EXHIBIT 10.1


                            STOCK PURCHASE AGREEMENT

     This Stock Purchase  Agreement (the  "AGREEMENT")  is made as of August 20,
2008, by and between Jacobs Financial Group,  Inc., a Delaware  corporation (the
"PURCHASER"),  and  National  Indemnity  Company,  a Nebraska  corporation  (the
"SELLER").

     WHEREAS, the Seller owns 337,248 shares (the "SHARES") of the common stock,
par value $10.00 per share of Unione Italiana  Insurance  Company of America,  a
New  York  corporation  (the  "COMPANY"),  which  Shares  constitute  all of the
outstanding capital stock of the Company; and

     WHEREAS, the Seller desires to sell to the Purchaser, and Purchaser desires
to purchase  from the Seller,  all of the Shares of the Company,  subject to the
terms and conditions set forth herein; and

     WHEREAS,  it is the intention of the parties hereto that  contemporaneously
with the  consummation of the transactions  contemplated by this Agreement,  all
liabilities under the Insurance and Reinsurance  Contracts (including contingent
liabilities  in respect of claims  thereunder)  shall be reinsured by the Seller
pursuant to the NICO  Reinsurance  Agreement  (as defined  herein) to be entered
into between the Company and the Seller at Closing.

     NOW,  THEREFORE,  intending to be legally bound and in consideration of the
mutual  provisions  set forth in this  Agreement and for other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

                                   ARTICLE I

                               CERTAIN DEFINITIONS

     Section 1.1.  The  following  terms,  as used  herein,  have the  following
meanings:

     "ACCOUNTING FIRM" has the meaning set forth in SECTION 2.5

     "AFFILIATE"   means,   with  respect  to  any  Person,   any  other  Person
controlling,  controlled by, or under common control with such other Person. For
purposes of this  definition,  "CONTROL,"  when used with respect to any Person,
means the power to direct the management  and policies of such Person,  directly
or indirectly,  whether through the ownership of voting securities,  by contract
or otherwise,  and the terms  "CONTROLLING"  and  "controlled"  have correlative
meanings.

     "ADVERSE CONSEQUENCES" has the meaning set forth in SECTION 9.1(A).

     "AGREEMENT" has the meaning set forth in the Preamble.

                                      -1-
<PAGE>

     "APPLICABLE  INSURANCE  CODE(S)"  means  the  insurance  laws to which  the
Company is subject,  including the  insurance  laws of the State of New York. In
all cases,  Applicable  Insurance  Code shall include the rules and  regulations
promulgated under any of the foregoing laws.

     "BASE PURCHASE PRICE" has the meaning set forth in SECTION 2.1.

     "BUSINESS  DAY" means a day other than a  Saturday,  Sunday or other day on
which commercial banks in Charleston, West Virginia or Stamford, Connecticut are
authorized or required by law to close.

     "CLOSING" has the meaning set forth in SECTION 2.2.

     "CLOSING  ASSETS" shall mean the  Licenses,  the  Statutory  Deposits,  the
Portfolio  Investments,  the Corporate  Records,  the Insurance and  Reinsurance
Contracts,  the Bank Accounts,  the assets set forth in the Company's  Statutory
Statements and the NICO Reinsurance Agreement.

     "CLOSING DATE" has the meaning set forth in SECTION 2.2.

     "CLOSING DATE POLICYHOLDERS' SURPLUS" shall mean the Policyholders' Surplus
as of the Closing Date.

     "CLOSING SURPLUS STATEMENT" has the meaning set forth in SECTION 2.5.

     "COMPANY" has the meaning set forth in the Preamble.

     "COMPANY BOOKS AND RECORDS" has the meaning set forth in SECTION 5.9.

     "COMPANY INSURANCE POLICIES" has the meaning set forth in SECTION 3.17.

     "CONSENTS" has the meaning set forth in SECTION 3.6.

     "CONTRACT"  means any  written or oral  contract,  lease or other  property
agreement,  license,  indenture,  note,  bond,  agreement,  permit,  concession,
franchise,  commitment,  insurance policy, bond, mortgage,  partnership or joint
venture agreement or instrument.

     "CORPORATE RECORDS" means the corporate records of the Company,  other than
Company  Books  and  Records,   including,   without  limitation,   articles  of
incorporation,  by-laws,  corporate seal,  stock book and stock transfer ledger,
minutes of meetings  of the  shareholders  and  directors  and other  records of
corporate actions, books of account, ledgers, , all filings,  correspondence and
communications  with  insurance  regulatory  authorities,  business  records and
documents  reflecting  the  qualifications,  assets,  liabilities,  commitments,
obligations, rights and entitlements of the Company of whatever nature.

     "DEPOSIT"  means the  deposit in the amount of $75,000  previously  paid by
Purchaser to Seller pursuant to the letter agreement,  dated December 3, 2008 by
and between Purchaser and Seller.

                                      -2-
<PAGE>

     "DOMICILIARY INSURANCE DEPARTMENT" means the New York Insurance Department.

     "EMPLOYEE  BENEFIT  PLAN"  means any  benefit  plan or  arrangement  of the
Company for its employees, including but not limited to employee pension benefit
plans,  as defined in Section  3(2) of ERISA,  Multiemployer  Plans,  if any, as
defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in
Section 3(1) of ERISA,  deferred  compensation  plans, stock option plans, bonus
plans,  stock purchase  plans,  hospitalization,  disability and other insurance
plans, severance or termination pay plans and policies, whether or not described
in Section 3(3) of ERISA,  in which  employees of the Company,  their spouses or
dependents participate.

     "ENVIRONMENTAL LAWS" has the meaning set forth in SECTION 3.16.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "ESTIMATED POLICYHOLDERS' SURPLUS" shall mean the Policyholders' Surplus as
of the Closing Date as estimated in good faith by the Seller as set forth on the
Estimated  Surplus  Statement  based upon the Company's  Policyholders'  Surplus
reflected in the Company's most recent filed statutory financial statement prior
to the Closing Date,  with  appropriate  adjustments  in the ordinary  course of
business  consistent  with past  practices  for the period from the date of that
financial  statement  until  the  Closing  Date to  reflect  any  change  in the
Company's  circumstances,  prepared in a manner  consistent  with the  Company's
historical  accounting  practices,  and to  give  effect  to any  settlement  of
intercompany  accounts as of the Closing  Date  pursuant to SECTION 5.8, in each
case to the extent  Policyholders'  Surplus shall have been changed thereby. The
Seller's calculation of the Estimated Policyholders' Surplus shall be binding on
Purchaser absent manifest error.

     "ESTIMATED   SURPLUS   STATEMENT"  shall  mean  the  Seller's  estimate  of
Policyholders'  Surplus as of the Closing  Date  delivered  by the Seller to the
Purchaser not less than two (2) Business Days prior to the Closing Date.

     "FINANCING CERTIFICATE" has the meaning set forth in SECTION 5.13.

     "GAAP" means United States generally accepted  accounting  principles as in
effect at the relevant time or for the relevant period.

     "GOVERNMENTAL   ENTITY"  means  any  federal,   state,   local  or  foreign
government,  political  subdivision,  legislature,  court,  agency,  department,
bureau,  commission  or other  governmental  or  regulatory  authority,  body or
instrumentality, including any insurance or securities regulatory authority.

     "INDEMNIFIED PARTY" has the meaning as set forth in SECTION 9.1(C).

     "INDEMNIFYING PARTY" has the meaning as set forth in SECTION 9.1(C).

     "INSURANCE  AND  REINSURANCE  CONTRACTS"  means  all  Contracts,  treaties,
facultative  certificates,  policies or other  arrangements  issued prior to the
Closing Date, other than Company Insurance  Policies,  to which the Company is a

                                      -3-
<PAGE>

party or by which the  Company is bound or  subject,  providing  for  insurance,
ceding  or  assumption  of  reinsurance,   excess   insurance  or  retrocession,
including, without limitation, all insurance policies, reinsurance policies, and
retrocession  agreements,  in each case as such  Contract,  treaty,  facultative
certificate,  policy or other  arrangement  may have been  amended,  modified or
supplemented,  other than Company Insurance  Policies,  irrespective of how such
arrangement is accounted for.

     "INTERCOMPANY  AGREEMENT"  shall  mean any  agreement  between  (i) (x) the
Company on the one hand, and (y) the Seller or any of its Affiliates (other than
the  Company)  on the other  hand,  and (ii) (x) any  director or officer of the
Seller or any of its Affiliates (including the Company) on the one hand, and (y)
the Company on the other hand.

     "LETTER AGREEMENT" has the meaning as set forth in SECTION 2.4.

     "LICENSES"  means the Company's  licenses or  certificates  of authority to
transact  insurance or  reinsurance,  as applicable,  in the states set forth on
ANNEX A hereto.

     "LIEN" means any lien, charge, claim, mortgage,  covenant,  option, pledge,
security interest,  right of first refusal,  restriction or other encumbrance of
any kind.

     "MATERIAL ADVERSE EFFECT" means any event, circumstance, change, occurrence
or effect which, individually or in the aggregate, has a material adverse effect
on (i) the business, operations, financial condition or results of operations of
the Company,  or (ii) the ability of the Company or the Seller to consummate the
transactions  contemplated  hereby,  other than arising out of,  resulting from,
caused by or  attributable  to (a) changes in conditions in the United States or
global economy or capital or financial markets  generally,  including changes in
interest  or exchange  rates,  except to the extent  such  condition  negatively
affects the Company  disproportionately  compared to other  participants  in any
segment of the property and casualty insurance or reinsurance  industry in which
the Company  operates,  (b) changes in economic or business trends or conditions
generally  applicable  to the  industries  and  markets  in  which  the  Company
operates,  except to the extent such  condition  negatively  affects the Company
disproportionately compared to other participants in any segment of the property
and casualty  insurance or reinsurance  industry in which the Company  operates,
(c)  changes in law,  regulatory  conditions  or GAAP or  regulatory  accounting
principles,  including Statutory  Accounting  Practices,  after the date of this
Agreement,  (d) the  announcement  of this  Agreement  and the  identity  of the
Purchaser,  (e) actions required or permitted to be taken by the Seller pursuant
to this  Agreement  or taken with the  Purchaser's  consent,  and (f) any action
taken by the Purchaser or its Affiliates in connection with the  consummation of
the transactions contemplated hereby.

     "NICO  REINSURANCE  AGREEMENT"  means  the  100%  Quota  Share  Reinsurance
Agreement by and between the Company and Seller dated the Closing  Date,  in the
specific  form  attached  hereto as EXHIBIT A,  pursuant to which  Seller  shall
reinsure the Company's liabilities under the Insurance and Reinsurance Contracts
in effect prior to the Closing Date.

     "NOTICE OF OBJECTION" has the meaning set forth in SECTION 2.5.

     "PERMIT"  means any  license,  permit,  franchise,  certificate,  approval,
consent and other governmental authorization.

                                      -4-
<PAGE>

     "PERSON"  means  an  individual,   corporation  (including  any  non-profit
corporation),  general or limited partnership,  limited liability company, joint
venture, estate, trust, unincorporated organization, association or other entity
or form of business enterprise.

     "POLICYHOLDERS'   SURPLUS"  means  as  of  any  date  "surplus  as  regards
policyholders" of the Company calculated in accordance with Statutory Accounting
Practices of the Domiciliary  Insurance Department applied on a basis consistent
with the Statutory Statements of the Company.

     "PORTFOLIO   INVESTMENTS"  means  the  portfolio  of  government  and  GNMA
Securities,  cash and cash equivalents  (including accrued interest and dividend
thereon,  owned  by the  Company)  as of the  date  hereof,  as such  investment
portfolio  may  change  in  connection  with  the  management  of the  Company's
investment  portfolio in the ordinary  course of business  consistent  with past
practices.

     "PURCHASE  PRICE" shall mean the Base Purchase Price,  as finally  adjusted
pursuant to SECTION 2.5 hereof.

     "PURCHASER" has the meaning set forth in the Preamble.

     "PURCHASER BOOKS AND RECORDS" has the meaning set forth in SECTION 5.9.

     "PURCHASER INDEMNIFIED PARTY" has the meaning set forth in SECTION 9.1.

     "SELLER"  has the meaning set forth in the  Preamble.  "SELLER  INDEMNIFIED
PARTY" has the meaning set forth in SECTION 9.1.

     "SHARES" has the meaning set forth in the Preamble.

     "STATUTORY  ACCOUNTING PRACTICES" means the accounting practices prescribed
or permitted by the Insurance  Department  of New York,  which are distinct from
GAAP and provide  the basis for the  Statutory  Statements  of the  Company,  as
applied on a consistent basis.

     "STATUTORY DEPOSITS" means any financial deposits required to be maintained
by the  Company by the  Commissioners  or  Departments  of  Insurance  (or other
governmental or regulatory  authority),  as a condition of the Company's conduct
of business in the states set forth on ANNEX A hereto.

     "STATUTORY  STATEMENTS OF THE COMPANY"  means the annual  statements of the
Company, as filed with its Domiciliary Insurance Department,  for the year ended
December 31, 2007 and the  quarterly  statements of the condition and affairs of
the  Company,  as  filed  with its  Domiciliary  Insurance  Department,  for the
quarterly periods ended March 31, 2008 and June 30, 2007.

     "SUPERINTENDENT"  means the Superintendent of Insurance of the State of New
York.

                                      -5-
<PAGE>

     "TAX" OR "TAXES"  means all  federal,  state,  county or local net or gross
income,  gross  receipts,  net proceeds,  sales,  use, ad valorem,  value added,
franchise,  bank shares,  withholding,  payroll,  employment,  excise, property,
deed,  stamp,  alternative  or add-on  minimum,  environmental  or other  taxes,
assessments,  duties,  fees, levies or other governmental  charges of any nature
whatsoever,   together  with  any  interest,  penalties,  additions  to  tax  or
additional  amounts  with  respect  thereto  imposed  by a  Governmental  Entity
("TAXING AUTHORITY").

     "TAXING AUTHORITY" has the meaning set forth in the definition of Tax.

     "TAX RETURN" means all reports,  estimates,  declarations of estimated Tax,
claims for refund,  information  statements and returns relating to, or required
to be filed in connection with, any Taxes,  including any schedule or attachment
thereto, and including any amendment thereof.

     "TRANSACTION  DOCUMENTS" means,  collectively,  this Agreement and the NICO
Reinsurance Agreement.

                                   ARTICLE II

                                 THE TRANSACTION

     Section  2.1.  PURCHASE  AND SALE.  Subject to the terms and subject to the
provisions  of this  Agreement,  and in reliance  upon the  representations  and
warranties  hereinafter  set forth,  at the Closing,  the Seller agrees to sell,
assign,  transfer  and deliver to the  Purchaser,  and the  Purchaser  agrees to
purchase and acquire from the Seller,  all of the Shares,  free and clear of all
Liens (other than any restrictions on subsequent transferability by Purchaser of
the Shares imposed by Applicable  Insurance  Codes,  and  applicable  federal or
state  securities laws) for a purchase price equal to the sum of (i) $2,750,000,
PLUS (ii) that amount in U.S.  dollars  cash equal to  Estimated  Policyholder's
Surplus,  LESS (iii) an amount equal to the Deposit (the "BASE PURCHASE PRICE").
The Base  Purchase  Price  shall be subject to  adjustment  in  accordance  with
SECTION  2.5 and  shall  be paid in the  manner  and at the  time  set  forth in
SECTIONS 2.3.

     Section  2.2.  CLOSING.  Subject to ARTICLE VI hereof,  the  closing of the
transactions  contemplated  by this Agreement (the "CLOSING") will take place at
the offices of the  Seller,  100 First  Stamford  Place,  Stamford,  Connecticut
06902,  at  10:00  a.m.,  local  time,  on the  third  Business  Day  after  the
satisfaction  or waiver of all of the  conditions set forth in ARTICLE VI hereof
(other than  conditions  relating  to actions to be taken at the  Closing) or at
such other place, time or date as the Purchaser and the Seller may agree upon in
writing.  The date upon which the Closing actually occurs is referred to in this
Agreement as the "CLOSING DATE".

                                      -6-
<PAGE>

     Section 2.3. CLOSING DELIVERIES.

     (a) At the Closing, the Seller will deliver or cause to be delivered to the
Purchaser:

          (i) certificate(s)  representing the Shares, duly endorsed in blank or
     accompanied  by stock  powers  duly  executed  in blank in form  reasonably
     satisfactory to the Purchaser for transfer;

          (ii) resignations effective as of the Closing of each officer and each
     member of the board of directors of the Company; and

          (iii) all  other  documents,  certificates  and  instruments  required
     hereunder to be delivered by Seller to Purchaser at Closing.

     (b) At the  Closing,  the  Purchaser  shall (i) pay to the  Seller the Base
Purchase Price by wire transfer of immediately  available funds to an account or
accounts  designated by the Seller at least three (3) Business Days prior to the
Closing Date, and (ii) deliver to the Seller all other  documents,  certificates
and instruments required hereunder to be delivered by Purchaser to Seller at the
Closing.

     Section 2.4. SELLER AND PURCHASER'S LETTER AGREEMENT DATED MAY 14, 2008.

     In connection  with the pending sale of the Company to the  Purchaser,  the
Seller and the  Purchaser  have  entered into a letter  agreement  dated May 14,
2008,  pursuant  to which the Seller has  agreed,  subject to certain  terms and
conditions,  to issue  bonds on behalf of the  Company to the extent  such bonds
require  the  issuing  carrier  to have a  Certificate  of  Authority  from  the
Financial  Management  Service of the U.S.  Department  of Treasury (the "LETTER
AGREEMENT"). The Letter Agreement is attached hereto as EXHIBIT B.

     Section 2.5. POLICYHOLDERS' SURPLUS ADJUSTMENT.

     (a) Within sixty (60) days after the Closing Date, Seller shall prepare and
deliver to the Purchaser a statement (the "CLOSING SURPLUS STATEMENT"),  setting
forth the Seller's  determination  of the Closing Date  Policyholders'  Surplus,
including  but not limited to (i) any changes in market  value of the  Company's
assets as of the Closing Date, (ii) investment  income, and (iii) any tax effect
of such  adjusted  amounts.  For the  avoidance  of doubt,  the Closing  Surplus
Statement  shall not, and is not  intended to take into account the  sufficiency
of, or any  change in the  Company's  insurance  or  reinsurance  reserves.  The
Closing  Surplus  Statement  shall be  prepared  in good  faith  and in a manner
consistent with the Estimated Policyholders' Surplus.

     (b) After the receipt by Purchaser  of the Closing  Surplus  Statement  and
until such time as the final Closing Date  Policyholders'  Surplus is determined
in  accordance  with this  SECTION  2.5,  the  Purchaser  and  their  authorized
representatives  shall have full access during  reasonable  business  hours upon
prior  written  notice to the  working  papers of  Seller  and their  respective
representatives  relating to the Closing Surplus  Statement and the calculations
set forth thereon.  Unless  Purchaser,  within thirty (30) days after receipt of
the Closing  Surplus  Statement,  gives  Seller a notice  objecting  thereto and

                                      -7-
<PAGE>

specifying,  in  reasonable  detail,  the basis for each such  objection and the
amount in dispute  ("NOTICE OF OBJECTION"),  such Closing Surplus  Statement and
the Closing Date Policyholders'  Surplus reflected therein shall be binding upon
Purchaser  and the  Seller  and the  applicable  payment  required  pursuant  to
subsection (c) below shall be made. Any Notice of Objection shall specify (x) in
reasonable detail the nature and amount of any disagreement so asserted, and (y)
only  include  disagreements  based on the  differences  between  the  Estimated
Surplus   Statement  and  the  Closing  Surplus   Statement  and  the  Estimated
Policyholders'   Surplus   and  the   Closing   Date   Policyholders'   Surplus,
respectively.  If a timely  Notice of Objection is received by Seller,  then the
Closing  Surplus  Statement  (as  revised in  accordance  with clause (1) or (2)
below) shall become final and binding upon the parties  hereto on the earlier of
(1) the date the Seller and Purchaser  resolve in writing any  differences  they
have with respect to any matter specified in the Notice of Objection and (2) the
date any matters  properly  in dispute  are  finally  resolved in writing by the
Accounting  Firm (as defined  below).  During the thirty  (30) days  immediately
following  the  delivery by Purchaser  to Seller of a Notice of  Objection,  the
Seller  and  Purchaser  shall  seek in good  faith to  resolve  in  writing  any
differences  that they may have with  respect  to any  matter  specified  in the
Notice of Objection.  At the end of such thirty (30) day period,  the Seller and
Purchaser shall submit to an accounting firm which has not performed work in the
last two (2) years  for  either  Seller or  Purchaser  jointly  selected  by the
Seller's accountants and the Purchaser's accountants (the "ACCOUNTING FIRM") for
review and  resolution  of any and all  matters  (but only such  matters)  which
remain in dispute.  Purchaser  and the Seller shall  instruct  their  respective
accountants to select the Accounting Firm in good faith within ten (10) days. If
the  Purchaser's  or the Seller's  accountants  cannot agree upon the Accounting
Firm within such ten (10) day period,  within an additional  five (5) days, they
shall each  designate an accounting  firm who has not performed work in the last
two years for  either  Seller or  Purchaser  and the  Accounting  Firm  shall be
jointly selected by those two accounting  firms. The Accounting Firm so selected
shall be  instructed  to review and resolve  any and all matters  (but only such
matters) which remain in dispute and which were properly  included in the Notice
of Objection.  Purchaser and the Seller shall  instruct the  Accounting  Firm to
make a final determination of the Closing Date Policyholders' Surplus. Purchaser
and the Seller will cooperate  with the  Accounting  Firm during the term of its
engagement.  Purchaser and the Seller shall instruct the Accounting  Firm not to
assign a value to any item in dispute  greater than the greatest  value for such
item assigned by Purchaser,  on the one hand, or the Seller,  on the other hand,
or less than the smallest value for such item assigned by Purchaser,  on the one
hand,  or the Seller,  on the other hand.  Purchaser  and the Seller  shall also
instruct  the  Accounting  Firm  to  make  its  determination  based  solely  on
presentations  by  Purchaser  and  the  Seller  (i.e.,  not on the  basis  of an
independent  review).  The  Closing  Surplus  Statement  and  the  Closing  Date
Policyholders'  Surplus  reflected therein shall become final and binding on the
parties hereto on the date the Accounting Firm delivers its final  resolution in
writing to Purchaser and the Seller (which final  resolution  shall be requested
by the  parties  hereto  to be  delivered  not more  than  forty  five (45) days
following submission of such disputed matters).  All of the fees and expenses of
the  Accounting  Firm pursuant to this SECTION 2.5 shall be borne equally by the
Seller and the Purchaser.

     (c) If the Closing Date  Policyholders'  Surplus (as determined pursuant to
SECTION 2.5(B))  exceeds the Estimated  Policyholders'  Surplus,  then Purchaser
shall pay the Seller the amount of such  excess,  as directed by the Seller.  If
the  Closing  Date  Policyholders'  Surplus (as  determined  pursuant to SECTION

                                      -8-
<PAGE>

2.5(B)) is less than the Estimated Policyholders' Surplus, then the Seller shall
pay Purchaser such shortfall as directed by Purchaser. Payments made pursuant to
this SECTION  2.5(C)  shall be made by wire  transfer of  immediately  available
funds as follows: (i) if no Notice of Objection is delivered to the Seller, such
amount  shall be paid  within  three (3)  Business  Days of the  earlier  of the
expiration  of the  thirty  (30) day  period  for  delivery  of such  Notice  of
Objection  and the date of  delivery  to the Seller of a notice that the Closing
Surplus  Statement  will be  accepted  without  objection;  or (ii) if Notice of
Objection  is delivered to the Seller,  (x) any net  undisputed  amount due from
Seller to  Purchaser  or from  Purchaser to Seller (as the case may be) shall be
paid within three (3) Business Days after  delivery of such Notice of Objection,
and (y) the remaining  amount, if any, due from Seller to Purchaser or Purchaser
to Seller  (as the case may be) shall be paid  within  three (3)  Business  Days
after the date all  disputed  items are  finally  resolved  pursuant  to SECTION
2.5(B). Any amounts not paid when required pursuant to this SECTION 2.5(C) shall
bear interest  compounded annually from the required date of payment to the date
of actual payment at the prime rate of interest  announced  publicly by Citibank
N.A. in New York, New York from time to time as its prime rate.

     Section 2.6. NICO REINSURANCE AGREEMENT.

     Subject to any required  Consents,  immediately  prior to the Closing,  the
Seller and the Company shall execute and deliver the NICO Reinsurance Agreement,
pursuant to which the Seller shall reinsure all of the Company's remaining gross
insurance liabilities under the Insurance and Reinsurance Contracts issued on or
prior to the Closing Date and expenses  related thereto as set forth in the NICO
Reinsurance Agreement.

                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

     The  Seller  represents  and  warrants  to the  Purchaser  that  except  as
disclosed  in any of the  Schedules  attached  hereto (it being  understood  and
agreed  that  information  disclosed  in any  Schedule  shall  be  deemed  to be
disclosed with respect to, and incorporated in, any other section or subsections
contained in this  ARTICLE III unless it is not  reasonably  apparent  that such
disclosure is applicable to another section or subsection) as follows:

     Section 3.1. ORGANIZATION AND GOOD STANDING OF SELLER AND THE COMPANY.

     (a) The Seller is a corporation duly  incorporated and subsisting under the
laws of the state of  Nebraska  and has all the  requisite  corporate  power and
authority to own and hold its assets and properties and to carry on its business
as now being conducted.  Seller has furnished to Purchaser  correct and complete
copies of its articles of incorporation  and bylaws,  in each case as amended to
date.

     (b) The Company is a corporation duly incorporated and subsisting under the
laws of the state of New York as a property  and  casualty  company  and has all
requisite  corporate  power and authority to own and hold assets and  properties
and to carry on its business as now being  conducted  in all material  respects.
The Company is duly  qualified and in good standing as a foreign  corporation in
all  jurisdictions  in which the nature of its business or the  ownership of its

                                      -9-
<PAGE>

assets makes such qualification necessary, in each case except where the failure
to be so qualified has not had a Material  Adverse Effect.  Seller has furnished
to Purchaser  correct and complete copies of the articles of  incorporation  and
bylaws of the Company, in each case as amended to date.

     Section 3.2. AUTHORITY AND ENFORCEABILITY.

     (a) The Seller has all requisite  corporate  power and authority to execute
and deliver this Agreement and the other Transaction  Documents to which it is a
party and to perform its obligations  hereunder and  thereunder.  The execution,
delivery and  performance by Seller of this Agreement and the other  Transaction
Documents  to which it is a party  have been duly  authorized  by all  necessary
corporate action on the part of the Seller and no other corporate proceedings on
the part of the Seller is  necessary to authorize  the  execution,  delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party or the  consummation of any of the transactions  contemplated  hereby or
thereby. This Agreement and other Transaction Documents (when executed) to which
the  Seller is a party  have been (or,  at Closing  will be) duly  executed  and
delivered by the Seller and  constitute  (or at Closing,  will  constitute)  the
legal,  valid and binding  obligations  of the Seller,  enforceable  against the
Seller in  accordance  with  their  terms,  subject  to  applicable  bankruptcy,
insolvency or similar laws in effect that affect the  enforcement  of creditors'
rights  generally  and to general  principles of equity  (regardless  of whether
enforcement is sought in equity or at law).

     (b) The Company has all requisite  corporate power and authority to execute
and deliver the Transaction  Documents to which it is a party and to perform its
obligations thereunder.  The execution,  delivery and performance by the Company
of the Transaction Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Company and no other corporate
proceedings  on the part of the Company is necessary to authorize the execution,
delivery and performance of the Transaction  Documents to which it is a party or
the  consummation  of any of  the  transactions  contemplated  or  thereby.  The
Transaction Documents to which the Company is a party (when executed) at Closing
will be duly  executed  and  delivered  by the Company  and,  at  Closing,  will
constitute the legal, valid and binding obligations of the Company,  enforceable
against  the  Company in  accordance  with their  terms,  subject to  applicable
bankruptcy,  insolvency or similar laws in effect that affect the enforcement of
creditors' rights generally and to general  principles of equity  (regardless of
whether enforcement is sought in equity or at law).

     Section  3.3.  CAPITALIZATION  AND  OWNERSHIP.  SCHEDULE 3.3 sets forth the
designation,  par value and the number of  authorized,  issued  and  outstanding
shares of capital stock of the Company.  The Shares constitute all of the issued
and  outstanding  shares of capital  stock of the Company and there are no other
shares of capital stock of the Company issued or outstanding.  All of the Shares
are duly authorized,  validly issued, fully paid and non-assessable.  The Seller
is, and on the Closing Date will be, the sole record holder and beneficial owner
of all of the Shares,  free and clear of any Lien (other than any restriction on
subsequent  transferability  by Purchaser imposed by Applicable  Insurance Codes
and applicable  federal or state  securities  laws).  Except for this Agreement,
there  are  no  subscriptions,  options,  warrants,  calls,  preemptive  rights,
commitments  or other rights  (contingent or otherwise) to purchase or otherwise
receive,  nor are there any securities or  instruments  of any kind  convertible
into or exchangeable  for, any capital stock of the Company.  Neither Seller nor

                                      -10-
<PAGE>

Company  is a  party  to any  agreement  with a third  party  which  places  any
restriction  upon, or which creates any voting trust,  proxy, or other agreement
with respect to, the voting,  purchase,  redemption,  acquisition or transfer of
the Shares.

     Section  3.4.  SUBSIDIARIES.  As of the  Closing,  the Company will not own
beneficially,  directly or indirectly, any shares of capital stock or securities
convertible   into  capital  stock  of  any  other   corporation   or  have  any
participating  interest in any partnership,  limited liability company, or joint
venture, or control, directly or indirectly, any other Person.

     Section 3.5. NO CONFLICTS  Assuming  receipt of the Consents (as defined in
SECTION 3.6 below),  the  execution,  delivery and  performance by the Seller of
this  Agreement  and of the  Seller  and the  Company  of the other  Transaction
Documents  to which each are a party and the  consummation  of the  transactions
contemplated hereby and thereby do not and will not conflict with, result in any
breach or violation  of,  constitute a default  under (or an event that with the
giving of notice or the lapse of time or both would constitute a default under),
or give rise to any right of termination, cause a loss, cancellation, suspension
or adverse  modification  of, or  acceleration of any right or obligation of the
Seller or the Company under, or result in the creation or imposition of any Lien
upon any  assets or  properties  of the  Seller or the  Company by reason of the
terms of (a) the  certificate  or  articles  of  incorporation  or bylaws of the
Seller or the Company,  (b) except as  disclosed  on SCHEDULE  3.5, any material
Contract  to which the Seller or the Company is a party or by or to which any of
them or their assets or properties (including,  without limitation,  the Shares)
may be bound or subject,  (c) any applicable  material  order,  writ,  judgment,
injunction,  award, decree, law, statute,  ordinance,  rule or regulation or (d)
any License or any other material  Permit used or held by the Company or Seller,
other than,  in the case of clause (b) and (c) above,  any such items that would
not be reasonably likely to have a Material Adverse Effect or a material adverse
effect on the ability of the Seller to execute and deliver this Agreement or the
other  Transaction  Documents to which it is a party, to perform its obligations
hereunder or thereunder,  or to consummate the transactions  contemplated hereby
and thereby.

     Section 3.6.  CONSENTS AND APPROVALS.  Except as set forth on SCHEDULE 3.6,
no consent, approval, authorization, license or order of, registration or filing
with, or notice to, any Governmental  Entity or any other Person  (collectively,
"CONSENTS")  is  necessary  to be  obtained,  made or given by the Seller or the
Company in  connection  with the  execution  and  delivery by the Seller of this
Agreement  or the Seller or the Company of the other  Transaction  Documents  to
which it is a party,  the  performance  by the  Seller or the  Company  of their
obligations  hereunder and thereunder and the  consummation of the  transactions
contemplated hereby and thereby, other than such Consents which, if not obtained
or made,  would not be reasonably  likely to have a Material Adverse Effect or a
material adverse effect on the ability of the Seller to execute and deliver this
Agreement or the other Transaction  Documents to which it is a party, to perform
its obligations hereunder or to consummate the transactions  contemplated hereby
or thereby.

     Section 3.7.  TITLE TO SHARES.  The Seller has good and valid title to each
of the  Shares,  free and clear of all Liens  (other  than any  restrictions  on

                                      -11-
<PAGE>

subsequent  transferability  by  Purchaser of the Shares  imposed by  Applicable
Insurance Codes and applicable federal or state securities laws).

     Section 3.8. CONTRACTS. SCHEDULE 3.8 sets forth a true and complete list of
all of the  following  Contracts  to which the Company is a party or pursuant to
which  any of its  properties  or  assets  is  bound  (excluding  Insurance  and
Reinsurance  Contracts  assumed  or  ceded  by the  Company  in  conduct  of its
insurance and reinsurance business): (x) all Intercompany Agreements and (y) all
other  material  Contracts.  The Seller has made  available to  Purchaser  true,
correct and complete copies of all Contracts listed on SCHEDULE 3.8.

     Section 3.9. FINANCIAL  STATEMENTS.  The Company has furnished to Purchaser
true,  correct and complete  copies of the Statutory  Statements of the Company.
The  Statutory  Statements  of the  Company  were  prepared in  accordance  with
Statutory Accounting Practices of the Domiciliary Insurance Department,  and the
Applicable Insurance Code,  consistently applied throughout the periods involved
(except as may be indicated in the notes  thereto  regarding the adoption of new
accounting  policies),  have been audited and present fairly, in accordance with
Statutory Accounting Practices of the Domiciliary Insurance Department,  and the
Applicable  Insurance Code, the statutory  financial  position of the Company at
the respective  dates thereof and the results of operations of the Company,  for
the  respective  periods  then  ended,   except  that  the  quarterly  Statutory
Statements  of the Company  have not been  audited and are or will be subject to
normal recurring  year-end audit  adjustments.  The Statutory  Statements of the
Company complied in all material respects with Statutory Accounting Practices of
the Domiciliary  Insurance  Department,  and the Applicable  Insurance Code, and
were complete and correct in all material  respects when filed,  and no material
deficiency  has been  asserted in writing with  respect to any of the  Statutory
Statements of the Company by any Applicable Insurance Department.

     Section 3.10. NO MATERIAL ADVERSE CHANGE.  Since December 31, 2007,  except
with  respect to the  Transaction  Documents,  the  Company  has  conducted  its
business in the ordinary  course in all material  respects  consistent with past
practice and no change or event has occurred or condition  exists that has had a
Material   Adverse  Effect.   The  Company  ceased  writing  new  Insurance  and
Reinsurance Contracts in 1991, and has been in run-off since.

     Section 3.11.  ASSETS AND  LIABILITIES  AT CLOSING.  Except as disclosed in
SCHEDULE 3.11, on the Closing Date (after giving effect to the NICO  Reinsurance
Agreement,  and  the  transactions  contemplated  hereunder,  including  without
limitation  Section 5.8 hereof),  the Company's  assets shall consist of nothing
more than the Closing Assets (it being understood that such assets shall be free
and clear of all Liens).  Except as disclosed in SCHEDULE 3.11, to the knowledge
of the Seller after due inquiry,  the Company has no  liabilities or obligations
of any nature  except (i) as  disclosed  or  reserved  against in the  Statutory
Statements  of  the  Company,   including  the  notes  thereto,   and  (ii)  for
non-material  liabilities  or  obligations  that were  incurred in the  ordinary
course of business consistent with past practice.

     Section 3.12.  TAXES.  Except as otherwise  disclosed in SCHEDULE 3.12, (i)
the Company  has filed (or joined in the filing of) when due (after  taking into
account all properly requested  extensions) all material Tax Returns required by
applicable  law to be  filed  with  respect  to the  Company.  All Tax  Returns,
including  amendments to date, filed (or joined in the filing of) by the Company

                                      -12-
<PAGE>

completely,  accurately, and correctly reflected the facts regarding the income,
properties,  operations  and  status  of the  Company  as  required  to be shown
thereon.  All Taxes  shown to be due on such Tax  Returns  have been paid,  (ii)
there is no pending  examination or proceeding by any Taxing Authority or agency
with respect to the Company  relating to the  assessment  or  collection  of any
material Tax or assessment, nor is there any written claim for additional Tax or
assessment  being  asserted  by any Taxing  Authority,  (iii)  there has been no
waiver or extension of any applicable  statute of limitations for the assessment
or  collection  of any such Taxes of the Company;  and (iv) the Company is not a
party to any tax sharing  agreement  other than with  Seller and its  Affiliates
providing  for the payment of Taxes,  payment for Tax  losses,  entitlements  to
refunds or similar Tax  matters.  There is no tax Lien,  whether  imposed by any
federal, state, county or local taxing authority outstanding against the assets,
properties or  businesses of the Company,  except for liens arising by operation
of law for accrued taxes not yet due.

     Section  3.13.  LEGAL  PROCEEDINGS.  Except as set forth in SCHEDULE  3.13,
there  is  no  action,  suit,  claim,   arbitration,   proceeding,   inquiry  or
investigation  pending or, to the  knowledge of Seller,  threatened  against the
Company or against the Seller with respect to the Company,  or any of the assets
of the Company,  by or before any court, other Governmental Entity or arbitrator
other than actions, suits, claims or proceedings which, if adversely determined,
would have a Material Adverse Effect.

     Section 3.14. COMPLIANCE WITH LAW; PERMITS. Except for matters disclosed in
SCHEDULE  3.14,  the Company is in compliance in all material  respects with (i)
all applicable  laws,  ordinances,  rules and  regulations  of all  governmental
authorities, (ii) all applicable orders, writs, judgments,  injunctions, awards,
determinations  and  decrees  of  any  court,   other  Governmental   Entity  or
arbitrator,  (iii) the Licenses, and (iv) any Permits (other than the Licenses),
except in the case of clause  (iv)  where the  failure  to comply  has not had a
Material Adverse Effect.  SCHEDULE 3.14(I) contains a complete and accurate list
of all the  Licenses.  Except for matters  disclosed in SCHEDULE  3.14(I),  each
License  set forth in SCHEDULE  3.14(I) is in full force and effect  without any
default or violation  thereunder in any material respect by the Company.  Except
as set forth in SCHEDULE 3.14(I),  no proceeding is pending or, to the knowledge
of  Seller,  threatened  by any  governmental  authority  to  revoke or deny the
renewal of any such License. The Company has not received notice in writing that
any  License  may not in the  ordinary  course be renewed  upon its  expiration.
SCHEDULE  3.14(II) contains a complete and accurate list of all material Permits
(other than the Licenses) used or held by the Company or the Seller.  Except for
matters disclosed in SCHEDULE  3.14(II),  each such material Permit set forth in
SCHEDULE  3.14(II) is in full force and effect  without any default or violation
thereunder, except as otherwise would not have a Material Adverse Effect. Except
as set forth in SCHEDULE 3.14(II), no proceeding is pending or, to the knowledge
of  Seller,  threatened  by any  governmental  authority  to  revoke or deny the
renewal of any such material  Permit and the Company has not received  notice in
writing that any material  Permit may not in the ordinary course be renewed upon
its expiration, except as otherwise would not have a Material Adverse Effect.

     Section 3.15.  EMPLOYEES AND BENEFIT PLANS. Except as disclosed on SCHEDULE
3.15,  the  Company (i) does not  currently  have any  employees,  (ii) does not
currently  sponsor  any  Employee  Benefit  Plans,  (iii)  has no  liability  or

                                      -13-
<PAGE>

responsibility  with respect to any Person who was previously an employee of the
Company or with respect to any Employee  Benefit Plan  previously  maintained by
the Company,  and (iv) has no liability  or  responsibility  with respect to any
employee or any Employee  Benefit Plan  sponsored or maintained by Seller or any
other Affiliate of the Company.

     Section 3.16.  ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 3.16,
(i) the Company has complied and is now in compliance, in all material respects,
with all applicable  federal,  state and local laws,  statutes,  regulations and
ordinances  governing  or relating to  pollution  or the  management,  handling,
disposal or release of hazardous  substances,  or the protection of human health
or the environment  ("ENVIRONMENTAL LAWS"), and (ii) neither the Company nor the
Seller,  has  received  any  written  notice,  request for  information,  order,
complaint,  notice  of  potential  responsibility,  penalty  or  claim  from any
governmental  authority  or other  Person  alleging  that the  Company is not in
compliance with any  Environmental  Law, or other than liabilities  arising from
Insurance or Reinsurance Contracts,  alleging that the Company is responsible or
liable  under   Environmental   Laws  or  under  common  law  (with  respect  to
environmental  matters),  nor,  to the  knowledge  of the  Seller,  is any  such
environmental notice, request, order, complaint or claim threatened.

     Section 3.17. COMPANY INSURANCE POLICIES.  SCHEDULE 3.17 contains a list of
all  material  policies  of  insurance   (excluding  Insurance  and  Reinsurance
Contracts  assumed  or ceded by the  Company in  conduct  of its  insurance  and
reinsurance  business) maintained by or for the benefit of the Company as of the
date hereof with respect to its  properties and the conduct of its business (the
"COMPANY INSURANCE POLICIES").

     Section  3.18.  BANK  ACCOUNTS.  SCHEDULE 3.18 contains a true and complete
list of the names and locations of all banks and other financial institutions at
which the  Company has an account or safe  deposit  box or  maintains a banking,
custodial, or other similar relationship

     Section 3.19. NO BROKERS.  No broker,  finder or investment banker or other
Person  acting on behalf of the Seller or Company is or will be  entitled to any
brokerage,  finder's or other fee,  compensation  or  commission  from Seller or
Company.

     Section  3.20.  NO OTHER  REPRESENTATIONS  OR  WARRANTIES.  EXCEPT  FOR THE
REPRESENTATIONS  AND  WARRANTIES  CONTAINED IN THIS ARTICLE III (AS QUALIFIED BY
THE SCHEDULES) OR THE  TRANSACTION  DOCUMENTS,  NEITHER THE SELLER NOR ANY OTHER
PERSON  MAKES ANY OTHER  EXPRESS  OR IMPLIED  REPRESENTATION  OR  WARRANTY  WITH
RESPECT TO THE SELLER, THE SELLER'S AFFILIATES, THE COMPANY, OR THE TRANSACTIONS
CONTEMPLATED  BY THIS  AGREEMENT OR THE  TRANSACTION  DOCUMENTS,  AND THE SELLER
DISCLAIMS ANY OTHER  REPRESENTATIONS OR WARRANTIES,  WHETHER MADE BY THE SELLER,
THE  SELLER'S  AFFILIATES,  THE COMPANY OR ANY OF THEIR  RESPECTIVE  AFFILIATES,
OFFICERS,  DIRECTORS,  EMPLOYEES,  AGENTS  OR  REPRESENTATIVES.  EXCEPT  FOR THE
REPRESENTATIONS  AND  WARRANTIES  CONTAINED IN THIS ARTICLE III (AS QUALIFIED BY
THE SCHEDULES) OR THE  TRANSACTION  DOCUMENTS,  THE SELLER HEREBY  DISCLAIMS ALL
LIABILITY  AND  RESPONSIBILITY  FOR ANY  REPRESENTATION,  WARRANTY,  PROJECTION,
FORECAST, STATEMENT OR INFORMATION MADE, COMMUNICATED OR FURNISHED (ORALLY OR IN

                                      -14-
<PAGE>

WRITING) TO THE PURCHASER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES (INCLUDING
ANY  OPINION,  INFORMATION,  PROJECTION  OR ADVICE  THAT MAY HAVE BEEN OR MAY BE
PROVIDED TO THE PURCHASER OR ANY OF ITS  AFFILIATES  BY ANY  DIRECTOR,  OFFICER,
EMPLOYEE,  AGENT, CONSULTANT OR REPRESENTATIVE OF THE SELLER, THE COMPANY OR ANY
OF THEIR RESPECTIVE AFFILIATES)..

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The  Purchaser  represents  and  warrants  to the  Seller  that  except  as
disclosed  in any of the  Schedules  attached  hereto (it being  understood  and
agreed that the  information  disclosed  in any  Schedule  shall be deemed to be
disclosed with respect to, and incorporated in, any other section or subsections
contained  in this  ARTICLE IV unless it is not  reasonably  apparent  that such
disclosure is applicable to another section or subsection) as follows:

     Section  4.1.  THE  ORGANIZATION  AND GOOD  STANDING.  The  Purchaser  is a
corporation  duly  incorporated  and  subsisting  under the laws of the state of
Delaware and has all the requisite corporate power and authority to own and hold
its assets and properties and to carry on its business as now being conducted.

     Section 4.2. AUTHORITY AND ENFORCEABILITY.  The Purchaser has all requisite
corporate  power and  authority  to execute and deliver this  Agreement  and the
other  Transaction  Documents  to  which  it  is a  party  and  to  perform  its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the other  Transaction  Documents to which it is a party have
been (or at Closing,  will be) duly authorized by all necessary corporate action
on the part of the Purchaser and no other  corporate  proceedings on the part of
the Purchaser are necessary to authorize the execution, delivery and performance
of this Agreement and the other Transaction  Documents to which it is a party or
the consummation of any of the transactions contemplated hereby or thereby. This
Agreement  and all other  Transaction  Documents to which it is a Party has been
(or at Closing,  will be) duly  executed  and  delivered  by the  Purchaser  and
constitutes  the  legal,  valid  and  binding   obligations  of  the  Purchaser,
enforceable against the Purchaser in accordance with their terms, subject to any
applicable  bankruptcy,  insolvency,  or similar  laws in effect that affect the
enforcement of creditors'  rights generally and to general  principles of equity
(regardless of whether enforcement is sought in equity or at law).

     Section 4.3.  INVESTMENT  INTENT. The Purchaser is acquiring the Shares for
its own  account  and not with a view to, or for  offer or resale in  connection
with, their  distribution  within the meaning of the Securities Act of 1933 (the
"SECURITIES ACT"). The Purchaser acknowledges that the Shares are not registered
under the  Securities  Act or  registered  or qualified for sale under any state
securities  law,  and that none of the Shares may be offered  for sale,  sold or
otherwise  transferred  unless they are registered or otherwise  qualified under
federal and any applicable state securities law or unless an exemption from such
registrations  or  qualifications  is available.  The  Purchaser has  sufficient

                                      -15-
<PAGE>

knowledge  and  experience  in financial  and  business  matters to enable it to
evaluate the risks of  investment in such Shares and has the ability to bear the
economic risks of such investment.

     Section 4.4. NO CONFLICTS  Assuming receipt of the Consents (referred to in
SECTION 4.5 below), the execution,  delivery and performance by the Purchaser of
this  Agreement and the other  Transaction  Documents to which it is a party and
the consummation of the transactions  contemplated hereby and thereby do not and
will not  conflict  with,  result in any breach or  violation  of,  constitute a
default  under (or an event  that with the giving of notice or the lapse of time
or both  would  constitute  a  default  under),  or give  rise to any  right  of
termination, cause a loss, cancellation,  suspension or adverse modification of,
or acceleration of any right or obligation of the Purchaser  under, or result in
the  creation or  imposition  of any Lien upon any assets or  properties  of the
Purchaser  by  reason  of the  terms  of (a)  the  certificate  or  articles  of
incorporation or bylaws of the Purchaser, (b) any material Contract to which the
Purchaser is a party or by or to which any of them or their assets or properties
may be bound or subject,  (c) any applicable  material  order,  writ,  judgment,
injunction,  award, decree, law, statute,  ordinance,  rule or regulation or (d)
any  material  Permit  used  or  held  by  the  Purchaser  (including,   without
limitation,  any  certificate  of  authority  or license  to  conduct  insurance
business in any state), other than, in the case of clause (b) and (c) above, any
such items that would not be reasonably likely to have a material adverse effect
on the ability of the  Purchaser  to execute and deliver  this  Agreement or the
other  Transaction  Documents to which it is a party, to perform its obligations
hereunder or thereunder,  or to consummate the transactions  contemplated hereby
and thereby.

     Section 4.5.  CONSENTS AND APPROVALS.  Except as set forth on SCHEDULE 4.5,
no Consents  are  necessary to be  obtained,  made or given by the  Purchaser in
connection  with the execution  and delivery by the Purchaser of this  Agreement
and the other  Transaction  Documents to which it is a party, the performance by
the Purchaser of its obligations  hereunder and thereunder and the  consummation
of the transactions  contemplated  hereby and thereby,  other than such Consents
which,  if not  obtained  or made,  would  not be  reasonably  likely  to have a
material  adverse  effect on the ability of the Purchaser to execute and deliver
this  Agreement or the other  Transaction  Documents to which it is a party,  to
perform its obligations hereunder or to consummate the transactions contemplated
hereby and thereby.

     Section  4.6.  LEGAL  PROCEEDINGS.   There  is  no  action,   suit,  claim,
arbitration,  proceeding,  inquiry or investigation pending or, to the knowledge
of the Purchaser, threatened against the Purchaser by or before any court, other
governmental  entity or  arbitrator  that could  delay,  impair or  prevent  the
Purchaser from performing its obligations hereunder.

     Section  4.7. NO BROKERS.  Except as set forth on SCHEDULE  4.7, no broker,
finder or investment banker or other Person acting on behalf of the Purchaser is
or will be entitled to any  brokerage,  finder's or other fee,  compensation  or
commission as a result of this transaction.

     Section  4.9.  NO  OTHER  REPRESENTATIONS  OR  WARRANTIES.  EXCEPT  FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE IV (AS QUALIFIED BY THE
SCHEDULES)  OR THE  TRANSACTION  DOCUMENTS,  NEITHER THE PURCHASER NOR ANY OTHER
PERSON  MAKES ANY OTHER  EXPRESS  OR IMPLIED  REPRESENTATION  OR  WARRANTY  WITH
RESPECT  TO THE  PURCHASER,  THE  PURCHASER'S  AFFILIATES  OR  THE  TRANSACTIONS

                                      -16-
<PAGE>

CONTEMPLATED BY THIS AGREEMENT OR THE TRANSACTION  DOCUMENTS,  AND THE PURCHASER
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY THE PURCHASER
OR THE PURCHASER'S AFFILIATES OR ANY OF THEIR RESPECTIVE  AFFILIATES,  OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES

                                   ARTICLE V

                                    COVENANTS

     Section 5.1. CONSENTS AND FILINGS; FURTHER ASSURANCES.

     (a)  Subject to the terms and  conditions  of this  Agreement,  each of the
parties hereto will use its commercially reasonable efforts to take promptly, or
cause to be taken promptly, all actions, and to do promptly, or cause to be done
promptly,  all things  necessary,  proper or  advisable to  consummate  and make
effective the transactions contemplated by this Agreement.

     (b)  Each of the  parties  hereto  shall  use its  commercially  reasonable
efforts to obtain, as soon as practicable  after the date hereof,  any necessary
Consents  of, and make any filing  with or give any notice to, any  Governmental
Entities and other Persons (including, without limitation,  insurance approvals)
as are required to be obtained,  made or given by such party to  consummate  the
transactions  contemplated  by  this  Agreement  and any  Transaction  Document.
Without limiting the generality of the foregoing, from the date hereof until the
earlier of the Closing Date and the termination of this Agreement, Seller agrees
to  continue  to use its  commercially  reasonable  efforts to  obtain,  for the
benefit  of the  Company,  as soon as  practicable  after  the  date  hereof,  a
Certificate of Authority from the  Commonwealth of Kentucky and a Certificate of
Authority  from the  Financial  Management  Service  of the U.S.  Department  of
Treasury.  Each party shall pay all amounts reasonably required to be paid by it
in connection  with  obtaining  any Consents  that it is required to obtain.  In
furtherance of the foregoing,  each party shall use its commercially  reasonable
efforts to obtain the  necessary  Consents  of any  Governmental  Entities on or
prior to December  31, 2008.  The Seller and the  Purchaser  shall  provide each
other with a reasonable  opportunity to review and comment upon submissions made
to the applicable Insurance  Departments in connection with the Seller insurance
approvals and the Purchaser insurance  approvals,  respectively,  and shall keep
one another  reasonably  informed of  developments  relating to their efforts to
obtain such insurance approvals.

     (c) To the extent permitted by law and the applicable  Governmental Entity,
the  Seller  and  Purchaser  shall  each  have the right to  participate  in any
meetings or telephone  conferences  in which the substance of the Form A and any
other regulatory filings is discussed. Subject to applicable law relating to the
sharing of information,  the Purchaser shall submit all such filings,  requests,
responses  and hearing  testimony,  witness  lists and other  similar  materials
relating  to any hearing to the Seller for its review  prior to filing  thereof,
provided  that nothing  herein  shall  obligate  Company to provide  Seller with
private  information  concerning any proposed new director or officer of Company
or any Affiliate of Company and nothing herein shall obligate Company to provide

                                      -17-
<PAGE>

Seller with any  confidential  information  concerning  Purchaser or any private
information regarding any director or officer of Purchaser or its Affiliates.

     (d) In  furtherance  and not in  limitation of the covenants of the parties
hereto  contained in this SECTION 5.1, each of the parties  hereto shall use its
commercially  reasonable  efforts to resolve such objections,  if any, as may be
asserted  by  any   governmental   entity  with  respect  to  the   transactions
contemplated by this Agreement or any other Transaction Document.

     Section 5.2. PUBLIC  ANNOUNCEMENTS.  Prior to the Closing Date, neither the
Purchaser  nor the Seller  will (and the Seller  shall cause the Company not to)
issue  any  public  announcement  or  similar  publicity  with  respect  to this
Agreement or the transactions  contemplated by this Agreement  without the prior
consent of the Seller (in the case of the  Purchaser)  or the  Purchaser (in the
case of the Seller or the Company), except to the extent required by law.

     Section 5.3. TAX MATTERS.

     (a) PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES.

          (i) The Seller shall be responsible  for the preparation and filing of
     (A) all Tax Returns for any Income  Taxes (as  hereinafter  defined) of the
     Company for all  taxable  periods  that end on or before the Closing  Date,
     including a Tax Return for the partial  year January 1, 2008 to the date of
     Closing  if  permitted  under  the  provisions  of  subsection  (v) of this
     subsection (a), and (B) all other Tax Returns of the Company required to be
     filed prior to the Closing Date.  For purposes of this  Agreement,  "INCOME
     TAXES"  shall mean any taxes  imposed  upon or measured by net income.  The
     Seller shall make or cause to be made all payments required with respect to
     any such Tax Returns.

          (ii) For all Tax Returns for periods beginning before and ending after
     the Closing Date, the Tax liability  with respect  thereto shall be accrued
     as of the Closing Date based upon a closing of the Company's books.  Seller
     shall be responsible  for and shall pay to Purchaser an amount equal to the
     Tax liability so accrued  within 30 days after the Closing  Date,  provided
     that such Tax liability has not been  accounted for in the  calculation  of
     the Closing Date Policyholders' Surplus. Purchaser shall be responsible for
     the preparation and filing of all such Tax Returns.

          (iii) The  Purchaser  shall be  responsible  for the  preparation  and
     filing of all other Tax Returns for the Company.  The Purchaser  shall make
     all payments required with respect to any such Tax Returns.

          (iv) The Purchaser shall be responsible for the payment of, and hereby
     covenants and agrees to pay, any transfer,  sales, use, stamp,  conveyance,
     value  added,  recording,  registration,  documentary,  filing,  and  other
     non-Income Taxes and administrative fees (including notary fees) arising in
     connection  with the  consummation  of the sale of the Shares which are the
     responsibility  of Purchaser  under  applicable law. Each of the Seller and
     the   Purchaser   shall   prepare  all  necessary  Tax  Returns  and  other
     documentation  that it is required  to prepare  under  applicable  law with
     respect to all taxes referenced in the previous sentence.

                                      -18-
<PAGE>

          (v) The Seller and  Purchaser  agree that if the Company is  permitted
     but not required  under  applicable  foreign,  state,  or local tax laws to
     treat the Closing Date as the last day of a taxable period, the Seller, the
     Purchaser,  and the  Company  shall  treat  such  day as the  last day of a
     taxable period.

     (b) REFUNDS.

          (i) The  Seller  shall  be  entitled  to any  refunds  (including  any
     interest  paid thereon) or credits of taxes with respect to the Company for
     which  the  Seller  is   responsible   for  filing  the  Tax  Return  under
     subparagraph  (a) (i) of this SECTION 5.3, and for the  preclosing  taxable
     period  under  subparagraph  (a)(ii),  provided  that such amounts were not
     accounted  for  in  the  calculation  of the  Closing  Date  Policyholders'
     Surplus.

          (ii) The  Purchaser  shall be entitled to any refunds  (including  any
     interest  paid thereon) or credits of taxes with respect to the Company for
     which  the  Purchaser  is  responsible  for  filing  the Tax  Return  under
     subparagraph (a) (iii) of this SECTION 5.3, provided that such amounts were
     not accounted  for in the  calculation  of the Closing Date  Policyholders'
     Surplus..

          (iii) The  Purchaser  shall forward to or reimburse the Seller for any
     such  refunds  (including  any  interest  paid  thereon) or credits due the
     Seller after receipt thereof,  and the Seller shall promptly forward to the
     Purchaser or reimburse the Purchaser  for any such refunds  (including  any
     interest paid thereon) or credits due the Purchaser after receipt thereof.

     (c) COOPERATION ON TAX MATTERS; TAX AUDITS.

          (i) The Seller and the Purchaser  (each a "PARTY") shall  cooperate in
     the  preparation of all Tax Returns for any tax periods for which one Party
     could reasonably require the assistance of the other Party in obtaining any
     necessary  information.  Such cooperation shall include, but not be limited
     to, furnishing prior years' Tax Returns or return  preparation  packages to
     the extent related to the Company illustrating previous reporting practices
     or containing  historical  information  relevant to the preparation of such
     Tax Returns,  and  furnishing  such other  information  within such Party's
     possession requested by the Party filing such Tax Returns as is relevant to
     their  preparation.  Such  cooperation and  information  also shall include
     provision  of limited  powers of  attorney  for the  purpose of signing Tax
     Returns and defending audits and promptly  forwarding copies of appropriate
     notices  and  forms or other  communications  received  from or sent to any
     Taxing  Authority that relate to the Company,  and providing  copies of all
     relevant Tax Returns to the extent  related to the Company,  together  with
     accompanying  schedules  and  related  workpapers,  documents  relating  to
     rulings  or other  determinations  by any  Taxing  Authority,  and  records
     concerning  the  ownership  and tax basis of property,  which the requested
     Party may possess.  The Seller or the Purchaser shall make their respective
     employees  and  facilities  available  on a  mutually  convenient  basis to
     explain any documents or information provided hereunder.

          (ii) The Seller shall have the right,  at its own expense,  to control
     any audit or examination by any Taxing  Authority  ("TAX AUDIT"),  initiate
     any  claim for  refund,  and  contest,  resolve,  and  defend  against  any
     assessment,   notice  of  deficiency,   or  other  adjustment  or  proposed

                                      -19-
<PAGE>

     adjustment  relating to any and all taxes for any taxable  period ending on
     or before the Closing Date for which it must file a Tax Return with respect
     to the Company.  The Purchaser shall have the right, at its own expense, to
     control  any other Tax Audit,  initiate  any other  claim for  refund,  and
     contest,  resolve,  and  defend  against  any other  assessment,  notice of
     deficiency,  or other adjustment or proposed  adjustment  relating to taxes
     with respect to the Company.

     (d) TERMINATION OF TAX SHARING  AGREEMENTS.  All tax sharing  agreements or
similar arrangements,  if any, with respect to or involving the Company shall be
terminated  with respect to the Company prior to the Closing Date and, after the
Closing Date,  the Company and the Purchaser  shall not be bound thereby or have
any  liability  thereunder  for amounts  due in respect of periods  ending on or
before the Closing Date.

     Section 5.4.  CONDUCT OF BUSINESS.  Except as set forth on SCHEDULE 5.4 and
except  as  otherwise  expressly  permitted  by  this  Agreement  or  any  other
Transaction Document (including,  without limitation, SECTION 5.4 hereto), or as
consented in writing by the Purchaser, from the date hereof to and including the
Closing Date,  the Seller shall cause the Company to conduct its business in the
ordinary course  consistent with past practice.  Without limiting the generality
of the  foregoing,  from the date hereof to and including the Closing Date,  the
Seller  will not,  without  the prior  written  consent of the  Purchaser  (such
consent  not to be  unreasonably  withheld  or  delayed),  permit the Company to
directly or indirectly:

          (i) amend or modify its  certificate  or  articles  of  incorporation,
     bylaws or other charter or organization documents;

          (ii) merge or  consolidate  with or acquire the  business of any other
     corporation  or other  business  organization  or,  except in the  ordinary
     course of  business,  acquire any  property or assets of any other  Person;

          (iii) split, combine or reclassify any shares of its capital stock, or
     declare,  pay or set aside any sum for any  dividend or other  distribution
     (whether in cash, stock or property,  any combination thereof or otherwise)
     in respect of its capital stock, or redeem,  purchase or otherwise  acquire
     (or agree to redeem,  purchase  or  otherwise  acquire)  any of its capital
     stock or any of its other securities or any securities of the Company;

          (iv) adopt a plan of  complete  or partial  liquidation,  dissolution,
     rehabilitation,  merger,  consolidation,  restructuring,  recapitalization,
     redomestication or other reorganization; or

          (v) take any action (or omit to take any action) which would result in
     a Material Adverse Effect; or

          (vi) enter into any agreement,  or otherwise become  obligated,  to do
     any of the foregoing.

     Section  5.5.  ACCESS;  CONFIDENTIALITY.  From the date  hereof  until  the
Closing Date, Purchaser,  and its representatives will have reasonable access to
the books and records,  Contracts,  management and personnel of Company relating
to the  operations  and  business  of  Company  at all  reasonable  times,  upon
reasonable  notice.  Subject to the prior  written  consent of the  Seller,  any
Person  providing  financing in connection  with the  transactions  contemplated

                                      -20-
<PAGE>

hereby will have reasonable  access to the books and records of Company relating
to the  operations  and  business  of  Company  at all  reasonable  times,  upon
reasonable notice. The Purchaser,  its representatives,  and such other Persons,
as applicable,  shall keep  confidential all information and documents  provided
under this SECTION 5.5 in accordance with the terms of the Mutual Non-Disclosure
Agreement entered into between the Purchaser and Seller dated September 26, 2007
(the "CONFIDENTIALITY AGREEMENT"), the terms of which are incorporated herein by
reference and shall continue in force until the Closing Date.

     Section 5.6. LITIGATION  COOPERATION.  From and after the Closing Date, the
Purchaser  shall cause the  Company to use  commercially  reasonable  efforts to
cooperate,  engage in  communications  and share,  exchange  and jointly  create
documents,  information, and analyses in connection with, and in order to enable
Seller to respond to any action  brought  against  the Seller or its  current or
former  Affiliates (other than the Company) relating or arising from the conduct
or  operations  of the  Company  that  occurred  prior  to the  Closing  Date (a
"THIRD-PARTY  CLAIM"). Such cooperation shall include,  without limitation,  (i)
the  provision  to the Seller of all  records  and  information  relating to the
Company concerning Third-Party Claims as reasonably requested by the Seller, and
(ii) providing Seller with access (upon reasonable advance notice) to materials,
documents,  emails  and data  residing  with or in the  possession,  custody  or
control of the Company or employees relating to any Third-Party Claim (provided,
that such access  shall be granted  only  during  normal  business  hours of the
Company and shall not otherwise be disruptive to the operations of the Purchaser
or the  Company).  To the extent  that the Seller and the Company are parties to
the same Third-Party Claim,  subject to the Purchaser's rights under Section 9.1
hereof,  the appropriate  parties to such claim shall consult as to strategy and
seek to coordinate their actions.

     Section  5.7.   PROPRIETARY  AND  THIRD  PARTY   SOFTWARE.   (a)  Purchaser
acknowledges  and  agrees  that all  rights  in and to any  software,  including
without limitation, source code, object code and related documentation, that was
created,  conceived developed or acquired,  whether jointly or individually,  by
the Seller or any of its  Affiliates  (but  excluding  any third party  software
licensed by the Seller or any of the Seller's  Affiliates)  prior to the Closing
Date shall belong solely to the Seller,  shall be  proprietary to the Seller and
shall be excluded from the assets of the Company to be  transferred to Purchaser
at Closing ("PROPRIETARY SOFTWARE").

     (b) Purchaser  acknowledges  and agrees that  Purchaser,  the Company,  and
their  respective  Affiliates  are not acquiring  any ownership  interest or any
other rights, in whole or in part, in the Proprietary  Software.  The Purchaser,
acting on behalf of itself, the Company, and their respective  Affiliates hereby
assigns,  transfers,  quit-claims and relinquishes to the Seller or its designee
all right, title and interest the Purchaser,  the Company,  and their respective
Affiliates may heretofore have had in and to the Proprietary Software, including
ownership  interests  in the  Proprietary  Software.  From and after the Closing
Date, if reasonably  requested by Seller,  Purchaser  shall cause the Company to
execute  such other or  additional  instruments  of  transfer or  conveyance  in
respect of the  Proprietary  Software  to give full effect to and to perfect the
ownership and proprietary  rights of Seller in and to the Proprietary  Software;
PROVIDED,  HOWEVER,  that Seller  shall bear all costs and  expenses  payable by
Purchaser or the Company (including,  without limitation,  reasonable  attorneys
fees and  expenses)  in  connection  with the  execution  by Company of any such

                                      -21-
<PAGE>

instruments at the specific request of the Seller.  Purchaser agrees (and agrees
to cause the Company) not to contest the  ownership or validity of any rights of
the Seller or any of its Affiliates in the Proprietary Software.

     Section 5.8. INTERCOMPANY ACCOUNTS;  INTERCOMPANY AGREEMENTS. Except as set
forth in  SCHEDULE  5.8,  the  Seller  shall  cause  all  intercompany  accounts
receivable or payable  (whether or not currently due or payable) between (x) the
Company,  on the one hand,  and (y) the Seller or any of its  Affiliates  (other
than the Company), on the other hand, to be settled in full (without any premium
or penalty), at or prior to the Closing, and all Intercompany Agreements, except
for the NICO Reinsurance Agreement and Reinsurance Agreement between the Company
and  Columbia,  shall be  terminated  as of the  Closing  Date  without  further
liability to the Company thereunder.

     Section  5.9.  RECORDS  RETENTION.  From and after the Closing  Date,  upon
reasonable  notice,  Purchaser  and  Seller  agree  to  furnish  or  cause to be
furnished  to each  other  and their  representatives,  employees,  counsel  and
accountants  access,  during normal  business  hours,  to such  information in a
readily readable and accessible form, assistance and cooperation relating to the
Company as is reasonably necessary for financial  reporting,  loss reporting and
accounting  matters,  the  preparation  and  filing of any Tax  Returns,  or the
defense  of  any  Tax  Claim,  or  third  party  claim,  and to  meet  reporting
requirements to any  retrocessionaires or any Governmental  Entities;  PROVIDED,
HOWEVER,  that such access and  cooperation  does not  unreasonably  disrupt the
normal  operations  of  Purchaser,  Seller  or the  Company.  From and after the
Closing Date,  Purchaser hereby  acknowledges that Seller shall on behalf of the
Company  maintain  and keep  original  copies of all books  and  records  of the
Company to the extent such books and records  relate to the business that is the
subject of the NICO  Reinsurance  Agreement  (the "COMPANY  BOOKS AND RECORDS").
Seller acknowledges,  that notwithstanding its maintenance and possession of the
Company Books and Records,  all such Company  Books and Records  remain the sole
property of the Company.  Purchaser  shall,  upon reasonable  notice and for any
reasonable  business  purpose,  have  access  during  normal  business  hours to
examine,  inspect and copy and to remove from Seller's  possession  the original
copies of such Company Books and Records;  provided that, if any of such Company
Books and Records are reasonably necessary,  as determined by Seller, for Seller
to perform its  obligations  under the NICO  Reinsurance  Agreement,  Seller may
retain copies of such Company Books and Records and the Company shall  reimburse
Seller for its  out-of-pocket  costs to copy same. Before the Seller may dispose
of any of Company Books and Records, Seller shall give Purchaser at least ninety
(90) days' prior  written  notice of its  intention  to dispose of such  Company
Books and Records and Purchaser or its designee  shall be given an  opportunity,
at its cost and  expense,  to remove and retain all or any part of such  Company
Books and  Records as  Purchaser  may elect.  From and after the  Closing  Date,
Purchaser shall cause the Company to preserve, maintain and keep, or cause to be
preserved,  maintained and kept, in a readily  readable and accessible form, all
original books and records of the Company that do not  constitute  Company Books
and Records,  including  all books and records  necessary  and  pertinent to the
Company for financial  reporting and accounting  purposes,  the  preparation and
filing of any Tax Returns, or the defense of any Tax Claim, or third party claim
(the  "PURCHASER'S  BOOKS  AND  RECORDS")  for the  shorter  of any  statute  of
limitations  applicable to any such matters and a period of seven (7) years from
the Closing Date. During such seven-year period,  Seller and its Representatives
shall,  upon reasonable  notice and for any reasonable  business  purpose,  have
access during normal business hours to examine,  inspect and copy such Purchaser

                                      -22-
<PAGE>

Books and Records.  After such seven-year period, before the Company may dispose
of any of such  Purchaser  Books and Records,  the Company  shall give Seller at
least ninety (90) days' prior written notice of its intention to dispose of such
Purchaser  Books and Records and Seller  shall be given an  opportunity,  at its
cost and expense,  to remove and retain all or any part of such Purchaser  Books
and Records as Seller may elect

     Section 5.10. NOTICE OF DEVELOPMENTS.  Seller and Purchaser shall each keep
the other advised of developments with respect to (a) regulatory submissions and
responses  with  respect  to the  transactions  contemplated  hereby and (b) any
notice or other  communication from any Person alleging that the consent of such
Person is or may be required in connection  with the  transactions  contemplated
hereunder. Prior to the Closing, Seller and Purchaser shall give the other party
prompt  notice of any breach or default by it of any  representation,  warranty,
covenant or agreement hereunder.

     Section 5.11. FURTHER ACTIONS.  FROM AND AFTER THE CLOSING DATE AND SUBJECT
TO the other  express  provisions of this  Agreement  and the other  Transaction
Documents, upon the request of any party to this Agreement, the other party will
(a) execute and deliver any other  documents  and (b) take any other  actions as
the  requesting  party may  reasonably  request to fully carry out the intent of
this Agreement and the transactions contemplated by this Agreement.

     Section 5.12.  MAINTENANCE OF  POLICYHOLDERS'  SURPLUS.  From and after the
date hereof  until the Closing  Date,  the Seller shall not, and shall cause the
Company not to, affirmatively  undertake to increase the level of Policyholders'
Surplus to exceed $50.0 million as of the Closing Date (it being  understood and
agreed that Seller shall in no event be obligated  seek  regulatory  approval to
cause the Company to declare and pay an extraordinary  dividend to Seller in the
event that such  Policyholders'  Surplus exceeds $50.0 million at any time on or
prior to the  Closing  Date).  Under no  circumstances  shall the  foregoing  be
construed  to  restrict  the  Seller or the  Company  from any  ordinary  course
business  activities,   including,  but  not  limited  to,  the  commutation  or
resolution  of  liabilities  or outwards  recoveries,  which may in fact have an
impact on the level of Policyholders' Surplus.

     Section 5.13. FINANCING.  Purchaser shall deliver to Seller, on or prior to
October 15, 2008, an officer's  certificate  of Purchaser to the effect that, as
of the date of such certificate, Purchaser has cash available or has existing or
committed (subject to customary closing conditions)  borrowing  facilities which
together are sufficient to enable it to consummate the transactions contemplated
by this Agreement (the "FINANCING CERTIFICATE").  From and after the date of the
Financing   Certificate  until  the  Closing  Date,   Purchaser  shall  use  its
commercially  reasonable efforts to comply with the covenants and to satisfy all
conditions  to  funding  set  forth  in  the  existing  or  committed  borrowing
facilities described in the Financing Certificate which are within the exclusive
control of Purchaser. Notwithstanding anything to the contrary contained herein,
the failure of Purchaser to deliver the  Financing  Certificate  to Seller shall
not  constitute  a willful  breach of this  Agreement by  Purchaser,  including,
without  limitation,  for  purposes of Seller's  rights  pursuant to SECTION 7.2
hereof.

                                      -23-
<PAGE>

                                   ARTICLE VI

                   CONDITIONS PRECEDENT TO OBLIGATION TO CLOSE

     Section 6.1. CONDITIONS TO THE OBLIGATION OF THE PURCHASER.  The obligation
of the Purchaser to consummate  the purchase of the Shares and to consummate the
other   transactions   contemplated   by  this   Agreement  is  subject  to  the
satisfaction, on or before the Closing Date, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):

     (a) each of the Seller's  representations  and warranties set forth in this
Agreement  must have been true and  correct in all  material  respects as of the
date of this  Agreement  and must be true and correct in all  material  respects
(except for (x) representations and warranties that contain qualifications as to
materiality and (y) SECTION 3.3  (Capitalization and  Ownership),which  shall be
true and correct in all  respects)  as of the Closing Date as though made on the
Closing Date (except to the extent that any such  representations  or warranties
speak as of another  date,  in which case such  representations  and  warranties
shall  be true  and  correct  in all  material  respects  at and as of the  date
specified therein);

     (b) all of the  covenants  and  obligations  that the Seller is required to
perform or comply with under this Agreement or any other Transaction Document on
or before the Closing Date must have been duly  performed  and complied  with in
all material respects;

     (c) Purchaser  shall have received a certificate  from Seller to the effect
set forth in SECTIONS 6.1(A) and (B);

     (d) all Consents or approvals  set forth in SCHEDULE  6.1(D) must have been
obtained and must be in full force and effect;

     (e)  there  must  not be in  effect  any  law,  or  court,  arbitration  or
regulatory  order  or  judgment,  and  there  must not have  been  commenced  or
threatened by any Governmental Entity any proceeding, that in any case would (i)
prohibit  or  make  illegal  the   consummation  of  any  of  the   transactions
contemplated by this Agreement or the other Transaction Documents, or (ii) cause
any of the transactions contemplated by this Agreement to be rescinded following
their consummation;

     (f) the Seller shall deliver to Purchaser  certificates  of the Company and
the  Seller,  each  dated  the  Closing  Date,  signed by the  secretary  or any
assistant  secretary of the Company and the secretary or any assistant secretary
of the Seller,  respectively,  each attesting to the completion of all necessary
corporate action by the Company and Seller respectively,  to execute and deliver
this  Agreement and the  Transaction  Documents to which each are a party and to
perform their respective obligations hereunder and thereunder,  including copies
of the organizational  documents of the Company and the Seller and all corporate
resolutions or other actions,  required in connection with this Agreement or any
other  Transaction  Document and attesting to the  incumbency of the officers of

                                      -24-
<PAGE>

the Company and Seller, respectively, signing the Transaction Documents to which
each of the Company and Seller is a party, respectively;

     (g) the Seller must deliver each document that SECTION  2.3(A)  requires it
to deliver;

     (h) the NICO Reinsurance Agreement in the form attached as EXHIBIT A hereto
shall have been executed and  delivered by Seller and the Company,  and shall be
in full force and effect;

     (i) each of the Company's  Licenses  listed on SCHEDULE  6.1(I) shall be in
full force and effect as of the Closing Date;

     (j)  Purchaser  shall have received  from  internal  counsel to Seller,  an
opinion dated as of the Closing Date covering the matters described in EXHIBIT C
hereto substantially the form attached hereto as EXHIBIT C;

     (k) all Intercompany  Agreements (other than the NICO Reinsurance Agreement
and the  Columbia  Reinsurance  Agreement)  shall have been  terminated  with no
further liability to the Company; and

     (l) the agreements set forth on SCHEDULE  6.1(L) shall have been terminated
with no further liability to the Company.

     Section 6.2.  CONDITIONS TO THE OBLIGATION OF THE SELLER. The obligation of
the  Seller to  consummate  the sale of the  Shares  and the other  transactions
contemplated by this Agreement is subject to the satisfaction,  on or before the
Closing Date, of each of the following conditions (any of which may be waived by
the Seller, in whole or in part):

     (a) each of the  Purchaser's  representations  and  warranties set forth in
this  Agreement must have been true and correct as of the date of this Agreement
and  must  be  true  and   correct  in  all   material   respects   (except  for
representations  and warranties  that contain  qualifications  as to materiality
which  shall be true and  correct in all  respects)  as of the  Closing  Date as
though  made  on  the  Closing   Date  (except  to  the  extent  that  any  such
representations  or  warranties  speak as of  another  date,  in which case such
representations  and  warranties  shall  be true  and  correct  in all  material
respects at and as of the date specified therein);

     (b) all of the covenants and obligations  that the Purchaser is required to
perform or comply with under this Agreement or any other Transaction Document on
or before the Closing Date must have been duly  performed  and complied  with in
all material respects;

     (c) Seller shall have received a certificate  from  Purchaser to the effect
set forth in SECTIONS 6.2(A) and 6.2(B);

     (d) all Consents or approvals  set forth in SCHEDULE  6.2(D) must have been
obtained and must be in full force and effect;

                                      -25-
<PAGE>

     (e)  there  must  not be in  effect  any  law,  or  court,  arbitration  or
regulatory  order  or  judgment,  and  there  must not have  been  commenced  or
threatened by any governmental entity any proceeding, that in any case would (i)
prohibit  or  make  illegal  the   consummation  of  any  of  the   transactions
contemplated by this Agreement or the other Transaction  Documents or (ii) cause
any of the transactions contemplated by this Agreement to be rescinded following
their consummation;

     (f) Purchaser shall deliver to the Seller a certificate,  dated the Closing
Date, signed by the secretary or any assistant secretary of Purchaser, attesting
to the completion of all necessary  corporate action by Purchaser to execute and
deliver this Agreement and the Transaction  Documents to which it is a party and
to perform its  obligations  hereunder and thereunder,  including  copies of the
organizational  documents of Purchaser and all corporate resolutions required in
connection with this Agreement or any other  Transaction  Document and attesting
to the incumbency of the officers of Purchaser signing the Transaction Documents
to which Purchaser is a party;

     (g) the NICO  Reinsurance  Agreement  in the forth  attached  as  EXHIBIT A
hereto  shall have been  executed and  delivered by Seller and the Company,  and
shall be in full force and effect; and

     (h) the  Purchaser  shall  have  delivered  to Seller  all  items  required
pursuant to SECTION 2.3(B).

                                   ARTICLE VII

                                   TERMINATION

     Section 7.1.  TERMINATION  EVENTS.  This  Agreement  may, by written notice
given before the Closing, be terminated:

     (a) by mutual written consent of the Purchaser and the Seller;

     (b) by the  Purchaser  if there  has been a breach  of any of the  Seller's
representations,  warranties or covenants  contained in this Agreement and which
breach  has not been cured or cannot be cured  within 15 days after the  written
notice of the breach from the Purchaser;

     (c) by the Purchaser if (i) for purposes of  determining  the Base Purchase
Price pursuant to SECTION 2.1 hereof, the  Policyholders'  Surplus exceeds $50.0
million, or (ii) if the Company fails to maintain its Licenses in good standing;

     (d) by the Seller if (i) there has been a breach of any of the  Purchaser's
representations,  warranties or covenants contained in this Agreement, and which
breach  has not been cured or cannot be cured  within 15 days after the  written
notice of breach  from the  Sellers,  (ii) the  Purchaser  shall have  failed to
deliver to Seller the Financing  Certificate  on or prior to October 15, 2008 or
(iii) if Purchaser shall have delivered the Financing Certificate on or prior to
October 15, 2008 and  thereafter  notifies  Seller (which the  Purchaser  hereby
agrees it will do as  promptly  as  practicable)  that the  representations  and

                                      -26-
<PAGE>

warranties  set forth in the  Financing  Certificate  shall cease to be true and
correct in all material respects,  in which case such failure shall constitute a
breach of a  representation  and warranty of  Purchaser  for purposes of SECTION
7.1(D)(I)  above and the Seller shall have the rights  described in such SECTION
7.1(D)(I) and SECTION 7.2);

     (e) by either the Purchaser or the Seller if any governmental  authority of
competent  jurisdiction  (including the Insurance Department of the state of New
York) has issued a nonappealable final judgment or taken any other nonappealable
final  action,  in each  case  having  the  effect of  permanently  restraining,
enjoining  or  otherwise  prohibiting  the  transactions  contemplated  by  this
Agreement; or

     (f) by the Seller or the  Purchaser  if the Closing has not  occurred on or
before  December 31, 2008  (provided  that the right to terminate this Agreement
under this SECTION 7.1(F) shall not be available to any party if the Closing has
not  occurred at least in material  part because of the failure of such party to
comply fully with its obligations under this Agreement).

     Section  7.2.  EFFECT OF  TERMINATION.  (a)  Subject to the  provisions  of
SECTION 7.2(B), and except as provided in the following  sentence,  in the event
of the  termination  of this  Agreement  pursuant to SECTION 7.1, this Agreement
shall thereafter become void and have no effect,  and no party hereto shall have
any  liability  or  obligation  to any other  party  hereto in  respect  of this
Agreement,  except that the  provisions  of SECTION 5.2 (Public  Announcements),
SECTION 5.5 (Access;  Confidentiality),  ARTICLE VIII (General  Provisions) (but
excluding  SECTION 8.6) and this SECTION 7.2 shall survive any such termination.
Nothing  herein shall relieve any party from liability for any willful breach of
any of its covenants or agreements or willful breach of its  representations  or
warranties contained in this Agreement prior to termination of this Agreement.

     (b)  Notwithstanding  anything to the  contrary set forth  herein,  if this
Agreement  is  terminated  by Purchaser  pursuant to SECTION  7.1(B) OR (C)(II),
Seller shall,  within two (2) Business Days following the effective date of such
termination,  return the Deposit to  Purchaser by wire  transfer of  immediately
available  funds to an account  designated  by the  Purchaser,  and the  parties
hereto  acknowledge  and agree that,  except in the case of a willful  breach of
this Agreement by Seller, such right shall constitute the sole damages that will
be suffered by, and an adequate and reasonable remedy for, Purchaser as a result
of such termination.  Notwithstanding anything to the contrary contained herein,
if this Agreement is terminated for any reason other than by Purchaser  pursuant
to SECTION  7.1(B) OR (C)(II),  then  Seller  shall have the right to retain the
Deposit,  and the parties hereto  acknowledge and agree that, except in the case
of a willful breach of this Agreement by Purchaser,  such right shall constitute
the sole damages that will be suffered by, and an adequate and reasonable remedy
for, Seller as a result of such termination.

                                      -27-
<PAGE>

                                  ARTICLE VIII

                               GENERAL PROVISIONS

     Section  8.1.  NOTICES.  All  notices and other  communications  under this
Agreement  must be in  writing  and  will be  deemed  duly  delivered  when  (a)
delivered if delivered personally or by nationally  recognized overnight courier
service (costs prepaid), (b) sent by facsimile with confirmation of transmission
by the transmitting  equipment or (c) received or rejected by the addressee,  if
sent by certified mail, return receipt requested;  in each case to the following
addresses or facsimile numbers and marked to the attention of the individual (by
name or title)  designated below (or to such other address,  facsimile number or
individual as a party may designate by notice to the other parties):

         If to the Seller:

         National Indemnity Company
         c/o Berkshire Hathaway Group
         100 First Stamford Place
         Stamford, Connecticut 06902
         Attn: General Counsel
         Fax: (203) 363-5221

         If to Purchaser:

         Jacobs Financial Group, Inc.
         300 Summers Street, Suite 970
         Charleston, West Virginia 25301
         Attn:  John Jacobs
         Fax:  (304) 342-9726

         With a copy to:

         Dechert LLP
         1095 Avenue of the Americas
         New York, New York 10036
         Attn:  James H. Nix, Esq. and Jonathan E. Silverblatt, Esq.
         Fax:  (212) 698-3599

     Either  party may upon fifteen days notice to the other change the location
for delivery of notice to the notifying party.

     Section 8.2. AMENDMENT. This Agreement may not be amended,  supplemented or
otherwise modified except in a written document signed by each party to be bound
by the amendment.

     Section 8.3.  WAIVER AND REMEDIES.  The parties may (a) extend the time for
performance  of any of the  obligations or other acts of any other party to this
Agreement,  (b) waive any inaccuracies in the  representations and warranties of

                                      -28-
<PAGE>

any other  party to this  Agreement  contained  in this  Agreement  or (c) waive
compliance  with any of the covenants,  agreements or conditions for the benefit
of such party contained in this  Agreement.  Any such extension or waiver by any
party to this  Agreement  will be valid only if set forth in a written  document
signed on behalf of the party or parties against whom the waiver or extension is
to be  effective.  Any  enumeration  of a party's  rights and  remedies  in this
Agreement is not intended to be exclusive, and a party's rights and remedies are
intended to be cumulative to the extent  permitted by law and include any rights
and remedies authorized in law or in equity.

     Section  8.4.  ENTIRE   AGREEMENT.   This  Agreement   (together  with  the
Confidentiality  Agreement  and the  Letter  Agreement)  constitute  the  entire
agreement among the Parties and supersede any prior  understandings,  agreements
or representations  by or among the Parties and/or the Company,  or any of them,
written or oral, with respect to the subject matter of this Agreement.

     Section  8.5.  EXPENSES.  Each  Party will bear its  respective  direct and
indirect expenses incurred in connection with the preparation and negotiation of
this Agreement and the  consummation  of the  transactions  contemplated by this
Agreement,  including all fees and expenses of its advisors and  representatives
(it being  understood  and agreed  that any such  direct and  indirect  expenses
incurred by the Company shall be borne by the Seller).

     Section 8.6. SURVIVAL.  The  representations  and warranties of the parties
set forth in ARTICLES III and IV of this Agreement shall survive the Closing and
shall  continue for a period of two (2) years  following  the Closing  Date,  at
which time all such  representations and warranties shall expire;  provided that
(x) the  representations  and warranties set forth in SECTION 3.1  (Organization
and Good  Standing),  SECTION 3.2  (Authority and  Enforceability),  SECTION 3.3
(Capitalization  and Ownership),  SECTION 3.4  (Subsidiaries),  SECTION 3.19 (No
Brokers),  SECTION 4.1 (Organization and Good Standing),  SECTION 4.2 (Authority
and  Enforceability),  and SECTION 4.7 (No Brokers) shall survive  indefinitely,
(y) the  representations  and  warranties  set forth in SECTION 3.12 (Taxes) and
SECTION 3.15  (Employee  Benefit  Plans) shall survive for sixty (60) days after
the  termination of the statute of limitations  applicable to the subject matter
of such representations and warranties,  and (z) any claim with respect to fraud
shall survive  indefinitely.  Any claim for Adverse Consequences asserted within
the applicable  period of survival as herein  provided in this SECTION 8.6 shall
be timely made for purposes hereof.  Such  representations  and warranties shall
survive in full force and effect  notwithstanding any investigation by the other
party. Each of the other covenants,  agreements and provisions contained in this
Agreement  shall  survive  indefinitely,  unless  such  covenant,  agreement  or
provision,  either by its express terms or its inherent sense, is to survive for
a limited period of time.

     Section 8.7.  ASSIGNMENT AND SUCCESSORS.  This Agreement binds and benefits
the Parties and their respective  heirs,  successors and permitted  assigns.  No
Party may  assign  or  delegate  any of its  rights or  obligations  under  this
Agreement without the prior written consent of the Purchaser (in the case of the
Seller) or the  Seller  (in the case of the  Purchaser).  No  provision  of this
Agreement  is intended or will be construed to confer upon any Person other than
the  parties  to this  Agreement  and their  respective  heirs,  successors  and
permitted  assigns  any  right,  remedy  or  claim  under or by  reason  of this

                                      -29-
<PAGE>

Agreement,  other than the provisions of SECTION 8.14,  which are intended to be
for the benefit of Persons covered thereby and may be enforced by such Persons.

     Section  8.8.  SEVERABILITY.  If any  provision  of this  Agreement is held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining  provisions of this  Agreement will not be affected or impaired in
any way and the  parties  agree  to  negotiate  in good  faith to  replace  such
invalid, illegal and unenforceable provision with a valid, legal and enforceable
provision that achieves, to the greatest lawful extent under this Agreement, the
economic,  business and other purposes of such invalid, illegal or unenforceable
provision.

     Section 8.9.  INTERPRETATION.  The language  used in this  Agreement is the
language chosen by the parties to express their mutual intent,  and no provision
of this  Agreement  will be  interpreted  for or against any party  because that
party or its attorney drafted the provision. The article and section headings in
this  Agreement  are inserted for  convenience  of reference  only and shall not
affect the interpretation of this Agreement.

     Section  8.10.  GOVERNING  LAW. The internal  laws of the state of New York
(without  giving  effect to any  choice or  conflict  of law  provision  or rule
(whether  of the state of New York or any other  jurisdiction)  that would cause
the  application of laws of any other  jurisdiction)  govern all matters arising
out of or relating  to this  Agreement  and the  transactions  it  contemplates,
including   its  validity,   interpretation,   construction,   performance   and
enforcement.

     Section  8.11.  WAIVER  OF  JURY  TRIAL.  EACH  OF THE  PARTIES  KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT,  TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE  TRANSACTIONS  CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF ANY PARTY TO
THIS  AGREEMENT IN  NEGOTIATION,  ADMINISTRATION,  PERFORMANCE OR ENFORCEMENT OF
THIS AGREEMENT

     Section 8.12. DISPUTE RESOLUTION.  Any unresolved controversy or claim that
cannot be resolved by the parties hereto through good faith negotiations  within
thirty (30) days of notification to the other of the commencement of the dispute
resolution  procedures of this SECTION 8.12 will then,  upon written  request of
any party  hereto,  be resolved by binding  arbitration  conducted in accordance
with the then effective rules of the American  Arbitration  Association ("AAA"),
by a sole  arbitrator.  Such  arbitrator  shall  be  mutually  agreeable  to the
parties.  If  the  parties  cannot  mutually  agree  upon  the  selection  of an
arbitrator,  the  arbitrator  shall  be  selected  in  accordance  with the then
effective  rules of the AAA. The  arbitration  shall take place in New York, New
York, in  accordance  with the then  effective AAA rules,  and judgment upon any
award  rendered  in such  arbitration  will be binding and may be entered in any
court having jurisdiction thereof.

     Section  8.13.  COUNTERPARTS.  The parties may execute  this  Agreement  in
multiple  counterparts,  each of which  constitutes  an  original as against the
party that signed it, and all of which together  constitute one agreement.  This
Agreement is effective upon delivery of one executed counterpart from each party

                                      -30-
<PAGE>

to the other parties.  The signatures of all parties need not appear on the same
counterpart.   The  delivery  of  signed  counterparts  by  facsimile  or  email
transmission  that  includes  a copy  of the  sending  party's  signature  is as
effective as signing and delivering the counterpart in person.


                                   ARTICLE IX

                                 INDEMNIFICATION

     9.1 INDEMNIFICATION

     (a) INDEMNIFICATION OF THE PURCHASER.  Subject to the limitations set forth
in SECTION 8.6 above and  Section  9.1 (C) and (D) below,  and to the extent the
Purchaser or Purchaser  Indemnified Party is not indemnified under a Transaction
Document, the Seller agrees to indemnify and hold harmless the Purchaser and its
Affiliates  (including,  from and after the  Closing,  the  Company) and each of
their respective directors,  officers,  employees,  and each of their respective
successors and permitted assigns (each a "PURCHASER  INDEMNIFIED  PARTY"),  from
and against all liabilities, claims, damages, losses, whether or not arising out
of Third-Party Claims, including,  without limitation,  penalties,  expenses and
fees,  including  court  costs  and  reasonable  attorneys'  fees  and  expenses
("ADVERSE  CONSEQUENCES")  which such Purchaser  Indemnified Party has suffered,
incurred or become subject to arising out of, based upon or otherwise in respect
or resulting from:

          (i) any breach of any representation or warranty of the Seller made in
     this Agreement or in any other Transaction Document to which it is a party;

          (ii) any breach or nonfulfillment of any covenant or obligation of the
     Seller contained in this Agreement or the NICO Reinsurance Agreement;

          (iii) all liabilities of any kind  whatsoever of the Company  incurred
     or arising  with respect to periods  prior to the Closing Date  (regardless
     when any claims are made in respect of such liabilities); and

          (iv) without  limiting the  generality of clause (iii) above,  (x) the
     Employment  Agreement  between the Company and Franklin Haftl, (y) the case
     known as  Consolidated  Rail Corp.  vs. Ace,  et. al.  (P.A.  Ct. of Common
     Pleas,  Phil.  Div. C.A. No. 2638) and (z) the  arbitration  demand made by
     Zurich  International  Insurance Company regarding D.J. expense  allocation
     under  a  reinsurance  agreement  between  Zurich  International  Insurance
     Company and the Company;

provided  that the Seller shall have no  obligation  to indemnify  the Purchaser
and/or a Purchaser  Indemnified Party to the extent any such Adverse Consequence
arises or out or is  attributable  to the acts or  omissions  of the  Purchaser,
Purchaser Indemnified Party, or any employee, officer, director, and/or agent of
the Company  elected or appointed  after the Closing  Date, or any breach by the
Company  after the Closing Date of its  obligations  under the NICO  Reinsurance
Agreement.

                                      -31-
<PAGE>

     (b) INDEMNIFICATION OF THE SELLER.  Subject to the limitations set forth in
SECTION 8.6 above and SECTION 9.1(C) and (D) below, and to the extent the Seller
or Seller Indemnified Party is not indemnified under a Transaction Document, the
Purchaser  agrees to indemnify the Seller and its  Affiliates  and each of their
respective  directors,   officers,  employees,  and  each  of  their  respective
successors and permitted assigns (each a "SELLER INDEMNIFIED  PARTY"),  from and
against  all  Adverse  Consequences  arising  out of or  resulting  from (i) any
misrepresentation,  inaccuracy  or  breach  of any  representation  or  warranty
contained in this  Agreement,  (ii) any breach of or failure by the Purchaser to
perform any covenant or agreement contained in this Agreement, (iii) the failure
by the  Company to perform  any  covenant  or  agreement  contained  in the NICO
Reinsurance  Agreement  after the Closing Date, (iv) the writing of new business
of the Company following the Closing Date, (iv) any liability, fee or commission
with respect to the Bell  Consulting or any other broker acting on behalf of the
Purchaser  and (v) any Taxes of the Company  for any  taxable  Period or portion
thereof that begins after the Closing Date;  provided  that the Purchaser  shall
have no obligation to indemnify the Seller and/or a Seller  Indemnified Party to
the extent any such Adverse  Consequence arises out of or is attributable to the
acts or omissions of the Seller,  Seller  Indemnified  Party,  or any  employee,
officer,  director, and/or agent of the Company on or prior to the Closing Date,
or any breach by the Company prior to the Closing Date of its obligations  under
the NICO Reinsurance Agreement.

     (c) INDEMNIFICATION  PROCEDURES.  The obligation of the Seller to indemnify
the  Purchaser  Indemnified  Party or the  Purchaser  to  indemnify  the  Seller
Indemnified Party (each, an "INDEMNIFIED PARTY"), as the case may be, under this
SECTION 9.1 shall be subject to the following conditions:

          (i) Each Indemnified  Party shall inform the  indemnifying  party (the
     "INDEMNIFYING PARTY") as soon as reasonably  practicable of any claim or of
     any  threat to bring  such a claim to which  this  SECTION  9.1 may  apply;
     provided  however,  that the failure or delay to furnish  such notice shall
     not limit the right of  indemnification  for such claim unless such failure
     or delay is prejudicial; provided further that the Indemnifying Party shall
     have no obligation to indemnify the  Indemnified  Party with respect to any
     expenses  incurred by the Indemnified  Party prior to such notice under any
     circumstances;

          (ii) Except with the consent in writing of the Indemnifying  Party, no
     admission, offer, promise or payment shall be made or given by or on behalf
     of any  Indemnified  Party in respect of a claim to which this  SECTION 9.1
     may apply;

          (iii) The  Indemnifying  Party shall take over and conduct the defense
     and  settlement  of any claim to which this SECTION 9.1 may apply and, upon
     the  Indemnifying  Party  taking  over  the  conduct  of  the  defense  and
     settlement of such claim,  the  Indemnifying  Party shall thereafter not be
     obliged to reimburse any Indemnified  Party in respect of its own legal and
     defense costs incurred after the Indemnified Party received notice that the
     Indemnifying  Party had  elected to take over and  conduct  the defense and
     settlement  of the  applicable  claim and the  Indemnified  Party  shall be
     entitled to participate in the defense at its own expense; in the event the
     Indemnifying  Party  fails to take over and to conduct  the  defense of any
     such claim, the Indemnified Party may take over and conduct the defense and
     settlement of such claim at the expense of Indemnifying Party;

                                      -32-
<PAGE>

          (iv)  The  Indemnified  Party  shall  at the  request  and cost of the
     Indemnifying Party give the Indemnifying Party all reasonable assistance in
     the Indemnified Party's power in connection with the defense and settlement
     of such claim;

          (v) The  Indemnifying  Party  may  settle  any claim  subject  to this
     SECTION 9.1 and shall have  discretion in the conduct of any proceedings in
     relation  thereto,  provided  that any  settlement  shall  not  impose  any
     obligation on the Indemnified Party and shall release the Indemnified Party
     from such claim; in the event the Indemnifying Party fails to take over and
     conduct  the  defense of any such  claim,  the  Indemnified  Party shall be
     entitled to settle such claim at the expense of the Indemnifying Party; and

          (vi) The  Indemnifying  Party shall not be liable under this Agreement
     to  indemnify  an  Indemnified  Party for any award of damages  proximately
     caused by any criminal or  intentional  act or omission on the part of such
     Indemnified  Party finally  determined by a court in a final judgment,  not
     subject  to  appeal.  Notwithstanding  the  requirement  in  the  foregoing
     sentence of a final judgment,  the Indemnifying  Party shall have the right
     to settle any claim alleging such criminal or  intentional  act or omission
     and seek  reimbursement  through an arbitration to determine whether if the
     claim had not been settled,  the claimant  would have been found in a final
     judgment,  not subject to further  appeal,  entitled  to  judgment  against
     Indemnified Party by reason of damages  proximately caused by a criminal or
     intentional act or omission;  provided, however, that this limitation shall
     not apply to any criminal act or intentional act or omission of the Company
     prior to Closing.

     (d) COLLATERAL SOURCE RECOVERIES.  The amount of an indemnification payment
in respect  of an Adverse  Consequence  required  to be made to any  Indemnified
Party hereunder shall be limited to the amount of any Adverse  Consequence  that
remains  after  deduction  therefrom of (i) any Tax benefits to the  Indemnified
Party as a result of the Adverse Consequence and (ii) any third party recoveries
relating to the Adverse  Consequence  giving rise to the  indemnification  claim
paid to the  Indemnified  Party  (provided,  that,  in the case of any insurance
benefits or proceeds, any such reduction shall be net of any cost of collection,
deductible,  increased  premiums,  "recoupment"  provisions  or  other  costs or
expense (including,  without limitation,  any reasonable legal fees or expenses)
attributable to collection under such policies).

     (e)   ADJUSTMENT   TO  PURCHASE   PRICE.   The   parties   agree  that  any
indemnification  payments made pursuant to this  Agreement  shall be treated for
tax purposes as an adjustment to the Purchase Price,  unless otherwise  required
by applicable law.

     Section 9.2  MITIGATION OF DAMAGES.  Subject to the rights of Purchaser and
Seller  pursuant to SECTION  9.1(C),  Purchaser and Seller shall  cooperate with
each other with  respect to  resolving  any claim or  liability  with respect to
which one party is obligated to indemnify the other party  hereunder.  Purchaser
and Seller  shall use  commercially  reasonable  efforts to mitigate  damages in
respect of any Adverse Consequence, provided that such duty shall not be greater
than that imposed by applicable law.

     Section 9.3 EXCLUSIVE REMEDY.  Notwithstanding anything contained herein to
the contrary,  the Purchaser and the Seller acknowledge and agree that (i) prior
to the Closing, the sole and exclusive remedy of the Purchaser for any breach of

                                      -33-
<PAGE>

any  representation or warranty contained herein of Seller, or of Seller for any
breach of any representation or warranty contained herein of Purchaser, shall be
termination of the Agreement  pursuant to SECTION 7.1(B)(in the case of a breach
by  Seller)  or  pursuant  to  SECTION  7.1(D)(I)  (in the case of a  breach  by
Purchaser)(provided,  that the  foregoing  shall  not  relieve  any  party  from
liability for any willful breach of any representations or warranties or fraud),
and (ii) following the Closing,  other than in the case of fraud,  or any action
seeking equitable remedies, the indemnification  provided for in this ARTICLE IX
shall  be the  exclusive  remedy  in any  action  brought  by any  party to this
Agreement in respect of the transactions contemplated hereby.





                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



























                                      -34-

<PAGE>



     The parties  have  executed  and  delivered  this  Agreement as of the date
indicated in the first sentence of this Agreement.

                                NATIONAL INDEMNITY COMPANY

                                By: /s/Brian Snover
                                    ----------------------------------------
                                      Name: Brian Snover
                                      Title: Vice President



                                JACOBS FINANCIAL GROUP, INC.

                                By:  /s/John M. Jacobs
                                    ----------------------------------------
                                      Name: John M. Jacobs
                                      Title: President



































                                      -35-