<PAGE>
                                                                    EXHIBIT 10.1

                              INVESTMENT AGREEMENT

THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of January 8, 2004, is
made by and between HAMBLIN WATSA INVESTMENT COUNSEL LTD. ("HW"), FAIRFAX
FINANCIAL HOLDINGS LIMITED ("FFH") and CRUM AND FORSTER INSURANCE COMPANY. As
used in this Agreement, "we", "us" and "our" shall refer to CRUM AND FORSTER
INSURANCE COMPANY, and "you" and "your" shall refer to HW and FFH jointly.

In consideration of the mutual promised contained herein, the parties agree as
follows:

Investment Management

1.       We authorize HW to manage on a continuous basis an investment account
         (the "Account") on our behalf on the terms and conditions set out in
         this Agreement.

2.       HW shall manage the Account in accordance with the investment
         objectives from time to time communicated in writing by us to HW,
         subject at all times to the investment guidelines. Until mutually
         agreed otherwise, the investment guidelines shall be as set out in the
         investment guidelines attached hereto as Schedule A. The investment
         guidelines shall at all times be in compliance with the investment
         statutes of New Jersey.

3.       Subject to Section 2 above, HW shall manage the Account in our name and
         HW is hereby authorized to take such action for the Account as HW, in
         your sole discretion, may consider appropriate for the operation of the
         Account including, without limitation, the power to buy, sell and
         exchange and otherwise deal in all securities which may at any time
         form part of the Account and to invest, in securities selected by HW,
         all funds contained in, paid to or derived from the operation of, the
         Account, except to the extent that HW otherwise instructed in writing
         by us.

         The services to be performed by HW shall be performed only by officers
         and employees who have appropriate qualifications. HW agrees to provide
         to us such information as we may reasonably request concerning the
         education and experience of any individuals HW proposes to assign to
         the performance of such services. Also, upon our request, HW agrees to
         provide a list of individual names and a brief description of their
         responsibilities. HW agrees to promptly notify us of any changes in
         HW's staff involving individuals that perform material functions on our
         Account.

4.       The securities and funds of the Account have been deposited with and
         shall be held by The Bank of New York (or with such other custodian as
         is chosen by you from time to time and is approved by the New Jersey
         Department of Banking and Insurance (the "Custodian") pursuant to an
         agreement which we have entered into with the Custodian. We have
         instructed the Custodian to promptly follow your directions at all
         times and to provide HW with all such information concerning the
         Account as HW may from time to time require in connection with your
         management of the Account, including without limitation, copies of
         relevant monthly statements.



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<PAGE>

5.       Provided HW has used reasonable care and diligence, HW shall not be
         liable for any damage, loss, cost or other expense sustained in the
         operation of the Account or relating in any manner to the carrying out
         of your duties under this Agreement. Notwithstanding the foregoing, any
         losses suffered as a result of an error in implementing investment
         decisions caused by HW's negligence or dishonesty are to be fully
         reimbursed by HW. To the extent any errors occur in implementing
         investment decisions, HW shall immediately notify us in writing of all
         relevant facts. HW shall bear full responsibility for any such errors
         to the extent such errors result from HW's negligence or dishonesty and
         shall be liable for all financial injury to us resulting therefrom. We
         agree that HW shall be entitled to assume that any information
         communicated by us or the Custodian to HW is accurate and complete, and
         that in making investment decisions HW shall be entitled to rely on
         publicly available information or on information which HW believes to
         have been provided to you in good faith, in both cases barring actual
         knowledge by HW to the contrary.

6.       HW will provide us with a monthly statement and a quarterly
         presentation respecting the securities held in the Account.

7.       HW shall deliver in writing to us, as soon as practicable after
         implementation of an investment decision, HW's confirmation of such
         implementation to enable us to ascertain that such implementation has
         been effected pursuant to the guidelines and procedures of our Board of
         Directors or a duly authorized committee thereof. Otherwise, the nature
         and timing of HW's reporting to us on the status of the Account shall
         be at least quarterly, within 45 days after the end of each quarter.

8.       We acknowledge receipt of a copy of policies that HW has established to
         ensure that investment opportunities are allocated fairly among HW's
         discretionary investment accounts and we confirm that these policies,
         until revised by HW, will apply to the account.

Investment Administration

9.       We authorize FFH to provide, and by signing below FFH agrees to
         provide, the investment administration services set forth in Schedule B
         attached hereto, on our behalf and on the terms and conditions set out
         in this Agreement, subject to such guidelines, procedures and
         limitations as may be duly established and approved by our Board of
         Directors or a duly authorized committee of said Board.

General

10.      You shall be entitled to such fees for the services provided hereunder
         as FFH may specify from time to time. Attached hereto as Schedule C as
         is a copy of the current fee schedule and FFH agrees to give us thirty
         (30) days prior written notice of any change in such schedule, which
         change shall require the approval of New Jersey Department of Banking
         and Insurance. Such fees shall be the exclusive fees and charges
         payable (excluding third party disbursements reasonably incurred) for
         the services provided hereunder. As regards


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         third party services, you will charge us only the amount of your actual
         disbursements paid to arm's length third parties for such services, and
         HW will select as agents, brokers or dealers executing orders or acting
         on the purchase or sale of portfolio securities only agents, brokers or
         dealers operating in the United States. Such disbursements to third
         parties shall be reported to us quarterly, provided, that we shall pay
         third parties such disbursements directly if requested to do so by you.
         We will pay you all fees and disbursements hereunder not later than 20
         days after receiving your quarterly report.

         All fees will be paid to FFH and FFH shall reimburse HW for its
         investment management services. HW acknowledges that it has no right
         under this agreement to receive fees directly from us.

11.      Either you or FFH and HW may terminate this Agreement without penalty
         by giving the other party at least thirty (30) days advance written
         notice of its desire to terminate the same. In the event that the day
         upon which this Agreement is so terminated is a day other than the
         first day of a calendar quarter, the fees payable in accordance with
         paragraph 6 for such quarter shall be pro-rated and shall be determined
         having regard to the market value of the Account based upon the most
         recent financial report which has been delivered to you by the
         Custodian. No termination or addition, other than a change to Schedule
         A, shall be effective unless such termination or addition is (i) filed
         with the New Jersey Department of Banking and Insurance ("NJDBI") at
         least 30 days prior to the proposed effective date, (ii) not
         disapproved by the NJDBI, (iii) made in writing, and (iv) signed by the
         parties hereto.

12.      All notices and communications to each party to this Agreement shall be
         in writing and shall be deemed to have been sufficiently given if
         signed by or on behalf of the party giving the notice and either
         delivered personally or sent by prepaid registered mail addressed to
         such party at the address of such party indicated herein. Any such
         notice or communication shall be deemed to have been received by any
         such party if delivered, on the date of delivery, or if sent by prepaid
         registered mail on the fourth business day following mailing thereof to
         the party to whom addressed. For such purpose, no day during which
         there shall be a strike or other occurrence interfering with normal
         mail service shall be considered a business day.

13.      This Agreement shall enure to the benefit of and shall be binding upon
         the parties hereto and their respective successors. This Agreement may
         not be assigned by any party.

14.      We acknowledge that we have read and understood this Agreement and that
         we have received a copy of the same. You and we each acknowledge that
         the terms of this Agreement are the exclusive and conclusive terms of
         our mutual agreement with regard to the subject matter hereof.

15.      Any dispute or difference arising with reference to the interpretation
         or effect of this Agreement, or any part thereof, shall be referred to
         a Board of Arbitration (the "Board") of two (2) arbitrators and an
         umpire. Such dispute and the Board shall be governed by the rules of
         the American Arbitration Association.



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         The members of the Board shall be active or retired disinterested
         officers of insurance or reinsurance companies.

         One arbitrator shall be chosen by the party initiating the arbitration
         and designated in the letter requesting arbitration. The other party
         shall respond, within thirty (30) days, advising of its arbitrator. The
         umpire shall thereafter be chosen by the two (2) arbitrators. In the
         event either party fails to designate its arbitrator as indicated
         above, the other party is hereby authorized and empowered to name the
         second arbitrator, and the party which failed to designate its
         arbitrator shall be deemed to have waived its rights to designate an
         arbitrator and shall not be aggrieved thereby. The two (2) arbitrators
         shall then have thirty (30) days within which to choose an umpire. If
         they are unable to do so within thirty (30) days following their
         appointment, the umpire shall be chosen by the manager of the American
         Arbitration Association and such umpire shall be a person who is an
         active or retired and disinterested officer of an insurance or
         reinsurance company. In the event of the death, disability or
         incapacity of an arbitrator or the umpire, a replacement shall be named
         pursuant to the process which resulted in the selection of the
         arbitrator or umpire to be replaced.

         Each party shall submit its case to the Board within one (1) month from
         the date of the appointment of the umpire, but this period of time may
         be extended by unanimous written consent of the Board.

         Sittings of the Board shall take place in Morristown, New Jersey. The
         Board shall make its decision with regard to the custom and usage of
         the insurance and reinsurance business. The Board is released from all
         judicial formalities and may abstain from the strict rules of law. The
         written decision of a majority of the Board shall be rendered within
         sixty (60) days following the termination of the Board's hearings,
         unless the parties consent to an extension. Such majority decision of
         the Board shall be final and binding upon the parties both as to law
         and fact, and may not be appealed to any court of any jurisdiction.
         Judgment may be entered upon the final decision of the Board in any
         court of proper jurisdiction.

         Each party shall bear the fees and expenses of the arbitrator selected
         by or on its behalf, and the parties shall bear the fees and expenses
         of the umpire as determined by the party, as above provided, the
         expenses of the arbitrators, the umpire and the arbitration shall be
         equally divided between the two parties. The arbitrators may allocate
         any and all of the costs and fees against the losing party upon a
         determination that the position of the losing party was, in whole or in
         part, groundless, specious or otherwise without merit or asserted
         primarily for the purposes of obfuscation or delay.

16.      Additional terms and conditions applicable to this Agreement are set
         forth in Schedule D. The provisions in Schedule A, Schedule B, Schedule
         C and Schedule D attached hereto are hereby incorporated into, and form
         part of, this Agreement.



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17.      This Agreement, including the schedules attached hereto and made a part
         hereof, may only be amended by written agreement signed by the parties
         and approved by the New Jersey Department of Banking and Insurance;
         provided, however, that any amendment to Schedule A may become
         effective without the prior approval of the New Jersey Department of
         Banking and Insurance, provided that such amendment shall be filed with
         the New Jersey Department of Banking and Insurance not later than its
         effective date and shall, if disapproved by the New Jersey Department
         of Banking and Insurance, be void as of the date of such disapproval.


IN WITNESS WHEREOF, this Agreement is hereby executed by duly authorized
officers of the parties hereto as of the date first written above.

                                    THE NORTH RIVER INSURANCE COMPANY

                                    BY:     /s/ HOWARD DEBARE
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                            Howard DeBare
                                            ------------------------------------
                                            NAME OF AUTHORIZED SIGNATORY


                                    BY:     /s/ VALERIE J. GASPARIK
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                            Valerie J. Gasparik
                                            ------------------------------------
                                            NAME OF AUTHORIZED SIGNATORY

                                    HAMBLIN WATSA INVESTMENT COUNSEL LTD.


                                    BY:
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                            ------------------------------------
                                            NAME OF AUTHORIZED SIGNATORY

                                    FAIRFAX FINANCIAL HOLDINGS LIMITED


                                    BY:
                                            ------------------------------------
                                            AUTHORIZED SIGNATURE

                                            ------------------------------------
                                            NAME OF AUTHORIZED SIGNATORY



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<PAGE>



                                   SCHEDULE A


INVESTMENT OBJECTIVES

1.       Invest for the long term always providing sufficient liquidity for the
         payment of claims and other policy obligations.

2.       Ensure preservation of invested capital for policy holder protection.

3.       Invest in accordance with insurance regulatory guidelines.


INVESTMENT GUIDELINES

1.       Approach

         All investments are to be made using the value approach by investing in
         companies at prices below their underlying long term values to protect
         capital from loss and earn income over time and provide operating
         income as needed.

         With regard to equities, no attempt is made to forecast the economy or
         the stock market. The manager will attempt to identify financially
         sound companies with good potential profitability which are selling at
         large discounts to their intrinsic value. Appropriate measures of low
         prices may consist of some or all of the following characteristics: low
         price earnings ratios, high dividend yields, significant discounts to
         book value, and free cash flow. Downside protection is obtained by
         seeking a margin of safety in terms of a sound financial position and a
         low price in relation to intrinsic value. Appropriate measures of
         financial integrity which are regularly monitored, include debt/equity
         ratios, financial leverage, asset turnover, profit margin, return on
         equity, and interest coverage.

         As a result of this bargain hunting approach, it is anticipated that
         purchases will be made when economic and issue-specific conditions are
         less than ideal and sentiment is uncertain or negative. Conversely, it
         is expected that gains will be realized when issue-specific factors are
         positive and sentiment is buoyant. The investment time horizon is one
         business cycle (approximately 3-5 years).

         As regards bonds, the approach is similar. No attempt is made to
         forecast the economy or interest rates. The manager will attempt to
         purchase attractively priced bonds offering yields better than Treasury
         bonds with maturities of 10 years or less that are of sound quality,
         i.e. whose obligations are expected to be fully met as they come due.
         We do not regard rating services as being/and unimpeachable source for
         assessing credit quality any more than we would regard a broker's
         recommendation on a stock as being necessarily correct. In any form of
         investment research and evaluation, there is no substitute for the
         reasoned judgment of the investment committee and its managers.



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<PAGE>

2.       Liquidity

         An adequate cash flow shall be maintained to ensure that claims and
         operating expenses are paid on a timely basis. An operating cash
         position is to be maintained at appropriate levels and will be managed
         by the insurance operating company in accordance with the approved list
         for investments as determined from time to time by the Investment
         Committee. These securities will be managed by the Insurance Company as
         part of the Treasury function and currently are restricted primarily to
         Treasury and Agency securities of the U.S. government.

3.       Regulatory

         Insurance regulations will be complied with.

4.       Diversification

         The portfolio is to be invested in a wide range of securities of
         different issuers operating in different industries and jurisdictions
         in order to minimize risk.

5.       Prudent Person Rule

         Prudent investment standards are considered in the overall context of
         an investment portfolio and how a prudent person would invest another
         person's money without undue risk of loss or impairment and with a
         reasonable expectation of fair return.


STRATEGY

1.       Maintain Adequate Liquidity

         A detailed review of portfolio liquidity is undertaken on a monthly
         basis. This liquidity analysis determines how much of each portfolio
         can be converted to cash in a given time period. Each company
         determines its liquidity requirements and the liquidity of the
         portfolio must match the requirement.

2.       Asset Allocation

         The asset allocation will be determined by the Portfolio Manager and
         will include short term investments that will generate appropriate cash
         flows and long term investments in stocks, bonds, debentures and money
         market investments, both domestic and foreign. The allocation will be
         in compliance with regulatory guidelines and should meet policy
         liabilities.




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3.       Foreign Exchange Risk

         Any foreign currency investments and exposures would normally be hedged
         via the use of forward foreign exchange contracts and/or currency
         options or preferably by a natural hedge with foreign pay liabilities
         of the Insurance Company. Unhedged foreign investments will be limited
         to 10% of invested assets at cost. Unhedged exposure above this amount
         must be approved by the Investment Committee.

4.       Interest Rate Risk

         Interest rate risk will be minimized primarily through investment in
         faxed income securities with maturities less than ten years. While
         there are no specific duration/maturity limits for convertible
         securities, these issues are included in the total fixed income
         duration/term measure. Maximum fixed income portfolio duration is
         limited to the equivalent of a ten year term to maturity Treasury
         security.


INVESTMENT POLICY MIX

The Investment Committee has established the following exposure ranges for
various asset mix classes:

                                             Range
                                             -----
         Equities                            0-25%
         Fixed Income                       0-100%
         Cash                               Residual
         Total                                100%
                                              ====

Within the Fixed Income portfolio, the Taxable/Tax Exempt mix will be determined
relative to the consolidated tax position of the Insurance Company and the
relative investment attractiveness of available tax exempt securities.

The Investment Committee will control the total asset mix and will give
performance objectives to the Investment Manager regarding the assets managed.


RETURN EXPECTATIONS

Total asset mix policy is expected on an annual basis to result in returns
better than the Consumer Price Index plus 3% over a ten year period before the
disbursement of investment management fees. However, in any one year the annual
return may be significantly above or below this expectation.



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INVESTMENT OBJECTIVES OF THE FUND MANAGER

The Manager, subject to regulatory and company imposed constraints mentioned
elsewhere, expects to provide additional returns to those returns that would be
earned by the alternative of passively managing a surrogate market index.

Performance of the Fund Manager is expected to result in the following returns:

    All Equities                       S&P 500 + 1% point

    Fixed Income:
    Taxable Bonds              Merrill Lynch Intermediate Treasury Index + 0.25%
    Tax-Advantaged Bonds       Lehman Brothers 3 & 5 Year State GO Indexes

Measured over four (4) year moving periods.


AGGREGATE INVESTMENT LIMITS, PERMITTED INVESTMENT CATEGORIES AND INDIVIDUAL
INVESTMENT LIMITS


PERMITTED INVESTMENT CATEGORIES WITHIN ASSET CLASSES

Cash:           Cash on hand, demand deposits, treasury bills, short-term notes
                and bankers' acceptances, term deposits and guaranteed
                investment certificates.

Equity:         Common shares, rights and warrants.

Fixed Income:   Bonds, debentures, preferred shares, including those convertible
                into common shares.

All of the above may be either U.S. domestic, Canadian, or other foreign
investments.

Convertible preferred securities will be classified as equities if the preferred
dividend is not being paid.

Private placement issues in public companies are allowed.


INVESTMENT CONSTRAINTS

All investments will be made in accordance with all applicable legislation.




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INDIVIDUAL INVESTMENT LIMITS

Any combination of investments in any one corporate issuer will be limited to a
maximum of 5% of admitted assets. Exposure beyond 5% will require approval of
the Investment Committee.


QUALITY CONSTRAINTS

The Investment Manager may invest in the permitted investment categories listed
in the Investment Objectives and Policy Statement subject to the following
quality constraints:

         Investments in money market instruments (less than or equal to 1 year
         term) will be limited to those included on the list approved by the
         Company. This list will include money market instruments of the U.S.
         Treasury, Agencies of the U.S. government, and as a minimum commercial
         paper rated A1 or higher by Moody's and rated P1 or higher by Standard
         & Poor's.


         Investments in bonds and preferreds will be limited by quality tier as
         follows:

LIMITS AS A % OF THE FIXED INCOME PORTFOLIO
<Table>
<Caption>
         Bond Rating                 % of Total         Min./Max.
         -----------                 ----------         ---------
<S>                                      <C>              <C>
         A or better                     65%              Min.
         BBB                             35%              Max.
         BB,B                            10%              Max.
         C,D                             0%
</Table>

         The above limits are subject to adjustment to conform with the
         regulatory requirements of Chapter 24 of Title 17 of the New Jersey
         Statutes.

         Limits are determined on a cost basis and include convertible
         securities.

         Downgrades will be taken into account when making new investments but
         will not necessarily result in the sale of existing positions.

         Securities un-rated by the public rating agencies must be rated by the
         Investment Manager and included as part of the categories above for the
         purposes of determining overall exposure by quality tier.

         Any exceptions to the above must be approved by the Investment
         Committee.




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<PAGE>


PROHIBITED INVESTMENTS

No loans will be made in any of the investment portfolios.

No Real Estate will be purchased without Investment Committee approval.

No Mortgages on real estate will be purchased without Investment Committee
approval. The exceptions to this are obligations issued by an agency of the U.S.
Government, or by U.S. domiciled corporations that are issued as part of a
registered public offering that also meet the minimum quality tier requirements.


FOREIGN INVESTMENT LIMITS

Foreign Securities may be purchased in compliance with established regulatory
guidelines and with the policy on foreign exchange risk outlined herein.

Foreign investments must be in the same kinds of securities and investments as
the Insurance Company is normally allowed.


OTHER

Derivative securities may be purchased up to 2% of the portfolios cost at book.
Use of derivative investments is infrequent and only for hedging purposes.
Derivative investments will be justified to and approved by the Investment
Committee prior to use of derivative instruments will at all times be in
compliance with NAIC guidelines regarding derivative investments.




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<PAGE>



                                   SCHEDULE B

                                    SERVICES


Investment Administration to be performed are:

MONTHLY
-        daily processing of securities
-        portfolio accounting functions including posting of all trades,
         monitoring investment income, corporate actions, open payables and
         receivables
-        computation of all regulatory figures
-        analysis and reconciliation of portfolios
-        yield review
-        computation of market decline tests
-        computation of liquidity analysis
-        analysis of book values, e.g. bond amortizations and investment
         provisions
-        analysis of gross gain and loss positions
-        cash flow obligations
-        investment review meeting
-        NAIC and SVO filings
-        custodial relationships
-        broker relationships


PERIODIC
-        review and analysis of foreign exchange position
-        placement of foreign exchange contracts, where appropriate
-        discussions with regulators regarding portfolio (positions)
-        reporting to the Board of Directors of The North River Insurance
         Company
-        reporting to the investment committee
-        reporting to the audit committee
-        general assistance with accounting issues
-        maintaining contact with external auditors
-        such other administrative services as the parties shall mutually agree
         from time to time
-        5900 report on investment controls
-        performance reporting
-        software provider (including e-Pam) - functioning and testing





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                                   SCHEDULE C

                                  FEE SCHEDULE


Investment fees are comprised of two parts:

                           (A). The Base Fee Amount

                                        and

                           (B). The Incentive Fee Amount

(A)             The Base Fee Amount

      1)       Fees will be payable quarterly. Interim invoices may be issued
               based on our estimates of the final fees payable.

      2)       After the end of each calendar quarter, FFH shall submit its
               investment management charges in accordance with the schedule
               below.

      3)       The charges are on a calendar year basis. They will be calculated
               at the end of each calendar quarter based upon the average of the
               market value of the funds at the close of business for the three
               (3) preceding months.

      4)       MARKET VALUE                 CHARGE
               ------------                 ------

               On Total Market Value          .30%


(B)   The Incentive Fee Amount

      The incentive fee amount relates to the investment management of equity
      securities only.

      Annual Base Fee:     a) If performance equals or exceeds benchmark, base
                           fee is unchanged from current fee.

                           b) If performance is less than benchmark, base fee is
                           90% of current fee.

      Maximum Fee:         1.75% (including base).



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<PAGE>

      Benchmark:           S&P 500 + 200 basis points.


      Incentive Fee:       Continuous rate of 10 basis point for every 100 basis
                           points of outperforming the benchmark. (Incentive fee
                           is in addition to base fee).


      Basis of Calculation:  Payable annually based on calendar year results.
                             Not earned or paid unless results since inception
                             (net of all fees) exceed benchmark return.

      Inception Date: January 1, 2002

(C)   Maximum Investment Management Fee

      Notwithstanding the foregoing, the maximum investment management fee
      payable in any calendar year will be .40% of the Total Market Value (as
      calculated in (A) 4) above); provided that any investment management fee
      not payable in any calendar year as a result of the restriction in the
      preceding sentence will be carried over to a succeeding calendar year, but
      the total investment management fee payable in any such calendar year,
      including any carry-over payment, shall be limited as provided by the
      preceding sentence.



                                       2
<PAGE>


                                   SCHEDULE D


1.              Notices

                Unless otherwise specified herein, all notices, instructions,
advices or other matters covered or contemplated by this Agreement, shall be
deemed duly given when received in writing (including by fax) by you or us, as
applicable, at the address or fax number set forth below or such other address
or fax number as shall be specified in a notice similarly given:

                If to us:

                CRUM AND FORSTER INSURANCE COMPANY
                305 Madison Avenue
                Morristown, New Jersey 07962
                Fax No. (973) 490-6612

                If to you:

                HAMBLIN WATSA INVESTMENT COUNSEL LTD.
                95 Wellington Street West
                Suite 802
                Toronto, Ontario
                M5J 2N7
                Fax No.: (416) 366-3993

                and

                FAIRFAX FINANCIAL HOLDINGS LIMITED
                95 Wellington Street West
                Suite 800
                Toronto ON M5J 2N7
                Fax No.: (416) 367-2201

2.              Governing Laws; Jurisdiction; Service of Process

                This Agreement shall be governed and construed in accordance
with the laws of the State of New Jersey our state of domicile. Each of the
parties thereto submits to the jurisdiction of the state and federal courts of
the State of New Jersey, in any action or proceeding arising out of or relating
to this Agreement and all claims in respect of any such action or proceeding may
be heard or determined in any such court; and service of process, notices and
demands of such courts may be made upon you by personal service to the person
and at the address contained in Section 1 above as such person or address may be
changed from time to time.



                                       1
<PAGE>



3.              Insurance Department Approval

                This Agreement shall be subject to the non-disapproval or
approval of the New Jersey Department of Banking and Insurance, and such terms
and conditions hereof as may be required by the New Jersey Department of Banking
and Insurance to be altered or amended shall be deemed acceptable to the parties
hereto, to the extent same shall not change the substance and intent of this
Agreement. No amendment or modification of this Agreement shall be effective
unless such amendment or modification is (i) filed with the New Jersey
Department of Banking and Insurance at least thirty (30) days prior to the
proposed effective dated, (ii) not disapproved by the New Jersey Department of
Banking and Insurance, (iii) made in writing, and (iv) signed by the parties
hereto.

4.              Inspection of Records

                You and we and the duly authorized representatives of each of us
shall, at all reasonable times, each be permitted access to all relevant books
and records of the other pertaining to this Agreement. You and your duly
authorized representatives shall provide to the New Jersey Department of Banking
and Insurance, within fifteen (15) days of any request from the New Jersey
Department of Banking and Insurance therefor, copies of all your books and
records as they pertain to us (or any portion thereof as may be specifically
requested).

5.              Headings

                The inclusion of headings in this Agreement is for convenience
of reference only and shall not affect the construction or interpretation
hereof.

6.              Severability

                Each of the provisions contained in this Agreement is distinct
and severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof.

7.              Entire Agreement

                This Agreement and the documents to be delivered pursuant hereto
constitute the entire agreement between the parties pertaining to the subject
matter of this Agreement.

8.              Control

                Notwithstanding any other provision of this Agreement, it is
understood and agreed that we shall at all times retain the ultimate control of
the investment of our investable funds and we reserve the right, upon written
notice by us to you, to direct, approve, or disapprove any investment made by
you hereunder or any action taken by you with respect to any such investment.
Furthermore, it is understood and agreed that we shall at all times own and have
custody of our general corporate accounts and records.



                                       2
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9.              Confidential Relationship

                The parties hereto will treat as confidential all information
that is not publicly available received from the other party.




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