bank may disclose such
information (i) to its directors, employees and agents and to its auditors, counsel and
other professional advisors, (ii) at the demand or request of any bank regulatory
authority, court or other Governmental Authority having or asserting jurisdiction over
such Bank, as may be required pursuant to subpoena or other legal process, or otherwise
in order to comply with any Requirement of Law, (iii) in connection with any proceeding
to enforce its other Credit Document or any other litigation or proceeding is a party,
(iv) to the Agent or any other Bank, (v) to the extent the same has become publicly
available other than as a result of a breach of this Agreement and (vi) pursuant to and
in accordance with the provisions of Section 10.6(f).

75

---

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year
first above written.

| |                                                                            |                                                            
| | -------------------------------------------------------------------------- | -----------------------------------------------------------
| | PMA CAPITAL CORPORATION                                                   
|
| | By:                                                                        | /s/ Francis W. McDonnell                                   
| | Name:                                                                      | Francis W. McDonnell                                       
| | Title:                                                                     | Senior Vice President, Chief FinancialOfficer and Treasurer
|
| | PNC BANK, NATIONAL ASSOCIATION, Individually and as Agent and Issuing Bank
|
| | By:                                                                        | /s/ Kirk Seayers                                           
| | Name:                                                                      | Kirk Seayers                                               
| | Title:                                                                     | Vice President                                             
|
| | FLEET NATIONAL BANK                                                       
|
| | By:                                                                        | /s/ Lawrence Davis                                         
| | Name:                                                                      | Lawrence Davis                                             
| | Title:                                                                     | Associate, Portfolio Manager                               
|
| | CREDIT LYONNAIS NEW YORK BRANCH                                           
|
| | By:                                                                        | /s/ Peter Rasmussen                                        
| | Name:                                                                      | Peter Rasmussen                                            
| | Title:                                                                     | First Vice President                                       
|
| | ALLFIRST BANK                                                             
|
| | By:                                                                        |                                                            
| | Name:                                                                      |                                                            
| | Title:                                                                     |                                                            
|
| | SOVEREIGN BANK                                                            
|
| | By:                                                                        | /s/ Michael J. Hassett                                     
| | Name:                                                                      | Michael J. Hassett                                         
| | Title:                                                                     | Vice President                                             
|

76

---

Co-Applicants:

|                                                          |                                                   | 
|--------------------------------------------------------- | ------------------------------------------------- | 
|PMA CAPITAL INSURANCE COMPANY                             |                                                  
|                                                         
|By:                                                       | /s/ Albert D. Ciavardelli                         | 
|Name:                                                     | Albert D. Ciavardelli                             | 
|Title:                                                    | Treasurer                                         | 
|                                                         
|PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY |                                                  
|                                                         
|By:                                                       | /s/ Francis W. McDonnell                          | 
|Name:                                                     | Francis W. McDonnell                              | 
|Title:                                                    | Vice President                                    | 
|                                                         
|HIGH MOUNTAIN REINSURANCE LTD.                            |                                                  
|                                                         
|By:                                                       | /s/ Francis W. McDonnell                          | 
|Name:                                                     | Francis W. McDonnell                              | 
|Title:                                                    | Vice President & CFO                              | 
|                                                         
|WALPROP, INC.                                             |                                                  
|                                                         
|By:                                                       | /s/ Francis W. McDonnell                          | 
|Name:                                                     | Francis W. McDonnell                              | 
|Title:                                                    | Vice President, Treasurer and Assistant Secretary | 
|                                                         
|PMA INTERNATIONAL INSURANCE CAYMAN LTD.                   |                                                  
|                                                         
|By:                                                       | /s/ Lily Chen                                     | 
|Name:                                                     | Lily Chen                                         | 
|Title:                                                    | Assistant Secretary                               | 
|                                                         

---

PMA CAPITAL CORPORATION EXHIBIT A

COMMITMENT

|Bank                            | Commitment   Percentage |  | Commitment   Amount | 
|------------------------------- | ----------------------- |  | ------------------- | 
|                               
|PNC Bank, National Association  | 27.27273%               |  | $   15,000,000      | 
|                               
|Fleet National Bank             | 22.72727%               |  | 12,500,000          | 
|                               
|Credit Lyonnais New York Branch | 27.27273%               |  | 15,000,000          | 
|                               
|Sovereign Bank                  | 22.72727%               |  | 12,500,000          | 
|                                |                         |  |                     | 
|                               
|Total                           | 100.0000000%            |  | $   55,000,000      | 
|                                |                         |  |                     | 

---

PMA CAPITAL CORPORATION EXHIBIT B

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This Assignment
and Acceptance Agreement is made and entered into as of _________, 200_, by and
between ____________________ (the Assignor) and _______________ (the
Assignee).

R E C I T A L S

A. The Assignor,
certain other banks (together with any prior assignees, (the Banks)
and PNC Bank, National Association, as agent (the Agent) and as
issuing bank (the Issuing Bank), are parties to that certain Second
Amended and Restated Letter of Credit Agreement dated as of ________________,
2000 (as from time to time amended, the Agreement) with PMA Capital
Corporation, a Pennsylvania corporation (the Applicant) and certain
subsidiaries of the Applicant party thereto. Pursuant to the Agreement, the
Banks agreed to participate in Letters of Credit issued by the Issuing Bank
under the Agreement in accordance with their Commitment Percentage. The
Assignors Commitment (without giving effect to the assignment effected
hereby or to other assignments thereof which have not yet become effective) is
specified in Item 1 of Schedule 1 hereto. The Assignors percentage of the
Letter of Credit Exposure (without giving effect to the assignment effected
hereby or to other assignments thereof which have not yet become effective) is
specified in Item 2 of Schedule 1 hereto. All capitalized terms not otherwise
defined herein are used herein as defined in the Agreement.

B. The Assignor
wishes to sell and assign to the Assignee, and the Assignee wishes to purchase
and assume from the Assignor, the portion of the Assignors Commitment
specified in. Item 3 of Schedule 1 hereto together with its related rights and
obligations under the Credit Documents and in respect of the Collateral (the
Assigned Commitment).

The parties
agree as follows:

1.   Assignment.
Subject to the terms and conditions set forth herein and in the Agreement, the
Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, without recourse, on the date set forth
above (the Assignment Date) all obligations of the Assignor under
the Agreement with respect to the Assigned Commitment together with its related
rights and obligations under the Credit Documents and in respect of the
Collateral. As consideration for the assignment and sale contemplated hereby,
the Assignee shall pay to the Assignor on the date hereof the amount heretofore
agreed between them.

2.   Representation and
Warranties. Each of the Assignor and the Assignee represents and warrants to the other
that (a) it has full power and legal right to execute and deliver this Assignment and
Acceptance Agreement and to perform the provisions of this Assignment and

---

Acceptance Agreement; (b) the execution, delivery and
performance of this Assignment and Acceptance Agreement have been authorized by
all action, corporate or otherwise, and do not violate any provisions of its
charter or by-laws or any contractual obligations or requirement of law binding
on it; and (c) this Assignment and Acceptance Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms. The Assignor further represents that it is the legal and beneficial owner
of the interest being assigned by it hereunder and that such interest is free
and clear of any adverse claim created by the Assignor. The Assignee further
represents that it is an Eligible Assignee as said term is defined
in the Agreement.

3.   Condition Precedent.
The obligations of the Assignor and the Assignee hereunder shall be subject to the
fulfillment of the condition that the Assignor shall have complied with the other
applicable provisions of Section 10.6 of the Agreement.

4.   Notice of
Assignment. The Assignor agrees to give notice of the assignment and assumption
of the Assigned Commitment to the Agent, the Issuing Bank and the Applicant and
hereby instructs the Agent, the Issuing Bank and the Applicant to make all
payments with respect to the Assigned Commitment directly to the Assignee at the
applicable office specified on Schedule 2 hereto; provided, however, that the
Applicant, the Agent and the Issuing Bank all shall be entitled to continue to
deal solely and directly with the Assignor in connection with the interests so
assigned until the Agent, the Issuing Bank and the Applicant, to the extent
required by Section 10.6 of the Agreement, shall have received notice of the
assignment, the Applicant, the Agent and the Issuing Bank shall have consented
in writing thereto to the extent required by Section 10.6 of the Agreement, and
the Agent shall have recorded and accepted this Assignment and Acceptance
Agreement and received the Assignment Fee required to be paid pursuant to
Section 10.6 of the Agreement. From and after the date (the Effective
Date) on which the Agent shall notify the Applicant and the Assignor that
the requirements set forth in the foregoing sentence shall have occurred and all
consents (if any) required shall have been given, (i) the Assignee shall be
deemed to be a party to the Agreement and, to the extent that rights and
obligations thereunder shall have been assigned to Assignee as provided in such
notice of assignment to the Agent, shall have the rights and obligations of a
Bank under the Agreement, and (ii) the Assignee shall be deemed to have
appointed the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto.
After the Effective Date, the Agent shall make all payments in respect of the
interest assigned hereby (including payments of interest, fees and other
amounts) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustment in payments under the Assigned Commitment for periods prior to the
Effective Date hereof directly between themselves. If the Assignee is not a
United States Person as defined in Section 7701(a)(30) of the Code, the Assignee
shall deliver herewith the forms required by Section 2.11 of the Agreement to
evidence the Assignees complete exemption from United States withholding
taxes with respect to payments under the Credit Documents.

5.   Independent
Investigation. The Assignee acknowledges that it is purchasing the Assigned Commitment
from the Assignor totally without recourse and, except as provided in Section 2 hereof,
without representation or warranty. The Assignee further acknowledges that it has made

-2-

---

its own independent investigation and credit evaluation of the
Applicant and any Co-Applicant in connection with its purchase of the Assigned
Commitment. Except for the representations or warranties set forth in Section 2,
the Assignee acknowledges that it is not relying on any representation or
warranty of the Assignor, expressed or implied, including without limitation,
any representation or warranty relating to the legality, validity, genuineness,
enforceability, collectibility, interest rate, repayment schedule or status of
the Assigned Commitment, the legality, validity, genuineness or enforceability
of the Agreement, or any other Credit Document referred to in or delivered
pursuant to the Agreement, or financial condition or creditworthiness of the
Applicant, any Co-Applicant or any other Person. The Assignor has not and will
not be acting as either the representative, agent or trustee of the Assignee
with respect to matters arising out of or relating to the Agreement or this
Assignment and Acceptance Agreement. From and after the Effective Date, except
as set forth in Section 4 above, the Assignor shall have no rights or
obligations with respect to the Assigned Commitment.

6.   Consent of
the Applicant. Pursuant to the provisions of Section 10.6 of the Agreement, and
to the extent required thereby, the Applicant, by signing below, consents to
this Assignment and Acceptance Agreement and to the assignment contemplated
herein.

7.   Method of Payment. Any
payments to be made by either party hereunder shall be in funds available at the place of
payment on the same day and shall be made by wire transfer to the account designated by
the party to receive payment.

8.   Integration. This
Assignment and Acceptance Agreement shall supersede any prior agreement or understanding
between the parties (other than the Credit Documents) as to the subject matter hereof.

9.   Counterparts. This
Assignment and Acceptance Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and shall be binding upon both parties, their
successors and assigns.

10.   Headings. Section
headings have been inserted herein for convenience only and shall not be construed to be
a part hereof.

11.   Amendments; Waivers.
This Assignment and Acceptance Agreement may not be amended, changed, waived or modified
except by a writing executed by the parties hereto, and may not be amended, changed,
waived or modified in any manner inconsistent with Section 10.6 of the Agreement without
the prior written consent of the Agent.

12.   Governing Law. This
Assignment and Acceptance Agreement shall be governed by, and construed in accordance
with the laws of, the Commonwealth of Pennsylvania.

-3-

---

IN WITNESS
WHEREOF, the parties hereto have caused this Assignment and Acceptance Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.

| |                                       | 
| | ------------------------------------- | 
| | ________________________, as Assignor
|
| | By:                                   | 
| | Name:                                 | 
| | Title:                                | 
|
| | ________________________, as Assignee
|
| | By:                                   | 
| | Name:                                 | 
| | Title:                                | 
|

|                                                |  | 
|----------------------------------------------- |  | 
|Consented to:                                   | 
|                                               
|PMA CAPITAL CORPORATION                         | 
|                                               
|By:                                             |  | 
|Name:                                           |  | 
|Title:                                          |  | 
|                                               
|Consented to and Accepted:                      | 
|                                               
|PNC BANK, NATIONAL ASSOCIATION, as Agent        | 
|                                               
|By:                                             |  | 
|Name:                                           |  | 
|Title:                                          |  | 
|                                               
|PNC BANK, NATIONAL ASSOCIATION, as Issuing Bank | 
|                                               
|By:                                             |  | 
|Name:                                           |  | 
|Title:                                          |  | 
|                                               

-4-

---

SCHEDULE 1

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT

between

______________________, as Assignor

and

______________________, as Assignee

relating to

Second Amended and Restated Letter of Credit Agreement among
PMA Capital Corporation, 
the Banks party thereto,
and
PNC Bank, National Association, as Agent and as Issuing Bank, 
dated as of ____________, 2000

|           |                                                                                                                                                         |             
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------
|Item 1.(a) | Assignor's Commitment          Percentage:                                                                                                              | __________ %
|           |                                                                                                                                                         |             
|           | (b)     Assignor's Commitment:                                                                                                                          | $___________
|           |                                                                                                                                                         |             
|Item 2.    | Assignors Letter of          Credit Exposure:
               (the Assignor's Commitment Percentage
               times the Letter of Credit Exposure) | $___________
|           |                                                                                                                                                         |             
|Item 3.    | Assigned Commitment:                                                                                                                                    | $___________

---

SCHEDULE 2

TO

ASSIGNMENT AND ACCEPTANCE AGREEMENT

between _______________________, as Assignorand
_______________________, as Assigneerelating to

Second Amended and Restated Letter of Credit Agreement amongPMA Capital
Corporation, the Banks party thereto, and PNC Bank, National Association as Agent and as
Issuing, Bank, dated as of _______________, 2000

Address for Notices

______________________________ 
______________________________ 
Attention: ______________________
Telephone: _____________________ 
Fax: __________________________

---

PMA CAPITAL CORPORATION EXHIBIT C

FORM OF LETTER OF CREDIT REQUEST

|_________________, 200_
|-----------------------

PNC Bank, National Association, as Agent
249 Fifth Street
Pittsburgh, PA 15222
Attention: Arlene Ohler
PNC Bank, National Association, as Issuing Bank
237 Fifth AvenueThird Floor, Annex Building
Pittsburgh, PA 15222

Attention: Letter of Credit Department

Gentlemen:

Reference is
made to the Second Amended and Restated Letter of Credit Agreement, dated as of
_______________, 2000, by and among PMA CAPITAL CORPORATION (the
Applicant), each Subsidiary of the Applicant which is or may become
a party thereto (each, a Co-Applicant), the Banks party thereto and
PNC BANK, NATIONAL ASSOCIATION, as Agent and Issuing Bank (as from time to time
amended, the Agreement).

Capitalized
terms used herein that are defined in the Agreement shall have the meanings
therein defined.

1. Pursuant to
Section 2.1 and 3.2(c) of the Agreement, the undersigned Applicant [and, if
applicable, ____________________ (the Co-Applicant(s))] hereby
requests that the Issuing Bank issue the Letter(s) of Credit in accordance with
the information annexed hereto which contains the verbatim text of the proposed
letter(s) of credit including the proposed terms and conditions and a precise
description of the documentation required to be complied with and submitted by
the beneficiary, which, if complied with by the beneficiary on or prior to the
Stated Expiration Date, would require the Issuing Bank to make payment under the
Letter of Credit.

-1-

---

2. The Applicant
hereby certifies that on the date hereof and on the Date of Issuance set forth
in Annex A, and after giving effect to the Letter(s) of Credit requested hereby:

(a)
The Applicant is and shall be in compliance with all of the terms, covenants and
conditions of the Credit Documents.

(b)
There exists and there shall exist no Default or Event of Default under the Agreement.

(c)
Each of the representations and warranties contained in the Agreement which is required
to be made on such Date of Issuance is and shall be true and correct in all material
respects.

(d)
After giving effect to the Letter(s) of Credit requested to be issued hereby, the
aggregate Letters of Credit Exposure will not exceed the Commitment and the aggregate
Letter of Credit Exposure with respect to Letters of Credit issued for the account of
Subsidiaries of the Applicant which are not Material Insurance Subsidiaries will not
exceed $15,000,000.

[3. Each
Co-Applicant which signs this Letter of Credit Request acknowledges that it has
received a copy of the Agreement and acknowledges and agrees that from and after
the Date of Issuance of the Letter(s) of Credit requested hereby, the
undersigned shall be jointly and severally liable with the Applicant for all
obligations with respect to the Letter(s) of Credit requested hereby and that
the undersigned shall be a party to the Agreement and the other Credit Documents
as a Co-Applicant with all the rights and obligations of a Co-Applicant under
the Agreement and Credit Documents with respect to the Letter(s) of Credit
requested hereby, and each and every reference in the Agreement and in any other
Credit Document to Co-Applicant shall mean and be a reference to
include the undersigned. The undersigned will, at the request of the Agent,
execute a copy of the Agreement and such other Credit Documents as may be
required.]1

[4. Each
Co-Applicant which signs this Letter of Credit Request represents and warrants
that the Agreement and each Credit Document executed by the undersigned
Co-Applicant constitutes a legal, valid and binding obligation of the
undersigned Co-Applicant in each case enforceable in accordance with its terms.]

[5. Each
Co-Applicant which signs this Letter of Credit Request specifically acknowledges
that certain provisions of the Agreement, including, without limitation, Section
10.1 (Amendments and Waivers), 10.3 (No Waiver; Cumulative Remedies), 10.6
(Assignments and Participation), 10.7 (Counterparts), 10.11 (Governing Law),
10.13 (Severability), 10.14 (Integration), 10.15 (Consent to Jurisdiction),
10.16 (Service of Process), 10.17 (No Limitation on Service or Suit) and 10.18
(Waiver of Trial by Jury) thereof, are made applicable to the Co-Applicant.]

_________________

1 Delete Items 3 through 5 if inapplicable

-2-

---

IN WITNESS WHEREOF, the
Applicant [and Co-Applicant, if applicable] has caused this
certificate to be executed by its duly authorized-officer(s) as of the
date and year first written above.

| |                         | 
| | ----------------------- | 
| | PMA CAPITAL CORPORATION
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|
| | [CO-APPLICANT]         
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|
| | [CO-APPLICANT]         
|
| | By:                     | 
| | Name:                   | 
| | Title:                  | 
|

-3-

---

Annex A

LETTER OF CREDIT INFORMATION

|1. |  | Name
of Beneficiary: _______________________________________________________.
|-- |  | -----------------------------------------------------------------------------

|2. |  | Address
of Beneficiary to which Letter of Credit will be sent:
 _______________________________________________________
_______________________________________________________.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Name
of Account Party: _____________________________________________________.
|-- |  | -----------------------------------------------------------------------------

|4. |  | Address
of Account Party: ___________________________________________________.
|-- |  | ------------------------------------------------------------------------------

|5. |  | Conditions
under which a drawing may be made (specify the required documentation):
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | Maximum
amount to be available under such Letter of Credit: $_________________.
|-- |  | -------------------------------------------------------------------------------

|7. |  | Requested
Date of Issuance: __________________, 200_.
|-- |  | -----------------------------------------------------

|8. |  | Stated
Expiration Date: _____________________, 200_.1
|-- |  | -----------------------------------------------------

|9. |  | Text
of Letter of Credit: _________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. |  | Name
and address of Co-Applicant, if any: __________________________________________
____________________________________________________________________________
____________________________________________________________________________
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. |  | Obligations
in respect of which the Letter of Credit is to be issued:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

__________________ 1 Not to be more than one year from the date of issuance.

-1-

---

|12. |  | Letter
of Credit is to be (check one box only):
|--- |  | -----------------------------------------------

| |  | |_|   Evergreen
Letter of Credit.
| |  | ---------------------------------

| |  | |_|   Not
an Evergreen Letter of Credit.
| |  | ----------------------------------------

|13. |  | If
the Evergreen Letter of Credit box in Item 13 was checked, specify the Beneficiary
Notification Date.
|--- |  | --------------------------------------------------------------------------------------------------------

-2-

---

PMA CAPITAL CORPORATION EXHIBIT D

FORM OF LETTER OF CREDIT

PNC BANK, NATIONAL ASSOCIATION 
237 Fifth AvenueThird Floor, Annex Building
Pittsburgh, PA 15222

OUR REF NO.              DATE

Beneficiary 
[Address]

GENTLEMEN/LADIES:

OUR REFERENCE NO.

ACCOUNT OF: 
[Name of Account Party] 
[Address]

AVAILABLE WITH:              OURSELVES
                  
                  
         BY PAYMENT

DRAFTS AT SIGHT 
DRAWN ON PNC BANK, NATIONAL ASSOCIATION, 
PITTSBURGH, PENNSYLVANIA, AS INDICATED BELOW.

TO THE EXTENT OF:     ***USD     ***

EXPIRY DATE: 
PLACE OF EXPIRY:     OUR COUNTERS

ADDITIONAL DETAILS:

WE HEREBY ESTABLISH THIS IRREVOCABLE LETTER OF CREDIT IN YOUR
FAVOR FOR DRAWINGS UP TO US$________________________ , EFFECTIVE [Date] AND
EXPIRING AT OUR OFFICE AT 237 FIFTH AVENUE, THIRD FLOOR, ANNEX BUILDING,
PITTSBURGH, PENNSYLVANIA 15222, WITH OUR CLOSE OF BUSINESS ON [Date].

---

WE HEREBY UNDERTAKE TO PROMPTLY HONOR YOUR SIGHT DRAFT(S),
MARKED DRAWN UNDER LETTER OF CREDIT NO. ______________", FOR ALL OR
ANY PART OF THIS LETTER OF CREDIT IF PRESENTED AT OUR 237 FIFTH AVENUE, THIRD
FLOOR, ANNEX BUILDING OFFICE, PITTSBURGH, PENNSYLVANIA 15222 ON OR BEFORE THE
EXPIRY DATE OR ANY AUTOMATICALLY EXTENDED DATE.

EXCEPT AS STATED HEREIN, THIS UNDERTAKING IS NOT SUBJECT TO ANY
CONDITION OR QUALIFICATION. THE OBLIGATION OF PNC BANK, NATIONAL ASSOCIATION
UNDER THIS LETTER OF CREDIT IS THE INDIVIDUAL OBLIGATION OF PNC BANK, NATIONAL
ASSOCIATION, AND IS IN NO WAY CONTINGENT UPON REIMBURSEMENT WITH RESPECT
THERETO.

[IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT IS DEEMED TO
BE AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR ONE YEAR FROM THE EXPIRY DATE
OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST DAYS PRIOR TO ANY EXPIRATION DATE
WE NOTIFY YOU BY REGISTERED MAIL THAT WE ELECT NOT TO CONSIDER THIS LETTER OF
CREDIT RENEWED FOR ANY SUCH ADDITIONAL PERIOD.]*

THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500.

YOURS VERY TRULY,

AUTHORIZED SIGNATURE

_________________ 
* To be included in Evergreen Letters of Credit only.

-2-

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PMA CAPITAL CORPORATION EXHIBIT E-1

FORM OF COMPLIANCE CERTIFICATE (GAAP Financial Statements)

THIS CERTIFICATE
is given pursuant to Section 5.3(a) of the Second Amended and Restated Letter of
Credit Agreement, dated as of ________________, 2000 (as amended, modified or
supplemented from time to time, the Agreement,  the terms defined
therein being used herein as therein defined), by and among PMA Capital
Corporation (the Applicant), the Banks party thereto and PNC Bank,
National Association, as Agent and Issuing Bank.

The undersigned hereby
certifies that:1

1.
   He is [the duly appointed chief financial officer of the Applicant] [a duly appointed
vice president of the Applicant having significant responsibility for financial matters].

2.
   Enclosed with this Certificate are copies of the financial statements of the Applicant
and its Subsidiaries as of _______________, and for the [__________ -month period] [year]
then ended, required to be delivered under Section [5.1(a)] [5.l(b)] of the Agreement.
Such financial statements have been prepared in accordance with generally accepted
accounting principles [(subject to the absence of notes required by generally accepted
accounting principles and subject to normal year-end audit adjustments)]2 and present
fairly the financial condition of the Applicant and its Subsidiaries on a consolidated
basis as of the date indicated and the results of operations of the Applicant and its
Subsidiaries on a consolidated basis for the period covered thereby.

3.
   The undersigned has reviewed the terms of the Agreement and has made, or caused to be
made under the supervision of the undersigned, a review in reasonable detail of the
activities of the Applicant and its Subsidiaries during the accounting period covered by
such financial statements with a view to determining whether the Applicant has performed
and maintained all of its obligations under the Agreement.

4.
   Based upon the review described in paragraph 3 above, the undersigned has no knowledge of
the existence of any Default or Event of Default during or at the end of the accounting
period covered by such financial statements or as of the date of this Certificate except
as set forth herein].3

_________________

1      Insert applicable bracketed language throughout the Certificate.

2      Insert in the case of quarterly financial statements.

3      Insert if applicable and describe in the Certificate or in a separate
attachment any exceptions to paragraph 4 above by listing, in reasonable detail, the
nature of the Default or Event of Default, the period during which it existed and the
action the Applicant has taken or proposes to take with respect thereto.

-1-

---

5. Attached to
this Certificate as Attachment A is a Covenant Compliance Worksheet reflecting
the computation of the financial covenants set forth in Sections 6.1 and 6.2 of
the Agreement, as of the last day of the period covered by the financial
statements enclosed herewith.

IN WITNESS
WHEREOF, the undersigned has executed and delivered this Certificate as of the
_______ day of ___________________, 200_.

| |             | 
| | ----------- | 
| | [signature] | 
| | Name:       | 
| | Title:      | 
|

-2-

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ATTACHMENT A TO GAAP COMPLIANCE CERTIFICATE

COVENANT COMPLIANCE WORKSHEET

|                                                    |                                                                                                         |                   
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------
|Capitalization Ratio(Section 6.1 of the Agreement): | Not greater than 0.35 to 1.0                                                                           
|                                                    |                                                                                                         |                   
|(1)                                                 | Consolidated Indebtedness:                                                                              |                   
|                                                    |                                                                                                         |                   
|                                                    | (a)   Indebtedness of Applicant and Subsidiaries as of        __________, ____ (the "Measurement Date") | $_________________
|                                                    |                                                                                                         |                   
|                                                    | (b)   Reimbursement obligations with respect to        letters of credit hereunder.                     | _________________ 
|                                                    |                                                                                                         |                   
|                                                    | (c)   Consolidated Indebtedness: Subtract lines l(b)        and l(c) from l (a)                         | $_________________
|                                                    |                                                                                                         |                   
|(2)                                                 | Capitalization:                                                                                         |                   
|                                                    |                                                                                                         |                   
|                                                    | (a)   Consolidated Indebtedness as of the        Measurement Date (from Line l(d))                      | $_________________
|                                                    |                                                                                                         |                   
|                                                    | (b)   Consolidated Net Worth as of the Measurement        Date                                          | _________________ 
|                                                    |                                                                                                         |                   
|                                                    | (c)   Capitalization: Add Lines 2(a) and 2(b)                                                           | $_________________
|                                                    |                                                                                                         |                   
|(3)                                                 | Ratio of Consolidated Indebtedness to TotalCapitalization:        Divide Line l(d) by Line 2(c)         | ___ to            
|                                                    |                                                                                                         |                   

-1-

---

|                                                   |                                                                                                                                                                                                        |                   
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------
|Cash Coverage Ratio(Section 6.2 of the Agreement): | Not less than 2.75 to 1.0                                                                                                                                                                             
|                                                   |                                                                                                                                                                                                        |                   
|(1)                                                | Cash Available:                                                                                                                                                                                        |                   
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (a)   Aggregate Available Dividend Amount for the
        Insurance Subsidiaries1
        for the Measurement Period2                                                                                  | $_________________
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (b)   Net Tax Sharing Payments for the Measurement
        Period                                                                                                                                      |                   
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (i)   Tax sharing payments received by Applicant                                                                                                                                                       | $_________________
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (ii)   Tax sharing payments estimated to be               
     received by Applicant in respect of                Measurement Period                                                                  | _________________ 
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (iii)  Taxes paid by Applicant                                                                                                                                                                         | (_______________) 
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (iv)   Taxes estimated to be paid by Applicant in               
     respect of Measurement Period                                                                                                    | (_______________) 
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (v)   Other payments, if any, paid or to be paid
                    
     by Applicant under tax sharing
                    agreements or arrangements during
                    Measurement Period | (_______________) 
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (vi)    Net Amount (lines (i) + minus lines (iii) +
                    
     (iv) + (v))                                                                                                              | _______________   
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (C)   Cash Available:
        Add lines 1(a) and l(b)(v)                                                                                                                                               | $_______________  
|                                                   |                                                                                                                                                                                                        |                   
|(2)                                                | Cash Uses:                                                                                                                                                                                             |                   
|                                                   |                                                                                                                                                                                                        |                   
|                                                   | (a)   Interest Expense incurred during the
        Measurement Period                                                                                                                                  | $_________________
|                                                   |                                                                                                                                                                                                        |                   

_______________

1      Other than each Insurance Subsidiary that is a Subsidiary of another
Insurance Subsidiary and determined as if the four fiscal quarters measured constitute a
fiscal year for regulatory purposes.

2      The four fiscal quarters immediately preceding the Measurement Date.

-2-

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|    |                                                                                       |                  
|--- | ------------------------------------------------------------------------------------- | -----------------
|    | (b)   Operating, expenses paid by the Applicant
        during the Measurement Period | _________________
|    |                                                                                       |                  
|    | (c)   Dividends paid by the Applicant during the
        Measurement Period           | _________________
|    |                                                                                       |                  
|    | (d)   Cash Uses:
        Add lines 2(a), 2(b) and 2(c)                                | $                
|    |                                                                                       |                  
|(3) | Cash Coverage Ratio:                                                                  |                  
|    | Divide line l(c) by line 2(d)                                                         | ___ to 1.0       

-3-

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PMA CAPITAL CORPORATION EXHIBIT E-2

FORM OF COMPLIANCE CERTIFICATE (Statutory Financial Statements)

THIS CERTIFICATE
is given pursuant to Section 5.3(a) of the Second Amended and Restated Letter of
Credit Agreement, dated as of November 22, 2000 (as amended, modified or
supplemented from time to time, the Agreement, the terms defined
therein being used herein as therein defined), by and among PMA Capital
Corporation (the Applicant), the Co-Applicants party thereto, the
Banks party thereto and PNC Bank, National Association, as Agent and Issuing
Bank.

The undersigned hereby
certifies that:4

1)
   He is [the duly appointed chief financial officer of the Applicant] [a duly appointed
vice president of the Applicant having significant responsibility for financial matters].

2)
   Enclosed with this Certificate are copies of the financial statements of the Applicant
and its Subsidiaries as of __________, and for the [__________-month period] [year] then
ended, required to be delivered under Section [5.2(a)] [5.2(b)] of the Agreement. Such
financial statements have been prepared in accordance with Statutory Accounting
Principles and present fairly the financial condition of the Applicant and its
Subsidiaries on a consolidated basis as of the date indicated and the results of
operations of the Applicant and its Subsidiaries on a consolidated basis for the period
covered thereby.

3)
   Attached to this Certificate as Attachment A is a Covenant Compliance Worksheet
reflecting the computation of the financial covenants set forth in Sections 6.3 and 6.4
of the Agreement as of the last day of the period covered by the financial statements
enclosed herewith.

_________________

4 Insert applicable bracketed language throughout the Certificate.

-1-

---

IN WITNESS WHEREOF, the
undersigned has executed and delivered this Certificate as of the ________ day of
_______________, ____.

| |             | 
| | ----------- | 
| | [signature] | 
| | Name:       | 
| | Title:      | 
|

-2-

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ATTACHMENT A TO STATUTORY COMPLIANCE CERTIFICATE

COVENANT COMPLIANCE WORKSHEET

|                                                 |                                                                                           |                   
|------------------------------------------------ | ----------------------------------------------------------------------------------------- | ------------------
|Statutory Surplus(Section 6.3 of the Agreement): | Not less than $450,000,000                                                               
|                                                 |                                                                                           |                   
|(1)                                              | Statutory Surplus of each Insurance Subsidiary1 as of (the"Measurement Date"):            |                   
|                                                 |                                                                                           |                   
|                                                 | (a)   PMACIC                                                                              | $_________________
|                                                 |                                                                                           |                   
|                                                 | (b)   Other Insurance Subsidiaries legally domiciled in
        the United States2        | $_________________
|                                                 |                                                                                           |                   
|                                                 | (c)   [Other Insurance Subsidiaries not legally domiciled
        in the United States3]2 | $_________________
|                                                 |                                                                                           |                   
|(2)                                              | Consolidated Statutory Surplus -- Sum of lines in item (1)                                | $_________________
|                                                 |                                                                                           |                   

_______________

1      Do not include any Insurance Subsidiary whose Statutory
Surplus is included in the Statutory Surplus of another Insurance Subsidiary.

2      List each such Insurance Subsidiary individually.

3      Include the shareholdersequity of such Insurance Subsidiary as
determined in accordance with Generally Accepted Accounting Principles (without regard to
the requirements of Statement of Financial Accounting Standards No. 115 issues by the
Financial Accounting Standards Board).

---

ATTACHMENT A TO STATUTORY COMPLIANCE CERTIFICATE

COVENANT COMPLIANCE WORKSHEET

|                                                   |                                                                                                              |                   
|-------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ------------------
|Risk-Based Capital(Section 6.4 of the Agreement):1 | For each Insurance Subsidiary, as  appropriate, line (a) to be not less  than line (d)                      
|                                                   |                                                                                                              |                   
|(1)                                                | PMACIC                                                                                                       |                   
|                                                   |                                                                                                              |                   
|                                                   | (a)   Total adjusted capital as of the
        Measurement Date                                              | $_________________
|                                                   |                                                                                                              |                   
|                                                   | (b)   Company Action Level RBC2 as of the
        Measurement Date                                           | $_________________
|                                                   |                                                                                                              |                   
|                                                   | (c)   Required Multiple                                                                                      | 150%              
|                                                   |                                                                                                              |                   
|                                                   | (d)   Required total adjusted capital as of the
        Measurement Date:
        Multiply Line l(b) by l(c) | $_________________
|                                                   |                                                                                                              |                   
|(2)                                                | Other Insurance Subsidiaries3                                                                                |                   
|                                                   |                                                                                                              |                   
|                                                   | (a)   Total adjusted capital as of the
        Measurement Date                                              | $_________________
|                                                   |                                                                                                              |                   
|                                                   | (b)   Company Action Level RBC2 as of the
        Measurement Date                                           | $_________________
|                                                   |                                                                                                              |                   
|                                                   | (c)   Required Percentage3:                                                                                  | 120%              
|                                                   |                                                                                                              |                   
|                                                   | (D)   Required total adjusted capital as of the
        Measurement Date:
        Multiply Line 3(b) by 3(c) | $_________________
|                                                   |                                                                                                              |                   

_________________

1      To be calculated and submitted annually.

2      As defined by the Risk-Based Capital for Insurers Model Act of the NAIC.

3      Complete different schedule for each Insurance Subsidiary required by
the relevant Insurance Regulatory Authority to meet any RBC requirements.

---

PMA CAPITAL CORPORATION EXHIBIT F

FORM OF FINANCIAL CONDITION CERTIFICATE

THIS FINANCIAL
CONDITION CERTIFICATE is delivered pursuant to Section 3.1 (a)(iv) of the Second
Amended and Restated Letter of Credit Agreement, dated as of November 22, 2000
(the Agreement), by and among PMA Capital Corporation, a
Pennsylvania corporation (the Applicant), the Co-Applicants party
thereto, the Banks party thereto and PNC Bank, National Association, as Agent
and as Issuing Bank. Capitalized terms used herein without definition shall have
the meanings given to such terms in the Agreement.

The undersigned
hereby certifies for and on behalf of the Applicant as follows:

1.
   Capacity. The undersigned is, and at all pertinent times mentioned herein has
been, the Applicants duly qualified and acting chief financial officer (and in such
capacity has responsibility for the management of the Applicants financial affairs)
and senior accounting officer (and in such capacity has responsibility for the
preparation of the Applicants financial statements). The undersigned has, together
with other officers of the Applicant, acted on behalf of the Applicant in connection with
the negotiation and consummation of the Agreement and the transactions contemplated
thereby.

2.
   Procedures. For purposes of this certificate, the undersigned, or officers or other
personnel of the Applicant under the direction and supervision of the undersigned, have,
as of or prior to the date hereof, undertaken the following activities in connection
herewith:

| | a) | The
undersigned has carefully reviewed the following:
| | -- | -----------------------------------------------------

| | i) | the
contents of this certificate;
| | -- | ---------------------------------

| | ii) | the
Agreement (including the exhibits and schedules thereto); and
| | --- | -----------------------------------------------------------------

| | iii) | the
audited consolidated balance sheets of the Applicant for the fiscal years ended December
31, 1997, 1998 and 1999, and the related consolidated statements of income, comprehensive
income and cash flows of the Applicant for the three-year period ended December 31, 1999,
each audited by PricewaterhouseCoopers, L.L.P. (successor by merger to Coopers and
Lybrand, L.L.P.) .
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | With
respect to any Contingent Obligations of the Applicant, the undersigned:
| | -- | -----------------------------------------------------------------------------

| | i) | has
inquired of certain officers and other personnel of the Applicant who have responsibility
for the legal, financial and accounting affairs of the Applicant, as to the existence and
estimated amounts of all Contingent Obligations known to them;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | ii) | has
confirmed with senior officers of the Applicant that, to the best of such officers
knowledge, (i) all appropriate items have been included in the Contingent Obligations
made known to the undersigned in the course of the inquiry of the undersigned in
connection herewith, and (ii) the amounts relating thereto were the maximum estimated
amounts of liability reasonably likely to result therefrom as of the date hereof, and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii) | confirms
that, to the best of his knowledge, all material Contingent Obligations that may arise
from any pending litigation, asserted claims and assessments, guarantees, uninsured
risks, and other Contingent Obligations of the Applicant have been considered in making
the certification set forth herein, and with respect to each such Contingent Obligation
the estimable maximum estimated of liability with respect thereto was used in making such
certification.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

c)
   In connection with the preparation for consummation of the transactions contemplated by
the Agreement, the undersigned has caused the preparation of and has reviewed projected
financial statements consisting of balance sheets and statements of income of the
Applicant giving effect to the transactions contemplated by the Agreement. The
assumptions upon which such projections are based were, in the opinion of the
undersigned, reasonable when made and continue to be reasonable as of the date hereof,
subject to the uncertainties and approximations inherent in any projections.

d)
   The undersigned has inquired of certain officers of the Applicant having responsibility
for financial reporting and accounting matters regarding whether such persons were aware
of any events or conditions that, as of the date hereof, would cause the statements made
in Section 3 below to be untrue.

e)
The    undersigned has conferred with counsel to the Applicant for the
purpose of discussing the meaning of the contents of this Certificate (including, without
limitation, Sections 3(a), 3(c) and 3(d) below).

3.
   Certifications. Based on the foregoing, the undersigned hereby certifies as follows:

a)
   The Applicant is not now, nor will consummation of the transactions contemplated by the
Agreement and the incurrence of the Obligations under the Agreement render the Applicant,
insolvent(as hereinafter defined). The undersigned understands that, in this
context, insolventmeans that the present fair saleable value of assets is
less than the amount that will be required to be paid on or in respect of the existing
debts and other liabilities as such debts and liabilities of the Applicant mature. The
undersigned understands that the term debtsincludes

-2-

---

any legal liability, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent, including any guaranty obligations.
A valuation of the Applicant, on the basis thereof, with reasonable allowance
for error, would reflect the net worth of the Applicant in the aggregate (excess
of fair value of assets over liabilities) as not less than $__________.

b)
   After giving effect to the transaction contemplated by the Agreement, all accounts and
other liabilities of the Applicant are current and not past due.

c)
   The undersigned believes that, by incurring the Obligations pursuant to the Agreement,
the Applicant will not incur debts beyond its ability to pay as such obligations mature
(taking into account the timing and amounts of cash to be payable on or in respect of the
Applicants Indebtedness). The foregoing conclusion is based in part on the
projections, which demonstrate that the cash flow of the Applicant, after taking into
account all anticipated uses of the cash of the Applicant, will at all times be
sufficient to pay all amounts on or in respect of Indebtedness of the Applicant when such
amounts are required to be paid (including without limitation, scheduled payments
pursuant to the Agreement).

d)
   As of the date hereof, the consummation of the transactions contemplated by the Agreement
will not leave the Applicant with unreasonably small capitalwithin the
meaning of Section 548(a) of the Bankruptcy Code or with remaining assets that are
unreasonably small. In reaching this conclusion, the undersigned understands that unreasonably
small capitaldepends upon the nature of the particular business or businesses
conducted or to be conducted, and has reached this conclusion based on the needs and
anticipated needs for capital of the businesses conducted or anticipated to be conducted
by the Applicant in light of the Applicants available credit capacity.

e)
   The Applicant has not executed the Agreement, or any documents mentioned herein, or made
any transfer or incurred any obligations thereunder, with intent to hinder, delay or
defraud either present or future creditors of the Applicant.

f)
   The undersigned understands that the Banks have performed their own review and analysis
of the financial condition of the Applicant, but that the Banks are relying on the
foregoing statements in connection with the extension of credit to the Applicant pursuant
to the Agreement.

Executed this ____ day of
______________, 2000.

| | ___________________________________Chief Financial OfficerPMA Capital Corporation
| | ---------------------------------------------------------------------------------

-3-

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PMA CAPITAL CORPORATION EXHIBIT G

MATTERS TO BE COVERED IN OPINIONS OF COUNSEL TO THE APPLICANT

1. Each of the
Applicant and its Material Subsidiaries is a corporation duly organized and
validly existing under the laws of the jurisdiction of its incorporation and is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the nature of its business or the ownership of its
properties requires it to be so qualified, except where the failure to be so
qualified would not have a Material Adverse Effect.

2. Each of the
Applicant and its Material Subsidiaries has the full corporate power and
authority to execute, deliver and perform the Credit Documents to which it is a
party, to own and hold its property and to engage in its business as presently
conducted.

3. The Applicant
and each Co-Applicants have taken all necessary corporate action to execute,
deliver and perform each Credit Document, and each Credit Document has been
validly executed and delivered by, and constitutes the legal, valid and binding
obligation of the Applicant, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting creditors rights generally or by general equitable principles
which may limit rights of acceleration, self-help and the availability of
equitable remedies, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law).

(d) No consent,
approval, authorization, exemption or other action by, notice to, or declaration
or filing with, any governmental or regulatory authority of the United States or
the Commonwealth of Pennsylvania is required in connection with the due
execution, delivery and performance by the Applicant of the Credit Documents,
the legality, validity or enforceability thereof or the consummation of the
transactions contemplated thereby.

5. The
execution, delivery and performance by the Applicant and each Co-Applicant of
the Credit Documents, and compliance by it therewith, do not and will not (i)
violate any provision of its certificate of incorporation or bylaws, (ii)
contravene any provisions of any applicable law, rule or regulation or, to the
best of such counsels knowledge, any judgment, order, writ, injunction or
decree to which it is subject, (iii) to the best of such counsels
knowledge, conflict with, result in a breach of or constitute (with notice,
lapse of time or both) a default under any material indenture, agreement or
other instrument to which it is a party, by which it or any of its properties is
bound or to which it may be subject, or (iv) result in the creation or
imposition of any Lien (except for Permitted Liens) arising under any of the
documents or instruments referred to in clause (iii), upon any property or
assets of the Applicant and each Co-Applicant; provided, however, in the case of
(ii), (iii) and (iv) herein, where to do so would not have a Material Adverse
Effect.

6. To the best of such
counsel's knowledge, there are no actions, investigations, suits or proceedings pending
or threatened, at law, in equity or in arbitration, before any court, other

---

Governmental Authority or other Person,
against or affecting the Applicant and its Subsidiaries or any of their
respective properties that, if adversely determined, would be reasonably likely
to have a Material Adverse Effect.

7. Neither the
Applicant nor any of its Subsidiaries is an investment company, a
company controlled by an investment company, or an investment
advisor, within the meaning of the Investment Company Act of 1940, as
amended.

8. Neither the
Applicant nor any of its Subsidiaries is engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and the
consummation of the transactions contemplated by the Agreement will not violate
Regulations T, U or X of the Board of Governors of the Federal Reserve System.

9. The
provisions of the Pledge Agreement are effective to create an enforceable
security interest in favor of the Agent (for the benefit of the Banks) in the
Collateral (as defined in the Pledge Agreement). Upon the execution and delivery
of the Control Agreements among the Applicant, the Co-Applicants, the Agent and
the Custodian (as defined in the Pledge Agreement), dated as of November __,
2000, the Agent will have a perfected security interest in and to the Collateral
in the Securities Accounts (as defined in the Pledge Agreement) under Division 9
of the Uniform Commercial Code (the UCC) which will have priority
over conflicting security interests created under Section 9115 of the UCC.

-2-

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PMA CAPITAL CORPORATION EXHIBIT H

FORM OF EXTENSION REQUEST

EXTENSION
REQUEST (this Extension Request), dated as of __________ __, 200_,
made by PMA CAPITAL CORPORATION, a Pennsylvania corporation (the Applicant)
pursuant to the Second Amended and Restated Letter of Credit Agreement, dated as of
November 22, 2000, by and among the Applicant, the Co-Applicants party thereto, the Banks
party thereto and PNC BANK, NATIONAL ASSOCIATION, in its capacity as Agent and as Issuing
Bank (as time amended, supplemented or otherwise modified from time to time, the Agreement).

RECITALS

A.
Capitalized terms used herein which are not defined herein and which are defined in the
Agreement shall have the same meanings as therein defined.

B.
Section 2.6 of the Agreement provides that so long as no Default or Event of Default
shall exist and be continuing, the Applicant may request that the Termination Date be
extended for a period of 364 days by delivering an Extension Request to the Agent.

C.
Section 2.6 of the Agreement further provides that if each Bank consents to an Extension
Request during the Extension Consent Period by giving written notice thereof to the
Agent, then effective on the first day of the Extension Consent Period, the then
applicable Termination Date shall be extended by 364 days.

D.
As of the date hereof, the Termination Date (without giving effect to the extension
requested hereby) is November __, 2001.

E.
The Applicant desires that the Termination Date be extended for an additional period of
364 days and the Banks signing below desire to consent thereto.

In
consideration of the premises, and the terms and conditions herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. Pursuant to Section
2.6 of the Agreement, the Applicant hereby requests that the Termination Date be extended
for an additional period of 364 days.

2. The Applicant hereby
represents and warrants to the Agent, the Co-Agent, the Issuing Bank and each Bank that
no Default or Event of Default exists and is continuing.

3. Each Bank signing
below hereby consents to this Extension Request.

---

4. Subject to
receipt by the Agent during the Extension Consent Period of a counterpart of
this Extension Request signed by each Bank (or a replacement bank pursuant to
Section 2.15), then effective on the first day of such Extension Consent Period,
the then applicable Termination Date shall be extended by 364 days.

5. This
instrument may be executed in any number of counterparts, each of which shall be
an original and all of which shall constitute one instrument. It shall not be
necessary in making proof of this instrument to produce or account for more than
one counterpart signed by the party to be charged.

6. This
instrument is being delivered in and is intended to be performed in the
Commonwealth of Pennsylvania and shall be construed and enforceable in
accordance with, and be governed by, the internal laws of the Commonwealth of
Pennsylvania without regard to principles of conflict of laws.

IN WITNESS
WHEREOF, each of the parties has caused this Extension Request to be executed by
its duly authorized officer as of the date and year first written above.

| |                                                                           | 
| | ------------------------------------------------------------------------- | 
| | PMA CAPITAL CORPORATION                                                  
|
| | By:                                                                       | 
| | Name:                                                                     | 
| | Title:                                                                    | 
|
| | PNC BANK, NATIONAL ASSOCIATION,Individually and as Agent and Issuing Bank
|
| | By:                                                                       | 
| | Name:                                                                     | 
| | Title:                                                                    | 
|

-2-

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