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EXHIBIT 10.1

PURCHASE AGREEMENT

        AGREEMENT, made as of this 4th day of February, 1981, among RELIANCE
INSURANCE COMPANY, a Pennsylvania corporation, ("Reliance"), Zenith National
Insurance Corp., a Delaware corporation ("Zenith"), the parties set forth in
Exhibit A hereto (collectively referred to herein as the "Selling
Stockholders"), and EUGENE V. KLEIN, DANIEL SCHWARTZ, and HARVEY L. SILBERT, as
agents for the Selling Stockholders ("Sellers' Agents");

WITNESSETH:

        WHEREAS, the Selling Stockholders collectively own approximately 60% of
the issued and outstanding common stock of Zenith which owns 100% of the issued
and outstanding common stock of Zenith Insurance Company ("ZIC"); and

        WHEREAS, Reliance has heretofore agreed in principle with the Selling
Stockholders to purchase 1,109,900 shares of common stock of Zenith at a price
of $19.00 per share, or an aggregate total purchase price of $21,083,100.00
subject, however, to a pro-rata adjustment in the number of shares and the price
per share (but not in the aggregate total purchase price) to reflect a five for
four stock split payable on January 30, 1981, to shareholders of record on
January 15, 1981; and

        WHEREAS, Zenith has determined that the consummation of this sale of
stock is in the best interest of Zenith and, therefore, Zenith is desirous of
assisting in the transaction;

        NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements, representations and warranties herein contained, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:

ARTICLE I
DEFINITIONS

        As used herein, the following terms shall have the following meanings:

        1.1  "Closing" shall mean the sale of "Tendered Shares" pursuant to this
Agreement and such other transactions contemplated by this Agreement which shall
take place on the Closing Date at the offices of Wyman, Bautzer, Rothman,
Kuchel & Silbert, 2049 Century Park East, 14th Floor, Los Angeles,
California 90067.

        1.2  "Closing Date" shall mean five business days after the date of the
Notice of Closing, but not later than June 30, 1981.

        1.3  "Note" shall mean the promissory notes, in the form and substance
of Exhibit B attached hereto, in the aggregate principal amount of
$10,544,050.00 to be delivered to each of the Selling Stockholders on the
Closing Date, maturing one year from the Closing Date and bearing interest at
the rate of 14% per annum.

        1.4  "Notice of Closing" shall mean the written notice sent by Reliance
to the Sellers' Agents wherein Reliance acknowledges receipt of all necessary
regulatory approvals and expiration of any applicable waiting periods.

        1.5  "Price Per Share" shall mean the purchase price in the amount of
$15.20 for each of the 1,387,375 shares of the common stock of Zenith to be sold
to Reliance, which price and number of shares reflect adjustment from the
original agreement in principle of the parties hereto for the Stock Split.

        1.6  "Purchase Price" shall mean the aggregate sum of $21,083,100.00
payable as set forth in Paragraph 2.1 by Reliance to the Selling Stockholders
for the Tendered Shares.

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        1.7  "Reliance" shall mean Reliance Insurance Company, a Pennsylvania
corporation, having its principal place of business at 4 Penn Center Plaza,
Philadelphia, Pennsylvania 19103.

        1.8  "Sellers' Agents" shall have the same meaning given to such term in
Article VIII hereof.

        1.9  "Selling Stockholders" shall mean those persons listed in Exhibit A
hereto who own the Tendered Shares and who shall sell the Tendered Shares to
Reliance.

        1.10   "Tendered Shares" shall mean 1,387,375 shares of the common stock
of Zenith owned by the Selling Stockholders, subsequent to the Stock Split.

        1.11   "Zenith" shall mean Zenith National Insurance Corp., a Delaware
corporation, having its principal place of business at 15760 Ventura Boulevard,
Encino, California 91436.

        1.12   "Zenith Stock" shall mean all of the issued and outstanding
shares of the common stock of Zenith as of the Closing Date.

        1.13   "ZIC" shall mean Zenith Insurance Company, a California
corporation and wholly-owned subsidiary of Zenith, having its principal place of
business at 15760 Ventura Boulevard, Encino, California 91436, and any and all
subsidiaries and/or affiliated entities through which it engages in business.

        1.14   "ZIC Stock" shall mean all of the issued and outstanding shares
of the common stock of ZIC as of the Closing Date.

        1.15   "Stock Split" shall mean the five for four Stock Split of the
common stock of Zenith, payable on January 30, 1981 to the shareholders of
record on January 15, 1981.

ARTICLE II
PURCHASE OF ZENITH STOCK

        2.1    Purchase.    On the Closing Date, Reliance shall purchase the
Tendered Shares and shall deliver to the Sellers' Agents:

        (a)  The Purchase Price as follows:

(i)Reliance check in clearing house funds payable to the order of Sellers'
Agents in the amount of $10,544,050.00; and

(ii)Fourteen (14) separate notes, one payable to each Selling Stockholder in the
face amount set forth opposite his name on Exhibit A hereof, for an aggregate
total principal face amount of $10,544,050.00;

        (b)  An Investment Letter in form and substance reasonably satisfactory
to counsel to the Selling Stockholders;

        (c)  An opinion by counsel for Reliance, addressed to Zenith and the
Selling Stockholders setting forth the matters contained in Paragraph 7.5
hereof.

        2.2    Deliveries At Closing.    At the Closing, there shall be
delivered to Reliance the following, in form and substance reasonably
satisfactory to Reliance:

        (a)  Certificates evidencing the Tendered Shares, free and clear of all
liens and encumbrances accompanied by stock powers relating to all of the
Tendered Shares, endorsed in blank by the respective Selling Stockholder with
said signatures guaranteed by commercial banks or member firms of the New York
Stock Exchange;

        (b)  An opinion by counsel for Zenith, and addressed to Reliance,
setting forth the matters contained in Paragraph 6.7 hereof;

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        (c)  An opinion by counsel for the Selling Stockholders, and addressed
to Reliance, setting forth the matters contained in Paragraph 6.6 hereof.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RELIANCE

        Reliance hereby represents and warrants to the Selling Stockholders and
Zenith as follows:

        3.1    Organization and Standing.    Reliance is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, has full power and authority to own its property
and conduct its business substantially as presently conducted by it and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business is sufficiently material to
make such qualification necessary.

        3.2    Corporate Authority.    Reliance has full corporate authority to
execute and perform this Agreement, and this Agreement constitutes a valid and
binding obligation of Reliance, subject, however, to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally. The Board of Directors of Reliance or its
Executive and Finance Committee will have approved this Agreement and the
transactions contemplated herein prior to the Closing Date and will have
authorized the execution and delivery of this Agreement by Reliance. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will have been duly authorized by all requisite
corporate authority of Reliance and will not result in a material violation of
the Articles of Agreement or By-Laws of Reliance or any material agreement by
which it may otherwise be bound or of any law, rule, license, regulation,
judgment, order or decree governing or materially affecting the operation of the
businesses of Reliance.

        3.3    Investigation by Reliance.    Reliance represents and
acknowledges to the Selling Stockholders that they or their agents or
representatives have had the opportunity to make such investigations of the
business, operations and financial conditions of Zenith and ZIC as they have
deemed necessary in connection with the transaction contemplated hereby and that
Reliance, and their representatives and agents, have had as of the Closing Date
full access to the books and records of Zenith and ZIC, and have had
opportunities to make inquiries with respect thereto of said companies'
employees, officers and agents. Reliance represents that in entering into this
transaction, they are not relying upon any representations or warranties made by
the Zenith, ZIC or any of their officers, agents or employees, except for those
expressly set forth in this Agreement. Reliance further represents and
acknowledges that, except as contained in this Agreement, the Selling
Stockholders have made no representations or warranties of any kind of nature
whatsoever with respect to Zenith or ZIC, or as to the value of the Tendered
Shares.

        3.4    Investment.    Reliance represents and warrants that it is
acquiring the Tendered Shares of record and beneficially and for its own account
and not as agent for, or the nominee of, any person, firm, or other entity.
Reliance is acquiring such Tendered Shares without a view to or for resale in
connection with the distribution thereof in violation of the Securities Act of
1933 and the rules and regulations thereunder (the "Act"); provided, however,
that the disposition of Reliance's property shall at all times be and remain
within its control, and provided further that nothing contained herein shall
prevent the disposition of the Tendered Shares by Reliance in a transaction
exempt from the registration provisions of the Act, or in any manner
contemplated by Article IX hereof.

        3.5    Brokerage.    Reliance acknowledges that a total brokerage fee of
$221,980 is payable upon closing to Drexel, Burnham, Lambert, Incorporated.
Reliance agrees to pay 50% of said fee, or $110,990 to said firm. No other
broker or finder has acted directly or indirectly for Reliance in connection
with this Agreement or the transactions contemplated hereby, and no other broker
or finder is entitled to any brokerage or finder's fee or other commission in
respect thereof based in any way on agreements, arrangements as understandings
made by as on behalf of Reliance.

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ARTICLE IV
REPRESENTATIONS OF THE SELLING STOCKHOLDERS

        A.    Each of the Selling Stockholders severally represents and warrants
as follows:

        4.1    Title to the Tendered Shares.    Each of the Selling Stockholders
shall deliver that number of Tendered Shares set forth opposite his name on
Exhibit A, which shares are owned by him, but which shares have not been
registered in accordance with the Act, free and clear of all liens,
encumbrances, and rights of others and has the right, and authority to convey,
or cause to be conveyed, clear title to such shares to Reliance on the Closing
Date and to otherwise perform under this Agreement; and this Agreement
constitutes a valid and binding obligation of each Selling Stockholder, subject,
however, to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally; and each
Selling Stockholder's performance under this Agreement will not conflict with
any law, rule, licence, regulation, judgment, order or decree specifically
applicable to such Selling Stockholder, the Articles of Incorporation or By-Laws
of Zenith, or any agreement entered into by such Selling Stockholder.

        4.2    Tendered Shares.    The Tendered Shares to be delivered to
Reliance at the Closing, will vest in Reliance good title thereto, free and
clear of all liens, charges, encumbrances, equities, claims, litigation and
options of whatever nature.

        4.3    Brokerage.    The Selling Stockholders acknowledge that a total
brokerage fee of $221,890 is payable upon closing to Drexel, Burnham, Lambert,
Incorporated. The Selling Stockholders agree to pay 50% of said fee, or $110,990
to said firm. No other broker or finder has acted directly or indirectly for the
Selling Stockholders, Zenith or any of its subsidiaries or affiliates in
connection with this Agreement or the transactions contemplated hereby, and no
other broker or finder is entitled to any brokerage or finder's fee or other
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Selling Stockholders or Zenith.

        4.4    Investment.    Each Selling Stockholder represents and warrants
that he is acquiring the Note of record and beneficially for his own account and
not as an agent for, or the nominee of, any person, firm, or other entity. Each
Selling Stockholder is acquiring the Note without a view to or for resale in
connection with the distribution thereof in violation of the Act.

        B.    Zenith represents and warrants as follows:

        4.5    Corporate Organization, Authorization, etc.    

        (a)  Zenith is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and ZIC is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and they each have full corporate power and authority
to conduct their businesses as they are now being conducted and to own or lease
the properties and assets they now own or hold under lease and are duly
qualified or licensed to do business and are in good standing as foreign
corporations in each jurisdiction where the nature of its business is
sufficiently material to make such qualification necessary.

        (b)  Zenith has heretofore furnished Reliance with a complete and
correct copy of Zenith's and ZIC's Articles of Incorporation and By-Laws, as
amended to date, certified respectively by the Secretary or an Assistant
Secretary of Zenith and ZIC or the official state custodian of such documents.
Zenith's and ZIC's respective Articles of Incorporation and By-Laws are in full
force and effect, and Zenith and ZIC are not in any material way in violation of
any of the provisions of their respective Articles of Incorporation and By-Laws.

        4.6    Authorized and Outstanding Stock.    The authorized capital stock
of Zenith consists of 10,000,000 shares of common stock of which 5,395,191 are
issued and outstanding immediately prior to the Stock Split and 1,000,000 shares
of preferred stock of which none are issued and outstanding; the

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authorized capital stock of Zenith Insurance Company consists of 20,000 shares
of common stock of which all are issued and outstanding and 20,000 shares of
preferred stock of which none are issued and outstanding. All of said
outstanding stock is validly issued, fully paid and non-assessable. Except for
the shares issued pursuant to the Stock Split, and not to exceed 160,000 shares
to be issued pursuant to existing stock option and appreciation plans neither
Zenith nor ZIC has outstanding; nor is bound by, any other subscriptions,
options, warrants, rights, calls, convertible securities, commitments or
agreements to issue any additional shares of their capital stock, including any
right of conversion or exchange under any outstanding security or other
instrument, and no other shares of Zenith Stock or ZIC Stock were reserved for
any purpose. There are no unsatisfied pre-emptive rights in respect of the
Zenith Stock.

        4.7    Consents and Approvals of Governmental Authorities.    No
characteristic of Zenith or ZIC or of the nature of its or their businesses or
operations requires any consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby except as provided herein.

        4.8    No Violation as to Zenith.    The consummation of the
transactions contemplated herein will not constitute or result in a breach of
any material term, condition or provision of, or constitute a material default
under, or result in the creation of any lien, charge or encumbrance upon a
material amount of the property or assets of Zenith or ZIC pursuant to or any
charter instrument, By-law, agreement or other instrument to which Zenith or ZIC
is a party or by which a material amount of their property is bound, or violate
any law, regulation, judgment, order or decree binding upon any of them, the
violation of which would result in a material adverse effect upon Zenith or ZIC
nor will the same result in the loss of any license, certificate, legal
privilege or legal right which is enjoyed or possessed by Zenith or ZIC, and
which is material to the operation of Zenith or ZIC, give any party to any
material agreement to which any of them is a party the right of termination or
give any lender or noteholder, or any trustee for any lender or noteholder, any
right to accelerate the maturity of any material indebtedness as to which Zenith
or ZIC is the direct or indirect obligor, or to claim any material default or
breach with respect thereto.

ARTICLE V
COVENANTS

        5.1    Affirmative Covenants.    During the period between the date of
this Agreement and the Closing Date, each Selling Stockholder will use his best
efforts, to cause Zenith and ZIC to:

        (a)  Access to Information.    Upon reasonable notice, afford
representatives of Reliance reasonable access to the personnel, properties,
business records and work papers of Zenith and ZIC including financial records
and reports and audit reports, in order that Reliance may have full opportunity
to make such investigation as it shall desire of the affairs of Zenith and ZIC.
Reliance shall treat as confidential all information obtained by it in the
course of such investigation and regardless of whether this Agreement is
terminated prior to the Closing Date or consummated, Reliance shall not use in
its business or disclose to others any of such information, except that which
has been publicly disclosed by any Selling Stockholder, Zenith or ZIC or which
has come into the public domain by action other than that of Reliance. In the
event the transaction contemplated hereby is not closed, Reliance agrees to
return all copies of such information obtained by it during its investigation to
Zenith.

        (b)  Compliance with Closing Conditions.    Comply with the respective
closing conditions to be performed on their parts.

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        5.2    Election of Directors.    Subsequent to and surviving the
Closing, the Selling Stockholders shall use their best efforts to expand the
Boards of Directors of Zenith and ZIC from five to eight directors and to cause
(and to continue to cause, (for so long as Reliance shall own at least 10% of
the issued and outstanding common stock of Zenith) the election of three
qualified individuals designated by Reliance from time to time to the Boards of
Directors of Zenith and ZIC.

ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF RELIANCE

        The obligation of Reliance to close the transaction contemplated hereby
is subject to the conditions that, on or before the Closing Date:

        6.1    Representations and Warranties True at Closing.    The
representations and warranties of the Selling Stockholders and Zenith contained
in this Agreement or in any certificate or document delivered pursuant to the
provisions hereof in connection with the transactions contemplated hereby, shall
be true and correct in all material respects on and as of the Closing Date as
though such representations and warranties were made at and as of such date
except as otherwise contemplated herein.

        6.2    Compliance With Agreement.    Each of the Selling Stockholders
and Zenith shall have performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed and
complied with by them prior to or at the Closing.

        6.3    Approval of Proceedings.    All actions, proceedings, instruments
and documents required to carry out this Agreement, or incidental thereto, and
any other related legal matters shall have been approved by Vincent Vaccarello,
Esq., counsel for Reliance, which approval shall not be unreasonably withheld.

        6.4    Investigation.    An investigation on the part of Reliance or its
representatives of the personnel, books, records and work papers of Zenith or
ZIC shall not have disclosed any inaccuracies in (a) any of such information
and/or data, (b) the consolidated balance sheets and consolidated statements of
income, (c) any representation or warranty to the Selling Stockholders and
Zenith, or (d) any other data supplied pursuant to this Agreement, which, in the
aggregate, materially and adversely affects the financial condition, assets or
results of operations of Zenith or ZIC as at the dates or for the periods
reported upon in such statements.

        6.5    Injunction.    On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction or an administrative agency
directing that the transactions provided for herein or any of them not be
consummated as herein provided.

        6.6    Opinion of Counsel.    The Selling Stockholders shall have
delivered to Reliance an opinion dated as of the Closing Date from counsel to
the Selling Stockholders, in form reasonably acceptable to Reliance, to the
effect that, after such inquiry regarding relevant facts as counsel deems
necessary:

        (a)  There are presently no existing restrictions in the Articles of
Incorporation and all amendments thereto or in the By-Laws, Minutes, or stock
certificates of Zenith or ZIC, or any stockholders agreements of which counsel
is aware or any laws, which have not been complied with limiting the right or
power of the parties obligated hereunder to transfer the Tendered Shares to
Reliance as called for by this Agreement;

        (b)  Counsel is unaware of any acts of any Selling Stockholder which
adversely affects the title of Reliance to the Tendered Shares;

        (c)  There are no limitations known to counsel upon the power and
authority of each Selling Stockholder to carry out the terms, conditions and
provisions of this Agreement.

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        6.7    Opinion of Counsel.    Zenith shall have delivered to Reliance an
opinion dated as of the Closing Date from counsel to Zenith, in form reasonably
acceptable to Reliance, to the effect that:

        (a)  Zenith and ZIC are each corporations duly organized, validly
existing and in good standing under the laws of the states of their respective
incorporations, and have full corporate power and authority to conduct their
businesses substantially as they are now being conducted and to own or lease the
properties and assets they now own or hold under lease, and are duly qualified
or licensed to do business and are in good standing as foreign corporations in
each jurisdiction where the nature of their business is sufficiently material to
make such qualification necessary.

        (b)  As of the Closing Date, the authorized capital stock of Zenith
consists of 10,000,000 shares of common stock of which, should all existing
option rights be exercised, 6,902,224 shares will be issued and outstanding and
1,000,000 shares of preferred stock of which none are issued and outstanding,
the authorized capital stock of Zenith Insurance Company consists of 20,000
shares of common stock, all of which are owned by Zenith, and 20,000 shares of
unissued preferred stock; all outstanding shares of stock of both Zenith and
Zenith Insurance Company have been validly issued, fully paid, and are non
assessable.

        (c)  There are presently no existing restrictions in the Articles of
Incorporation and all amendments thereto or in the By-Laws of Zenith or ZIC, or
any stockholders' agreements of which such counsel is aware, after due and
appropriate inquiry, limiting the right or power of the parties obligated
hereunder to transfer the Tendered Shares to Reliance.

        (d)  Counsel, after such inquiry regarding relevant facts as counsel
deems necessary, is unaware of any acts of Zenith or ZIC which adversely affects
the title of Reliance to the Tendered Shares;

        (e)  Except as provided herein, Counsel, after such inquiry regarding
relevant facts as counsel deems necessary, knows of no outstanding options,
warrants, rights or privileges, contractual or otherwise, to acquire any shares
of Zenith or ZIC common or preferred stock from said companies;

        (f)    To the best of such Counsel's knowledge, after such inquiry
regarding relevant facts as counsel deems necessary, there is no litigation
pending, threatened or in prospect against Zenith or ZIC relating to the
Tendered Shares or the consummation of this transaction.

        6.8    Regulatory Approvals.    The transaction contemplated hereby
shall be approved by all necessary regulatory authorities, including but not
limited to the California Insurance Commissioner pursuant to an order of
exemption or disclaimer of control, and the waiting period required by the
Hart-Scott-Rodino Act shall have expired and no other Federal Trade Commission
approvals shall be required. Reliance will deliver the Notice of Closing
promptly upon fulfillment of these conditions.

        6.9    Resolutions and Zenith's Certificate.    Zenith shall have
delivered to Reliance copies of the resolutions of its Board of Directors
authorizing the transaction contemplated herein, with such resolutions to be
certified to be true and correct by the Secretary of Zenith.

ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF SELLING STOCKHOLDERS

        The obligations of the Selling Stockholders to deliver the Tendered
Shares hereunder are subject to the conditions that, on or before the Closing
Date:

        7.1    Representations and Warranties True at Closing.    The
representations and warranties of Reliance contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof or in
connection with the transactions contemplated hereby shall be true and correct

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in all material respects on and as of the Closing Date as though such
representations and warranties were made at and as of such date, except as
otherwise contemplated herein.

        7.2    Reliance's Compliance with Agreement.    Reliance shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed and complied with by it
prior to or at the Closing.

        7.3    Resolutions and Reliance's Certificate.    Reliance shall have
delivered to Sellers' Agents copies of the resolution of its Board of Directors
or its Executive and Finance Committee authorizing the transactions contemplated
herein, with such resolutions to be certified to be true and correct by the
Secretary of Reliance.

        7.4    Approval of Proceedings.    All actions, proceedings,
instruments, and documents required to carry out this Agreement, or incidental
thereto, and to other related legal matters shall have been approved by counsel
for the Selling Stockholders, which approval shall not be unreasonably withheld.

        7.5    Injunction.    On the Closing Date, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction or an administrative agency
directing that the transactions provided for herein or any of them not be
consummated as herein provided.

        7.6    Opinion of Reliance's Counsel.    Reliance shall have delivered
to Sellers' Agent the opinion of Vincent Vaccarello, Esq., its Counsel, to the
effect that:

        (a)  Reliance is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania;

        (b)  All corporate and other proceedings required to be taken by or on
the part of Reliance to authorize it to carry out this Agreement have been duly
and properly taken and this Agreement constitutes the valid and binding
obligation of Reliance;

        (c)  The execution and performance by Reliance of this Agreement does
not violate any provisions of the Articles of Agreement or By-Laws of Reliance
or any material agreement of which he is aware, after such inquiry regarding
relevant facts as he deems necessary, by which it may otherwise be bound or of
any law, rule, license regulation, judgment order or decree governing or
affecting the operation of the businesses of Reliance;

        (d)  All governmental and regulatory approvals necessary hereunder or by
reason of the nature of the business of Reliance have been obtained;

        (e)  The Note, upon delivery at Closing, will be the valid and binding
obligation of Reliance, enforceable in accordance with its terms, subject,
however, to the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally.

        7.7    Regulatory Approvals.    The transaction contemplated hereby
shall be approved by all necessary regulatory authorities, including but not
limited to the California Insurance Commissioner pursuant to an order of
exemption or disclaimer of control, and the waiting period required by the
Hart-Scott-Rodino Act shall have expired and no other Federal Trade Commission
approvals shall be required.

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ARTICLE VIII
SELLERS AGENTS

        8.1    Appointment.    Selling Stockholders do, and each of them does,
hereby irrevocably constitute and appoint Eugene V. Klein, Daniel Schwartz and
Harvey L. Silbert as their agents (herein called the "Sellers' Agents") to
perform, on their behalf and on behalf of each of them, all acts which, by the
provisions of this Agreement are to be performed by the Sellers' Agents; to
approve and initial on behalf of the Selling Stockholders any interlineations
and insertions appearing in this Agreement; to represent them and each of them
at the Closing; to execute and deliver on their behalf and on behalf of each of
them such documents, as they, in their sole judgment, shall deem to be necessary
or advisable in their interest; to execute and give or perform on their behalf
and on behalf of each of them all notices, requests, consents and other
communications and actions required or permitted to be given or performed by him
or by the Selling Stockholders or any of them hereunder and to receive on their
behalf and on behalf of each of them all notices, requests, consents and other
communications and actions required or permitted to be given or performed by
them or by the Selling Stockholders or any of them hereunder prior to Closing;
to waive in writing on their behalf and on behalf of each of them any one or
more conditions stated in Article VII hereof; to receive on their behalf and on
behalf of each of them monies delivered out of the Purchase Price at Closing, to
be the named payee of the Note to be delivered at Closing, and to distribute the
Purchase Price among the Selling Stockholders as their interests may appear; to
expend on behalf of the Selling Stockholders or each or any of them in the
carrying out of any of their powers or duties hereunder such sums as they, in
their sole judgment, shall deem necessary or advisable in their interest (and
each Selling Stockholder hereby agrees promptly to pay the Sellers' Agents such
Selling Stockholder's pro rata share of such expenses); provided, however, that
no material amendment of any of the terms of any provision of this Agreement or
any exhibit hereto, any change in the number of Tendered Shares, the Purchase
Price, the payment terms, or any increase in the liability of any Selling
Stockholder or reduction of the pro-rata share of the Purchase Price to be
received hereunder by each Selling Stockholder for the Tendered Shares, shall be
binding on any Selling Stockholder who does not specifically agree thereto in
writing.

        8.2    Successors.    Upon the death, incapacity, disability or
resignation of any one of said Agents, then and forthwith the Selling
Stockholders, for themselves and for their then respective heirs, executors,
administrators, successors and assigns, do hereby agree to, and each of them
does hereby irrevocably constitute and appoint the surviving two of them, if
then living and physically and mentally able and willing so to act, or upon the
subsequent death, incapacity, disability or resignation of the second one of
them, then and forthwith the Selling Stockholders for themselves and for their
then respective heirs, executors, administrators, successors and assigns, do
hereby agree to, and each of them does hereby, irrevocably constitute and
appoint the sole survivor of them as successor Sellers' Agent. Each such
successor Sellers' Agent shall have and exercise all of the same powers with
full force and effect as set forth in the foregoing Paragraph 8.1 and, in
addition, authority to notify Reliance of his succession to the position of
Sellers' Agent.

        8.3    Disclaimer.    The Sellers' Agents and their successors shall be
the representative of the Selling Stockholders only, and Reliance shall not be
responsible or liable for any of his or their acts or omissions.

9

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ARTICLE IX
REGISTRATION RIGHTS

        Reliance and Zenith agree:

        9.1    Registration Request by Reliance.    

        (a)  From and after the Closing Date, Reliance may deliver a written
request to Zenith with copies being delivered at the same time to each of the
Selling Stockholders, which request shall state (i) the aggregate number of
shares of Zenith Stock which are proposed to be sold in a public offering, (ii)
whether such shares will be disposed of through an underwriter (an "Underwritten
Offering") or otherwise, and (iii) shall request that Zenith effect a
registration under the Act, of (x) all or part of the shares of Zenith Stock
then owned by Reliance, whether or not such shares were Tendered Shares, and (y)
such shares of Zenith Stock which the Selling Stockholders request to be
registered pursuant to subsection (b) below. Upon receipt of such request,
Zenith will promptly use its best effort to effect the registration (the
"Registration") under the ILLEGIBLE of the shares of Zenith Stock which Zenith
has been so requested to register for disposition, and any shares held by
Selling Stockholders to be registered as provided in subsection (b) below, all
to the extent requested so as to permit the disposition (in accordance with the
intended methods thereof as aforesaid) by Reliance or any Selling Stockholder,
of the shares of the Zenith Stock so to be registered.

        If Reliance requests an Underwritten Offering, Zenith shall enter into
an agreement with a managing underwriter selected by Reliance and named in such
request and with such other underwriters as Reliance shall from time to time
name, which agreement shall contain terms customary for a secondary
distribution. Zenith shall have the right to approve any and all underwriters
selected by Reliance, which approvals shall not be unreasonably withheld.

        For the purposes of this Article IX, Zenith Stock shall also mean shares
of common stock of Zenith which become outstanding after the Closing, and
securities issued in respect of the shares of Zenith Stock.

        (b)  Within ten (10) days of the mailing of the notice referred to in
subsection (a) above, any Selling Stockholder may provide written notice to
Reliance and Zenith stating that such Selling Stockholder wishes to participate
in the Registration (a "Participating Selling Stockholder"), and further stating
the number of shares of Zenith Stock then held by such Participating Selling
Stockholder which ILLEGIBLE to be included in the Registration, and such number
of shares will be so included; provided, however, that if the managing
underwriter for an Underwritten Offering notifies Reliance that it is able to
dispose of fewer shares of Zenith Stock that the aggregate number which
Participating Selling Stockholders and/or Reliance have requested to be
registered (such difference to be referred to as the "Undisposed Shares"), then
the number of shares of Zenith Stock to be registered on behalf of each
Participating Selling Stockholder and Reliance shall be reduced by a number
calculated pursuant to the following formula: multiply the number of Undisposed
Shares times the percentage obtained by dividing (i) the number of shares of
Zenith Stock which such Participating Selling Stockholder or Reliance has
requested to be registered by (ii) the total number of shares of Zenith Stock
requested to be registered by all Participating Selling Stockholders and
Reliance.

        (c)  Reliance may make the request for the Registration only once;
provided, however, that in the event that an Underwritten Offering results in
Undisposed Shares, then, Reliance may subsequently request a Registration
pursuant to subsection (a) one or (to the extent that subsequent notice or
notices are of Underwritten Offerings which resulted in Undisposed Shares) more
additional times, to the extent necessary to register on behalf of Reliance that
number of shares of Zenith Stock equal to Reliance's portion of the Undisposed
Shares (as determined by the

10

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formula set forth in subsection (b) above)—which resulted from the first
Registration. In the event of additional Registration as provided in the
preceding sentence, Reliance may request registration of shares in excess of its
portion of the Undisposed Shares, provided, however, that the inability to
register such shares in excess of the Undisposed Shares shall not give rise to
additional Undisposed Shares for the purpose of determining whether Reliance
will again be entitled to request Registration pursuant to subsection (b) above.
Selling Stockholders may participate in subsequent Registrations referred to in
this subsection (c) under the same terms and conditions as provided in Sections
9.1, 9.3, 9.4 and 9.5 of this Agreement.

        9.2    Registration of Shares by Zenith.    

        (a)  If Zenith proposes to register on a general form for registration
(e.g., S-1, S-7, S-16) under the Act a sale, disposition or transfer by Zenith
or any other person of any securities (otherwise than pursuant to Section 9.1 of
this Agreement) it will at each such time give written notice to Reliance and
the Selling Stockholders of its intention to do so and, upon the written request
of Reliance and/or any of the Selling Stockholders (also a "Participating
Selling Stockholder") given within ten (10) days after mailing of any such
notice (which request of each such entity shall specify the number of shares of
Zenith Stock, intended to be sold or disposed of by each such entity and
describe the nature of any proposed sale or other disposition thereof), Zenith
will use its best efforts to cause all such Zenith Stock to be registered under
the Act to the extent requisite to permit the sale or other disposition, in
accordance with the method described in the notice; provided, however, that
Reliance and the Selling Stockholders shall have no right to participate in any
Underwritten Offering by Zenith in connection with shares of Zenith Stock to be
registered pursuant to this Section 9.2, notwithstanding their rights to have
shares registered pursuant to such Section; provided further, that Zenith may
require Reliance and the Selling Stockholders to agree not to sell or otherwise
dispose of such shares pursuant to the registration statement for a period not
exceeding 90 days after the closing of the sale of Zenith Stock to an
underwriter (the "Waiting Period") to the extent that the managing underwriter
of the proposed public offering of securities for which the registration
statement was to be filed delivers to Reliance and the Selling Stockholders a
letter stating that such sales or other disposition within such Waiting Period
could materially and adversely affect such public offering. In the event of a
disagreement in good faith between the parties hereto and the managing
underwriter as to the length of the Waiting Period or any other matters relating
to a Registration pursuant to this Article IX, the decision of Mr. Mike Milken,
or any other mutually agreed upon third party, shall control.

        9.3    Certain Obligations Regarding Registration.    

        (a)  If and whenever Zenith is required to use its best efforts to
effect the Registration of any shares of Zenith Stock under the Act as provided
above in Sections 9.1 and 9.2, Zenith will promptly:

(i)prepare and, within sixty (60) days of the date such request was made,
(provided that Zenith shall use its best efforts to file such registration
statement as soon as possible), file with the Securities and Exchange Commission
(the "Commission") a registration statement (on any form that is available to
Zenith and usable by Reliance or the Participating Selling Stockholders in
connection with such Registration) with respect to such shares of Zenith Stock
and use its best efforts to cause such registration statement to become
effective;

(ii)afford to the officers and authorized representatives of Reliance reasonable
access to Zenith's and its subsidiaries' plants, properties, books and records
and its and their principal officers in order that Reliance may have full
opportunity to make a reasonable investigation of the statements made in any
such registration statement;

11

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(iii)prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Act with respect to the disposition of all shares of
Zenith Stock covered by such registration statement until such time as all of
such shares of Zenith Stock have been disposed of in accordance with the
intended methods of disposition by Reliance or any Participating Selling
Stockholder set forth in such registration statement but in no event for a
period of more than nine (9) months after such registration becomes effective;

(iv)furnish to Reliance and the Participating Selling Stockholders such number
of copies such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Act, and such other
documents, as Reliance or any Participating Selling Stockholder may reasonably
request in order to facilitate the disposition of the shares of Zenith Stock
owned by Reliance or any Participating Selling Stockholder;

(v)use its best efforts to register or qualify the shares of Zenith Stock
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States as Reliance or any
Participating Selling Stockholder shall reasonably request, except that Zenith
shall not for any such purpose be required to qualify generally to do business
as a foreign corporation or any jurisdiction wherein it is not so qualified, to
subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction; and

(vi)notify Reliance and any Participating Selling Stockholder at any time when a
prospectus relating thereto is required to be delivered under the Act within the
period mentioned in paragraph (a)(iii) of this Section 9.3 of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statement therein not misleading in light of the circumstances then
existing, and at the request of Reliance, prepare and furnish to Reliance and
any Participating Selling Stockholder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.

        (b)  In connection with any Registration pursuant to Sections 9.1 and
9.2 of this Agreement, Zenith may require Reliance and any Participating Selling
Stockholder, and Reliance and such Participating Selling Stockholders each
agree:

(i)to furnish Zenith such information regarding itself and the distribution of
the shares of Zenith Stock as to which a registration is being effected as
Zenith may from time to time reasonably request in writing and as shall be
required by law in connection therewith.

(ii)in the event of a Registration pursuant to Section 9.2 of this Agreement, to
cooperate with Zenith and enter into such agreements and take such actions as
may be reasonably requested by Zenith.

        9.4    Registration Expenses    

        (a)  For purposes of this Article IX, Registration Expenses shall
include all expenses incident to Zenith's performance of or compliance with this
Article IX including, without limitation, all

12

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registration and filling fees, all fees and expenses of complying with
securities or blue sky laws, all registration and other incidental expenses in
connection with the registration of the Zenith Stock under the Act, all printing
expenses, the fees and disbursements of counsel for Zenith and of Zenith's
independent certified public accountants, and the expenses of any special audits
required by or incident to such performance and compliance (but excluding
selling expenses, underwriting discounts and commissions and transfer taxes, if
any).

        (b)  In the event of a Registration pursuant to Section 9.1 of this
Agreement, Reliance and any Participating Selling Stockholders shall pay all
Registration Expenses other than those expenses and costs which would have been
incurred by Zenith notwithstanding such request and other than those
Registration Expenses and costs attributable to the overhead of Zenith or any of
its subsidiaries or the compensation of any employee thereof. Such expenses
shall be allocated among Reliance and each Participating Selling Stockholder
pursuant to the following formula; multiply the total of such Registration
Expenses times the percentage obtained by dividing (i) the number of shares
registered on behalf of such Participating Selling Stockholder or Reliance by
(ii) the total number of shares registered on behalf of all Participating
Selling Stockholders and Reliance.

        (c)  Reliance and the Selling Stockholders shall not be required to pay
any Registration Expenses in connection with a registration pursuant to
Section 9.2 of this Agreement except for legal or selling expenses directly
incurred by each such person.

        9.5    Indemnification    

        (a)  In the event of any registration of the Zenith Stock pursuant to
this Article IX, Zenith will indemnify and hold harmless the seller of such
Zenith Stock and each underwriter of such Zenith Stock and each other person, if
any, who controls such seller or underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several, to which
such seller or underwriter or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto (including any material incorporated by
reference into such registration statement, any such preliminary prospectus,
final prospectus or any amendment or supplement thereto, but excluding any item
in a preliminary prospectus which is corrected in the final prospectus), or
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and Zenith will, pursuant to the provisions of subsection (c) of this section,
reimburse such seller and each such underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided that Zenith shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to Zenith by such seller, underwriter or
controlling person specifically for use in preparation thereof.

        (b)  Zenith may require, as a condition to including any Zenith Stock in
any registration statement filed pursuant to this Article IX, that Zenith shall
have received an undertaking satisfactory to it from the prospective seller of
such Zenith Stock, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 9.5(a)) Zenith, each director of Zenith,
each officer of Zenith who shall sign such registration statement and each
underwriter of such Zenith Stock and each other person, if any, who controls
Zenith Shares or such underwriter within the meaning of the Act, from any
losses, claims, damages or liabilities, joint or several, to

13

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which Zenith, such directors or officers of Zenith or such underwriter or
controlling person may become subject under the Act or otherwise insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to Zenith by such seller,
underwriter or controlling person specifically for use in preparation thereof.

        (c)  Within sixty (60) days after receipt by an indemnified party of
notice of either a claim or the commencement of any action involving a claim
referred to in the preceding paragraphs of this Section 9.5 such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action; the
failure of any indemnified party to give notice as provided herein shall relieve
the indemnifying party of its obligations under the preceding paragraphs of this
Section 9.5, except where it can be established that the indemnifying party had
prior actual notice of such claim or action. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation.

ARTICLE X
MISCELLANEOUS

        10.1    Expenses.    Whether or not this Agreement closes, the parties
shall pay their own respective expenses, including, without limitation, the
fees, disbursements and expenses of their attorneys, accountants, and investment
advisors, in connection with the negotiation and preparation of this Agreement
and the consummation of transactions contemplated by it. Notwithstanding the
foregoing, the Selling Stockholders shall pay or cause to be paid any sales,
use, stock transfer or similar taxes which become payable as a direct result of
the consummation of the transactions contemplated hereby.

        10.2    Jurisdiction.    This Agreement is made with reference to and is
intended to be construed in accordance with the laws of the State of Delaware.

14

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        10.3    Notices.    All notices, requests, consents, demands, approvals,
and other documents, instruments or communications required or which may be
given under this Agreement shall be in writing and shall be deemed to have been
duly given either at the time of delivery if personally delivered or forty-eight
(48) hours after the time of mailing, if mailed first class, postage prepaid,
and addressed:

If to Reliance:   William A. Pollard
Reliance Insurance Company
4 Penn Center Plaza
Philadelphia, PA 19103
 
 
  With a copy to:   Vincent Vaccarello, Esq.
Reliance Insurance Company
4 Penn Center Plaza
Philadelphia, PA 19103
 
 
  If to Selling Stockholders and Sellers' Agents to:   Each of them at their
respective addresses as set forth on Exhibit A.
 
 
  With a copy to:   Wyman, Bautzer, Rothman, Kuchel & Silbert
2049 Century Park East
14th Floor
Los Angeles, California 90067
Attn: Stephen D. Silbert

or to any other address or addresses as shall be designated from time to time as
the parties direct.

        10.4    Waiver and Modification.    This Agreement may not be amended,
modified, superseded, or cancelled, and none of the terms, covenants,
representations, warranties, or conditions may be waived, except by all the
parties hereto, or in the case of waiver, by the party or parties waiving
compliance; provided that the Sellers' Agents may act on behalf of the Selling
Stockholders to the extent they are so authorized under Section 8.1 hereof. The
failure of any party at any time or times to require strict performance of any
provision hereof shall not in any manner affect the right of such party at a
later time to enforce the same. No waiver by any party of the breach of any
term, covenant, representation, or warranty contained in this Agreement as a
condition to such party's obligations hereunder shall release or affect any
liability resulting from such breach. No waiver of any nature, whether by
conduct, course of dealing or otherwise, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach or as a waiver of any other condition or of any other breach
of any other term, covenant, representation, or warranty of this Agreement.

        Any failure of the parties to comply with any obligation, covenant,
agreement or condition herein may be expressly waived to the extent permitted
under applicable law, in writing, if by Reliance, by the Chairman of the Board,
President, Corporate Executive Vice President, or any Corporate Senior Vice
President, thereof, and if by the Selling Stockholders, by the Sellers' Agents.

        10.5    Successors in Interest.    This Agreement shall be binding upon
and inure to the benefit of heirs, assigns, distributees, legatees,
beneficiaries, successors, and transferees of the parties.

        10.6    Entire Agreement.    Except as otherwise provided in this
Agreement, this Agreement contains the entire agreement between the parties with
respect to its subject matter. There are no representations, warranties,
understandings, or agreement other than those expressly set forth herein.

        10.7    Other Documents.    The Exhibits annexed to this Agreement and
the documents and instruments delivered at the time or prior to the execution of
this Agreement and delivered on or prior to the Closing Date are expressly made
a part of this Agreement as fully as though completely set forth in it.

15

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        10.8    Severability.    If any part, term, provision, paragraph, or
section or this Agreement is held to be illegal or in conflict with state or
federal law, the remaining portions, provisions, and section shall continue in
full force and effect.

        10.9    Captions.    The respective captions of the sections and
paragraphs of this Agreement are inserted for convenience or reference only and
shall not be deemed to modify or otherwise affect in any respect any of the
provisions of this Agreement.

        10.10    Execution by Counterpart.    This Agreement may be executed
separately or independently in any number of counterparts, each and all of which
together shall be deemed to have been executed simultaneously and for all
purposes to be one agreement.

        10.11    Additional Documents.    Before and after the Closing Date,
each of the Selling Stockholders shall execute, or cause to be executed, and
deliver to Reliance, without additional consideration, such further instruments
and take such other action as Reliance may reasonably request for purposes of
conveying and transferring more effectively the Tendered Shares and to carry out
the provisions of this Agreement.

        10.12    Press Releases.    No press releases regarding the transactions
contemplated by this Agreement shall be issued by any party hereto without the
mutual prior consent of Reliance and the Sellers' Agents, except that in the
event that the parties are unable to agree on a press release and legal counsel
for one party is of the opinion that such press release is required by law, then
such party may issue the legally required press release.

        Dated as of the date first written above.

 
 
 
 
  ATTEST:   RELIANCE INSURANCE COMPANY
 
 
 
 
  /s/  ILLEGIBLE         By:   /s/  MICHAEL T. HOLLAND      

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

     

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

 
 
 
 
  ATTEST:   ZENITH NATIONAL INSURANCE CORP.
 
 
 
 
  /s/  ILLEGIBLE         By:   /s/  STANLEY ZAX      

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

     

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

Senior Vice Pres., Treasurer       Chairman

       

 
 
  WITNESS:   SELLING STOCKHOLDERS:
 
 
  /s/  ILLEGIBLE         /s/  FRANK ROTHMAN      

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

 

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

    Frank Rothman
 
 
  /s/  ILLEGIBLE         /s/  JACK M. OSTROW      

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

 

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

    Jack M. Ostrow

16

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  /s/  ILLEGIBLE         /s/  STANLEY R. ZAX      

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

 

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

    Stanley R. Zax
 
 
  /s/  ILLEGIBLE         /s/  EUGENE V. KLEIN      

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

 

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

    Eugene V. Klein
 
 
  /s/  ILLEGIBLE         /s/  JOYCE F. KLEIN      

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

 

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

    Joyce F. Klein
 
 
  /s/  ILLEGIBLE         /s/  MICHAEL KLEIN      

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

 

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

    Michael Klein
 
 
  /s/  ILLEGIBLE         /s/  RANDEE C. HAWKINS      

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

 

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

    Randee C. Hawkins
 
 
  /s/  ILLEGIBLE         /s/  STEVE LAWRENCE      

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

 

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

    Steve Lawrence, Co-Trustee of the Lawrence Family Trust under Agreement
dated April 16, 1980.
 
 
  /s/  ILLEGIBLE         /s/  EYDIE GORME LAWRENCE      

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

 

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

    Eydie Gorme Lawrence, Co-Trustee of the Lawrence Family Trust under
Agreement dated April 16, 1980.
 
 
  /s/  ILLEGIBLE         /s/  HARVEY L. SILBERT      

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

 

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

    Harvey L. Silbert
 
 
  /s/  ILLEGIBLE         /s/  HARVEY L. SILBERT      

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

 

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

    Harvey L. Silbert, Trustee u/w
Harry A. Goldman, Deceased

17

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  /s/  ILLEGIBLE         /s/  DANIEL SCHWARTZ      

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

 

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

    Daniel Schwartz
 
 
  /s/  ILLEGIBLE         /s/  DANIEL SCHWARTZ      

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

 

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

    Daniel Schwartz, as Trustee of Robert Schwartz Trust
 
 
  /s/  ILLEGIBLE         /s/  DANIEL SCHWARTZ      

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

 

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

    Daniel Schwartz, as Trustee of Joan Schwartz Trust
 
 
  /s/  ILLEGIBLE         /s/  DANIEL SCHWARTZ      

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

 

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

    Daniel Schwartz, as Trustee of Sallie Schwartz Trust

18

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EXHIBIT A

Selling Stockholder

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

  Number of
Tendered Shares

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

  Principal Face
Amount of Note

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

Frank Rothman
2049 Century Party East
14th Floor
Los Angeles, California 90067   31,250   $ 237,500.00
Jack M. Ostrow
9601 Wilshire Boulevard
Beverly Hills, California 90210
 
25,000
 
$
190,000.00
Stanley R. Zax
15760 Ventura Blvd.
Encino, California 91436
 
24,875
 
$
189,050.00
Eugene V. Klein
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
186,459
 
$
1,417,088.40
Joyce F. Klein
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
186,459
 
$
1,417,088.40
Michael Klein
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
31,250
 
$
237,500.00
Randee C. Hawkins
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
31,250
 
$
237,500.00
Steve Lawrence and Eydie Gorme Lawrence,
Trustees of the Lawrence Family Trust
under agreement dated April 16, 1980
820 Greenway Drive
Beverly Hills, California 90210
 
62,500
 
$
475,000.00
Harvey L. Silbert
2049 Century Park East
14th Floor
Los Angeles, California 90067
 
247,916
 
$
1,884,161.60
Harvey L. Silbert, Trustee u/w
Harry A. Goldman, Deceased
2049 Century Park East
14th Floor
Los Angeles, California 90067
 
125,000
 
$
950,000.00
Daniel Schwartz
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
310,416
 
$
2,359,161.60
Daniel Schwartz, as Trustee of
Robert Schwartz Trust
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
62,500
 
$
475,000.00
Daniel Schwartz, as Trustee of
Joan Schwartz Trust
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
31,250
 
$
237,500.00
Daniel Schwartz, as Trustee of
Sallie Schwartz Trust
6330 San Vincente Blvd., Suite 500
Los Angeles, California 90048
 
31,250
 
$
237,500.00    

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

 

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

 
Total
 
1,387,375
 
$
10,544,050.00

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

EXHIBIT B

PROMISSORY NOTE

THIS NOTE HAS BEEN ACQUIRED BY THE PAYEE FOR INVESTMENT PURPOSES ONLY AND NOT
WITH A VIEW TO THE RESALE OR OTHER DISTRIBUTION THEREOF. THE NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED
WITHOUT REGISTRATION UNDER SUCH ACT OR WITHOUT THE OPINION OF LEGAL COUNSEL OF
RELIANCE INSURANCE COMPANY AS TO THE AVAILABILITY OF AN EXEMPTION THEREFROM.

[amount from Exhibit A]   Philadelphia, Pennsylvania     [Closing Date] , 1981  
 

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        One year form the date hereof FOR VALUE RECEIVED, Reliance Insurance
Company, a Pennsylvania corporation, promises to pay to the order of [Selling
Stockholder], in lawful money of the United States of America, the principal
amount of [amount from Exhibit A] Dollars. Interest on said principal at the
rate of Fourteen (14%) percent per annum from the date hereof, shall be paid
with principal. If interest is not paid when due it shall bear like interest as
the principal.

        If the full amount of principal and interest due under this note is not
paid when due, the undersigned promises to pay in additional, reasonable
attorneys' fees necessarily incurred thereby irrespective of whether suit is
commenced hereon.

    RELIANCE INSURANCE COMPANY
 
 
 
      By:        

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