**Exhibit 10.1**  **STOCK PURCHASE AGREEMENT**between**TRIUMPHE INSURANCE HOLDINGS LLC**,Seller,and**NATIONAL INTERSTATE INSURANCE COMPANY**,PurchaserDated as of September 30, 2005  
 

 
**TABLE OF CONTENTS**                           Page**ARTICLE 1 DEFINITIONS**  **1**                1.1.     Definitions  1                **ARTICLE 2 SALE OF THE TRIUMPHE SHARES AND CLOSING**  **6**                2.1.     Sale of the Triumphe Shares   6 2.2.     Purchase Price  6 2.3.     Closing  7                **ARTICLE 3 REPRESENTATIONS AND WARRANTIES**  **8**                3.1.     Representations and Warranties of Seller  8    *3.1.1.*      *Organization, Authority, Standing, of the Company*  *8*    *3.1.2.*      *Triumphe Shares*  *8*    *3.1.3.*      *Organization and Standing of Seller; Authority for Agreement*  *9*    *3.1.4.*      *Consents*  *10*    *3.1.5.*      *Financial Statements; Assets*  *10*    *3.1.6.*      *Absence of Undisclosed Liabilities; Soundness of Reserves; Records*  *11*    *3.1.7.*      *Litigation*  *12*    *3.1.8.*      *Compliance with Law*  *12*    *3.1.9.*      *Insurance Regulation*  *13*    *3.1.10.*         *Taxes*  *13*    *3.1.11.*         *Absence of Certain Changes*  *15*    *3.1.12.*         *Brokers*  *16*    *3.1.13.*         *Conduct of Operations*  *16*    *3.1.14.*         *Absence of Claims*  *16*    *3.1.15.*         *No Infringement*  *17*    *3.1.16.*         *Insurance Coverage*  *17*    *3.1.17.*         *No Employee Claims*  *17*    *3.1.18.*         *Contracts*  *17*    *3.1.19.*         *Powers of Attorney and Suretyship*  *18*    *3.1.20.*         *Disclosure*  *18* 3.2.     Representations and Warranties of Purchaser  18    *3.2.1.*      *Organization and Standing of Purchaser*  *18*    *3.2.2.*      *Authority for Agreement*  *18*    *3.2.3.*      *Consents*  *19*    *3.2.4.*      *Purchase for Investment*  *19*    *3.2.5.*      *Brokers*  *19*    *3.2.6.*      *Financing*  *19*    *3.2.7*      *Litigation*  *20*    *3.2.8*      *Compliance with Law*  *20*    *3.2.9*      *Disclosure*  *20*                **ARTICLE 4 CONDITIONS PRECEDENT**  **20**                4.1.     Conditions to the Obligations of Purchaser and Seller  20 4.2.     Conditions to Purchaser’s Obligations  *21*    *4.2.1.*      *Material Adverse Effect*  *21*    *4.2.2.*      *Representations and Warranties*  *21* 
 

 
              *4.2.3.*     *Performance*  *22*   * **4.2.4*.* *    *Certificate*  *22*    *4.2.5.*     *Resignation*  *22*    *4.2.6.*     *Termination of Certain Agreements*  *22*    *4.2.7.*     *Shares and Transferred Assets; Other Agreements*  *22*    4.3.     Conditions to the Seller’s Obligations  *22*    *4.3.1.*     *Representations and Warranties*  *22*    *4.3.2.*     *Performance*  *22*    *4.3.3.*     *Certificate*  *23*            **ARTICLE 5 COVENANTS**  **23**               5.1.     Conduct of Business of the Company  23    5.2.     Filings and Authorizations  24    5.3.     Name Change  25    5.4.     Confidentiality  25    5.5.     Non-Competition and Non-Solicitation  25    5.6.     Updated Schedules  25    5.7.     Further Assurances  26            **ARTICLE 6 TAX MATTERS**  **28**               6.1.     Indemnity  28    6.2.     Returns and Payments  28    6.3.     Consents  29    6.4.     Time of Payment  30    6.5.     Cooperation and Exchange of Information  30    6.6.     Transfer Taxes  31    6.7.     Miscellaneous  31            **ARTICLE 7 TERMINATION**  **31**               7.1.     Termination  31    7.2.     Effect of Termination  32            **ARTICLE 8 INDEMNIFICATION**  **32**               8.1.     Survival of Representations and Warranties  32    8.2.     Additional Definitions  33    8.3.     Indemnity  33    8.4.     Third Party Claims  34    8.5.     Indemnity Payments  34    8.6.     Exclusive Remedy  35    8.7.     Miscellaneous  35            **ARTICLE 9 MISCELLANEOUS**  **35**               9.1.     Notices  36    9.2.     Entire Agreement  36    9.3.     Expenses  36    9.4.     Public Announcements  36    9.5.     Waiver; Construction  36    9.6.     Amendment  37    9.7.     No Third Party Beneficiary  37    9.8.     No Assignment; Binding Effect  37    9.9.     Headings  37    9.10.     Invalid Provisions  37    9.11.     Counterparts  38 
 

 
            9.12.   Governing Law  38    9.13.   WAIVER OF JURY TRIAL  38    9.14.   Specific Performance  38 
 

 
**STOCK PURCHASE AGREEMENT**     This Stock Purchase Agreement (this “Agreement”), dated as of September 30, 2005, ismade by and between Triumphe Insurance Holdings LLC, a Delaware limited liability company(“Seller”), and National Interstate Insurance Company, an Ohio corporation(“Purchaser”).**W I T N E S S E T H**     WHEREAS, Seller is the owner of all of the issued and outstanding capital stock of TriumpheCasualty Company (the “Company”), a Pennsylvania domiciled insurance company, withseventy-five thousand (75,000) shares of common stock, par value Forty and 00/100 Dollars ($40.00)per share (the “Triumphe Shares”) issued and outstanding;     WHEREAS, Seller desires to sell all of the Triumphe Shares to Purchaser, and Purchaser desiresto purchase all of the Triumphe Shares from Seller, upon the terms and conditions and for theconsideration described below;     WHEREAS, Purchaser acknowledges that the Company discontinued writing new and renewalinsurance policies on or about April 1, 2004 (the “Runoff Date”); and     WHEREAS, since the Runoff Date the parties have worked together to transition various aspectsof the Company’s operations to Purchaser;     NOW, THEREFORE, in consideration of the foregoing and the mutual promises made and the mutualbenefits to be derived from this Agreement, and for other good and valuable consideration, thereceipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:**ARTICLE 1****DEFINITIONS**     1.1. Definitions. The terms defined in this Article 1, whenever used in thisAgreement, shall have the following meanings for all purposes of this Agreement.     “Admitted Assets” mean all of the assets whose values are permitted to be includedunder the Pennsylvania insurance laws in the Company’s Statutory Statements.
 

 
     “Affiliate” of a specified Person means a Person that (at the time when thedetermination is to be made) directly, or indirectly through one or more intermediaries, Controls,or is Controlled by, or is under common Control with, the specified Person.     “Affiliate Agreements” means all agreements and arrangements between the Company andSeller or any Affiliate of Seller (excluding the Agency Agreement).     “Agency Agreement” means the Agency Agreement executed July 2, 2001, between theCompany and VFS Insurance Services LLC, a North Carolina limited liability company, as amended May31, 2005 to remove agent’s binding authority effective as of the Runoff Date.     “Agreement” shall have the meaning set forth in the Preamble of this Agreement.     “Annual Statements” shall have the meaning set forth in Section 3.1.5 of thisAgreement.     “Approvals and Filings” shall have the meaning set forth in Section 3.2.3 of thisAgreement.     “Assessment Period” shall have the meaning set forth in Section 6.1 of this Agreement.     “Audit” shall have the meaning set forth in Section 3.1.10(f) of this Agreement.     “Business Day” means a day of the year (other than Saturdays, Sundays or any otherdays on which banks are required or authorized to close in New York City).     “Closing” shall have the meaning set forth in Section 2.3 of this Agreement.     “Closing Admitted Assets” means the Company’s Admitted Assets as of the ClosingEffective Date.     “Closing Date” means the date on which the Closing shall take place as set forth inSection 2.3 of this Agreement.     “Closing Effective Date” means January 1, 2006, at 12:00:01 a.m. Eastern StandardTime.     “Closing Payment” means an amount equal to 90% of the Company’s Statutory Surplus.     “Code” means the United States Internal Revenue Code of 1986, as amended, or anysuccessor thereto, including any rules and regulations issued thereunder.     “Commissioner” means the Commissioner of Insurance of any jurisdiction in which theCompany is licensed to conduct insurance business.     “Company” shall have the meaning set forth in the Recitals of this Agreement.     “Consents” shall have the meaning set forth in Section 3.1.4 of this Agreement.
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     “Consolidated Return” means any consolidated, combined or unitary Tax Return whichincludes the Company.     “Contest” shall have the meaning set forth in Section 6.3 of this Agreement.     “Control” (including, with correlative meaning, the terms “controlling,”“controlled by” and “under common control with”) means the possession, directly orindirectly, of the power to direct or cause the direction of the management and policies of aPerson, whether through the ownership of voting securities, by contract, or otherwise.     “Debt” means, with respect to any Person, all obligations (including all obligationsin respect of principal, accrued interest, penalties, fees and premiums) of such Person (a) forborrowed money (including overdraft facilities), (b) evidenced by notes (including surplus notes),bonds, debentures or similar contractual obligations, (c) for the deferred purchase price ofproperty, goods or services (other than trade payables or accruals incurred in the ordinary courseof business consistent with past practices), (d) under capital leases, (e) in respect of letters ofcredit and bankers’ acceptances, (f) for swap agreements, collar agreements and other contractualobligations relating to interest rate protection and (g) in the nature of guarantees of theobligations described in clauses (a) through (f) above of any other Person.     “Disclosure Schedule” means each of the Disclosure Schedules referred to herein, andall exhibits thereto.     “Escrow Agreement” shall mean the Escrow Agreement among Seller, Purchaser andKeyBank, National Association governing the deposit, investment, and release of the ClosingPayment, the form of which is attached hereto as Exhibit A.     “GAAP” shall mean Generally Accepted Accounting Principles in the United States,consistently applied.     “Income Taxes” means all Taxes computed in whole or in part based on or by referenceto net income and any alternative, minimum, accumulated earnings or personal holding company Tax.     “Indemnifiable Losses” shall have the meaning set forth in Section 8.2 of thisAgreement.     “Information Returns” means, with respect to any entity or group of entities, any andall reports, returns, declarations or other filings (other than Tax Returns), including but notlimited to, federal and state wage reporting, employment and unemployment Tax Returns (e.g. IRSForms 940, 941, W-2, W-3 and their state and local equivalents) as well as reports of payments made(e.g. IRS Forms 1099 and 1042), that are required under applicable law to be supplied to any TaxingAuthority.     “Insurance Brokers” shall have the meaning set forth in Section 3.1.18 of thisAgreement.
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     “Insurance Contracts” means the treaties, policies, binders, slips and otheragreements of insurance (including reinsurance) written, assumed, or ceded by the Company to theextent in effect prior to the Closing Effective Date (including all supplements, endorsements,riders and ancillary agreements in connection therewith).     “IRS” means the United States Internal Revenue Service.     “Lien” means any lien, pledge, charge, security interest, title retention agreement,or other encumbrance or adverse claim of any kind.     “Material Adverse Effect” means any event or occurrence which, individually ortogether with any other such event or such occurrence, has, or would be reasonably likely to have,a material adverse effect on the business, assets, liabilities, financial condition or Operationsof the Company, or which would materially interfere with or delay the consummation of thetransactions contemplated hereunder, but shall in all cases exclude any effect from (i) generaleconomic conditions, (ii) actions taken with Purchaser’s knowledge and consent , (iii) the Companydiscontinuing to write new and renewal insurance policies, or (iv) the ordinary and customaryconduct of the Company’s Operations since January 1, 2005.     “Nonadmitted Assets” means those assets designated as such on page 2 of the Company’sStatutory Statements.     “Operations” means all insurance and reinsurance business of the Company, past orpresent.     “Parties” shall mean Seller and Purchaser.     “Permitted Liens” shall mean any liens identified as such on Disclosure Schedule3.1.3.     “Person” means any individual, firm, partnership, association, corporation, limitedliability company, trust, public body, government or other entity.     “Purchase Price” shall have the meaning set forth in Section 2.2 of this Agreement.     “Purchaser” shall have the meaning set forth in the Preamble of this Agreement.     “Quarterly Statutory Statements” shall have the meaning set forth in Section 3.1.5(a)of this Agreement.     “Responsible Officer” shall mean, with respect to any Party, the Chairman, President,Chief Financial Officer or Vice President of such Party.     “SAP” means with respect to the Annual Statements and Quarterly Statutory Statementsof the Company, the statutory accounting practices prescribed or permitted by the InsuranceDepartment of the Commonwealth of Pennsylvania for the preparation of such annual and quarterlystatements.     “Seller” shall have the meaning set forth in the Preamble of this Agreement.
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     “Software” means all computer software used in the Operations and owned by theCompany, including but not limited to, application software and system software, including allsource code and object code versions thereof, in any and all forms and media, whether recorded onpaper, magnetic media or other electronic or non-electronic media (including data and relateddocumentation, user manuals, training materials, flow charts, diagrams, descriptive tests andprograms, computer print-outs, underlying tapes, computer databases and similar items), integratedcircuits, embedded systems, and other electromechanical or processor based systems.     “Statutory Statements” shall have the meaning set forth in Section 3.1.5(a) of thisAgreement.     “Statutory Surplus” means the Company’s surplus as regards policyholders as reportedin the Company’s Quarterly Statutory Statement for the period ended September 30, 2005, which shallbe prepared to include any adjustments from an audit by the Company’s independent accountants anddelivered to the Purchaser on or before November 7, 2005.     “Straddle Period Taxes” shall have the meaning set forth in Section 6.1 of thisAgreement.     “Tax Returns” means with respect to any entity or group of entities, all reports,estimates, extension requests, information statements and returns relating to, or required to befiled in connection with, any payment of any Tax.     “Taxable Period” means, with respect to any Tax of any entity, or any group ofentities filing a Consolidated Return for federal, state, local or foreign Tax purposes, the periodfor which the Tax is computed.     “Taxing Authority” means the IRS and any other domestic or foreign governmentalauthority responsible for the administration of any Tax.     “Taxes” (or “Tax,” where the context requires) means all federal, state,local, foreign and other income, profits, franchise, gross receipts, capital, sales, use, valueadded, ad valorem, transfer, employment, social security, disability, health insurance, occupation,property, severance, production, premium, payroll, real and personal property, stamp, unemploymentinsurance, social security, disability, workers compensation, withholding, excise and other taxes,duties and other similar governmental charges and assessments which are in the nature of a tax(including interest and penalties thereon and additions thereto).     “To the knowledge of” and any similar phrases or corollaries means, with respect tothe Seller, the actual knowledge, after due inquiry, of those officers set forth on DisclosureSchedule 1.1 attached hereto and, with respect to the Purchaser, the actual knowledge, after dueinquiry of those officers set forth on Disclosure Schedule 1.2 attached hereto.     “Triumphe Shares” shall have the meaning set forth in the Recitals of this Agreement.
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**ARTICLE 2****SALE OF THE TRIUMPHE SHARES AND CLOSING**     2.1. Sale of the Triumphe Shares. Subject to the terms and conditions of thisAgreement and in reliance upon the representations, warranties and covenants contained herein, atthe Closing provided for in Section 2.3, Seller will sell, and Purchaser will purchase, theTriumphe Shares free and clear of all Liens for the consideration specified in Section 2.2.     2.2. Purchase Price.     (a) The purchase price (the “Purchase Price”) for the Triumphe Shares shall bethe Statutory Surplus of the Company as adjusted to reflect (i) the fair market value of theCompany’s investment portfolio as of the Closing Effective Date; (ii) any contingentliabilities specified on Schedule 2.2 that are not reserved for in the Statutory Surplus orindemnified by the Seller and VFS US LLC under Article 8, as such schedule may be amended bymutual agreement of the Parties from time to time prior to the Closing as a result ofPurchaser’s continuing due diligence following the execution of this Agreement; (iii) anamount equal to any uncollected premium (net of commissions) on the policies identified onSchedule 2.2, which shall be collected and retained by Seller or an Affiliate following theClosing; (iv) the amount of $100,000 to be used by Purchaser to defray the cost of extendingthe reinsurance on or self-insuring with respect to the business underwritten by MissionInsurance Company of Texas prior to acquisition by Seller (it being the intention of theParties that this purchase price adjustment is given as a concession to Purchaser in view ofthe fact that no reserves have been or are required to be established with respect to suchbusiness in accordance with sound actuarial principles as of the date hereof); and (v) thevalue of Seller’s deferred tax asset as determined by Seller’s independent auditors as ofSeptember 30, 2005.     (b) No later than November 30, 2005, Purchaser shall deposit the Closing Payment inescrow, which shall be released no later than the later of (i) the Closing, or (ii) if thePurchase Price is not determined as of the Closing Date, then pursuant to the Arbitrator’sOrder. Except as set forth in this Section 2.2, interest on the escrow account shall inureto the benefit of Seller and accrue in the escrow account so long as any unpaid portion ofthe Purchase Price remains in the escrow account for the benefit of Seller. The escrowaccount shall be established with KeyBank, National Association and administered inaccordance with the Escrow Agreement. Any fees charged by KeyBank to administer the escrowaccount shall be borne equally between Seller and Purchaser.     (c) If the parties agree upon the Purchase Price by November 30, 2005, then the partiesshall proceed to Closing. Should the final Purchase Price agreed upon by the parties be apositive value and less than the Closing Payment, the Purchase Price plus accrued interestspecifically attributable to the Purchase Price will be released to Seller at Closing,
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withthe remaining escrow balance returned to Purchaser at Closing. Should the Purchase Price bea positive value and greater than the Closing Payment, then at Closing the entire escrow(Closing Payment plus all accrued interest) will be released to Seller, and Purchaser willconcurrently make a payment to Seller in immediately available funds in an amount equal tothe Purchase Price less the Closing Payment. Should the Purchase Price be a negative value,the entire escrow (Closing Payment plus all accrued interest) will be immediately releasedto Purchaser, and Seller will make a payment to Purchaser in an amount equal to the amountthe Purchase Price is below zero dollars.     (d) Should the Parties fail to agree on the final Purchase Price by November 30, 2005,the Parties will nevertheless proceed to Closing and will submit their differences withrespect to the Purchase Price to binding arbitration in Harrisburg, Pennsylvania, under theCommercial Arbitration Rules and procedures of the American Arbitration Association todetermine the final Purchase Price. Should the final Purchase Price determined by theArbitrator’s Order be a positive value and less than the Closing Payment, the Purchase Priceplus accrued interest specifically attributable to the Purchase Price will be immediatelyreleased to Seller, with the remaining escrow balance returned to Purchaser. Should thePurchase Price be a positive value and greater than the Closing Payment, the entire escrow(Closing Payment plus all accrued interest) will be immediately released to Seller, andPurchaser will make a payment to Seller in an amount equal to the Purchase Price less theClosing Payment. Should the Purchase Price be a negative value, the entire escrow (ClosingPayment plus all accrued interest) will be immediately released to Purchaser, and Sellerwill make a payment to Purchaser in an amount equal to the amount the Purchase Price isbelow zero dollars. The balances shall be settled by either party as the case may be withinfifteen (15) days of the arbitration award. All fees and expenses of the arbitration shallbe borne equally between Seller and Purchaser. For purposes of clarity, such fees andexpenses shall not include the parties’ respective legal and accounting fees, which shall bethe obligations of the respective Parties contracting for any such services.     2.3. Closing.     (a) Subject to the terms and conditions of this Agreement, the closing of the sale andpurchase of the Triumphe Shares (the “Closing”) will take place at the offices ofthe Company at 10:00 A.M., local time, on January 3, 2006, effective as of the ClosingEffective Date.     (b) At the Closing:          (i) Seller shall transfer to Purchaser, free and clear of all Liens (other thanrestrictions on transfer under federal and state securities laws) the certificatesrepresenting the Triumphe Shares, duly endorsed for transfer or accompanied by duly executedstock powers in favor of Purchaser with all necessary stock transfer tax stamps affixedthereto.          (ii) Except as otherwise provided in Section 2.2, Purchaser shall cause the PurchasePrice to be paid to Seller.
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          (iii) Seller shall assign to Purchaser any applicable trademark and servicemarkregistration covering the “Triumphe” name, and shall thereafter take all measures necessaryto discontinue use of “Triumphe” as the corporate name of Seller or any of its Affiliates.**ARTICLE 3****REPRESENTATIONS AND WARRANTIES**     3.1. Representations and Warranties of Seller. Seller represents and warrants toPurchaser as follows:     3.1.1. Organization, Authority, Standing of the Company. The Company is aninsurance company validly existing and in good standing under the laws of the Commonwealthof Pennsylvania, having redomiciled from Texas on July 20, 2001. The Company has allrequisite corporate power and authority to carry on its business as presently conducted andto own or lease and to operate its properties. The Company is duly qualified and in goodstanding to do business in every jurisdiction in which such qualification is necessarybecause of the nature of the property owned, leased or operated by it or the nature of thebusiness conducted by it, except where the failure to be so licensed or qualified would nothave a Material Adverse Effect on the Company. The Company is not transacting any insuranceor reinsurance business in any state or jurisdiction requiring a license or qualificationtherefor in which it is not so licensed or qualified and where the failure to be so licensedor qualified would have a Material Adverse Effect. No jurisdiction in which the Company isnot licensed or qualified has claimed in a writing received by the Company or Seller thatthe Company is required to be qualified or licensed therein. The Company has nosubsidiaries.     3.1.2. Triumphe Shares.     (a) The Triumphe Shares have been duly authorized and validly issued and are fullypaid, non-assessable and free of preemptive rights. No subscriptions, options, warrants,calls or rights of any kind to purchase or otherwise acquire, and no securities convertibleinto, or exchangeable for, capital stock of the Company are outstanding, no authorizationtherefor has been given and there are no agreements or commitments obligating the Company toissue, sell or acquire any shares of its capital stock or any rights with respect theretoand no Person has any right of first refusal, preemptive right, subscription right orsimilar right with respect to any shares of the Company’s capital stock either pursuant toany agreement or arrangement with the Company, or, to the Company’s knowledge, pursuant toany agreement or arrangement with any other party.     (b) Seller is the lawful record and beneficial owner of the Triumphe Shares free andclear of any Liens, and, upon the delivery to Purchaser of the certificates representing the
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Triumphe Shares, duly endorsed for transfer or accompanied by stock powers in favor ofPurchaser, and payment by Purchaser of the Purchase Price as provided for in this Agreement,Purchaser will acquire good and valid title to the Triumphe Shares, free and clear of anyLiens, other than restrictions on transfer under federal and state securities laws andregulations and except for any Liens created by the Purchaser.     3.1.3. Organization and Standing of Seller; Authority for Agreement.     (a) Seller is a limited liability company duly organized, validly existing and in goodstanding under the laws of the State of Delaware, and has full corporate power and authorityto execute and deliver this Agreement and each of the other agreements, instruments anddocuments contemplated hereby, to which Seller is a party, and to carry out its obligationshereunder and thereunder. The execution, delivery and performance of this Agreement andeach of the other agreements, instruments and documents required by the terms of thisAgreement to be executed and delivered by Seller or the Company, as the case may be, and theperformance of all transactions herein or therein contemplated, have been duly authorized byall necessary action on the part of Seller or the Company, as the case may be, including theconsent of all stockholders to the extent required, and no further corporate or other actionon the part of Seller or the Company, as the case may be, is necessary to authorize suchexecution, delivery and performance. This Agreement has been duly executed and delivered bySeller and constitutes, and each of the other agreements, instruments and documents requiredby the terms of this Agreement to be executed and delivered by Seller or the Company, as thecase may be, when so executed and delivered will constitute, the valid and legally bindingobligation of Seller or the Company, as the case may be, enforceable against Seller or theCompany, as the case may be, in accordance with their respective terms.     (b) Neither the execution and delivery of this Agreement, any of the other agreements,instruments and documents contemplated hereby to be executed and delivered by Seller or theCompany, as the case may be, nor the consummation of the transactionscontemplated hereby or thereby will (i) conflict with, result in a breach orviolation of or constitute a default under the charter, by-laws or operating agreement ofSeller or the Company, as the case may be, or (ii) assuming all regulatory andgovernmental approvals sought by the Parties hereunder have been obtained, conflict in anyrespect with, result in a breach of or constitute a default under any court oradministrative order or process, judgment, decree, statute, law, ordinance, rule orregulation or any agreement, license, binding arrangement or commitment to which Seller orthe Company, as the case may be, is a party or by which any of them is subject or bound,except where such conflict, breach or default would not preclude the consummation of thetransactions contemplated herein or therein or have a Material Adverse Effect on theCompany, (iii) result in the creation of, or give any Person the right to create,any Lien, other than Permitted Liens (any of which are identified on Disclosure Schedule3.1.3), upon the property and assets of the Company or any Lien upon any of the TriumpheShares other than restrictions on transfer under federal and state securities laws andregulations, or (iv) assuming all regulatory and governmental approvals sought bythe Parties hereunder have been obtained, violate the terms and conditions of, or
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result inthe loss or suspension of, any license or other legal or contractual right enjoyed by theCompany.     3.1.4. Consents. Assuming the accuracy of the representations and warrantiesset forth in Section 3.2.3, no consent, license, approval, order, or authorization of, orregistration, declaration, or filing with, any third party or any governmental authority,agency, bureau or commission is required to be obtained or made by Seller or the Company inconnection with the execution, delivery, performance, validity, and enforceability of thisAgreement, the sale of the Triumphe Shares or the consummation of any of the othertransactions contemplated hereunder, except for the following consents and approvals (the“Consents”): (i) the filings to be made with, and approvals to be obtainedfrom, the Pennsylvania Department of Insurance with respect to the transfer of control ofthe Company, (ii) the other consents, including without limitation any third-partyconsents, set forth on Disclosure Schedule 3.1.4 hereof and (iii) the registrations,declarations or filings required to be made by Seller subsequent to the Closing notentailing any requirement of consent, license, approval, order or authorization on the partof any governmental entity or third party, all of which are set forth on Disclosure Schedule3.1.4.     3.1.5. Financial Statements; Assets.     (a) Seller has delivered or, in the case of the September 30, 2005 Quarterly StatutoryStatements will deliver to Purchaser, complete and correct copies of (i) the AnnualStatement of the Company filed with the Pennsylvania Department of Insurance for the yearsended December 31, 2001, 2002, 2003, and 2004 (the “Annual Statements”) and(ii) the Quarterly Statutory Statements of the Company, for the periods ended March31, June 30 and September 30, 2004 and March 31, June 30 and September 30, 2005 filed withthe Pennsylvania Department of Insurance (the “Quarterly Statutory Statements;” theAnnual Statements and the Quarterly Statutory Statements are collectively referred to as the“Statutory Statements”), as well as the Company’s audited financial statements forthe years ended December 31, 2001, 2002, 2003, and 2004.     (b) The Statutory Statements have been or, in the case of the September 30, 2005Quarterly Statutory Statements will be, prepared in accordance with practices prescribed orpermitted by the Pennsylvania Department of Insurance, and all such accounting practiceshave been applied on a consistent basis, except as expressly set forth or disclosed in thenotes, exhibits or schedules thereto or as required by changes in accounting conventions bythe Pennsylvania Department of Insurance. The Statutory Statements have been or, in thecase of the September 30, 2005 Quarterly Statutory Statements will be, prepared from thebooks and records of the Company, which are maintained on a GAAP basis, and present fairlyor, in the case of the September 30, 2005 Quarterly Statutory Statements will presentfairly, in all material respects, the statutory financial condition of the Company as at thedates thereof and the statutory results of its Operations, and statements of cash flow, inaccordance with accounting practices prescribed or permitted by the Pennsylvania Departmentof Insurance. Except as set forth on Disclosure Schedule 3.1.5, no deficiency has been
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communicated either orally or in writing to the Company with respect to any of the StatutoryStatements filed prior to the date hereof which was not resolved prior to the date hereof.     (c) The Company does not own any real property, tangible personal property, orSoftware (except as set forth on Disclosure Schedule 3.1.5) and is not party to any leasesregarding real property; any licenses for the use of Software by the Company, except asdisclosed on Disclosure Schedule 3.1.5, will terminate as of the Closing Effective Date.Except as disclosed on Disclosure Schedule 3.1.5, the Company will have, as of the Closing,sole and exclusive, good and marketable title to, all of its properties, rights and assets,whether tangible or intangible, none of which are subject to any Lien (other than PermittedLiens), and none of which will be owned or held by Seller or its Affiliates.     (d) Disclosure Schedule 3.1.5 sets forth a listing of all Admitted Assets owned by theCompany on June 30, 2005, including all of the deposits of the Company made pursuant toapplicable laws, as of such date. Disclosure Schedule 3.1.5 is true, accurate and completewith respect to each item set forth therein in all material respects. The Company had goodand marketable title to each asset set forth in Disclosure Schedule 3.1.5 as of June 30,2005; each asset is free and clear of all Liens (other than Permitted Liens, including Lienson statutorily required special deposits that arise as a result of their status as such),and was admitted and eligible for investment by the Company pursuant to applicablePennsylvania insurance laws. Each deposit set forth in said statement is acceptable to theinsurance department holding the deposit and is in compliance with the laws applicablethereto.     (e) The Admitted Assets, including statutorily required special deposits set forth inDisclosure Schedule 3.1.5, are, as of the date hereof, and the Closing Admitted Assets willbe, as of the Closing Effective Date, sufficient to meet all statutory and regulatorystandards and requirements of the laws for the Company to maintain the licenses, approvalsand permits necessary for Company Operations. A schedule of the Admitted Assets will beprepared as of November 30, 2005 and provided to Purchaser not less than five (5) BusinessDays prior to Closing. At Closing, Seller will warrant that no material change (excludingchanges in market value, changes consented to by Purchaser, and changes resulting from thenormal conduct of the Company’s Operations) has occurred with respect to the ClosingAdmitted Assets between November 30, 2005, when the schedule of Admitted Assets wasprepared, and the Closing Effective Date.     3.1.6. Absence of Undisclosed Liabilities; Soundness of Reserves; Records.     (a) Except for (i) liabilities specifically reflected as to nature and amount in theStatutory Statements; (ii) liabilities incurred in the ordinary course of business sinceJune 30, 2005 consistent with past practice and the terms of this Agreement; and (iii) otherliabilities detailed on Disclosure Schedule 3.1.6, the Company does not have any liabilitiesor obligations of any nature, whether absolute, accrued, contingent or otherwise, andwhether due or to become due, that would exceed (a) $5,000 for any individual liability orobligation or (b) $25,000 in the aggregate for all such undisclosed liabilities orobligations. Except to the extent included within the preceding sentence, the Company doesnot have any liability in respect of Debt and has no obligation or practice to extend creditto any Person.
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     (b) The Company has established all claim and IBNR reserves in accordance with soundactuarial principles and has established all claim and other reserves in accordance withGAAP and SAP.     (c) All insurance records and other data relating to the Company’s Operations and anyInsurance Contracts have been maintained by Seller and the Company in accordance with soundcorporate record retention practices and in accordance with applicable law or regulation,except to the extent that a failure to do so would not have a Material Adverse Effect. Allsuch records and data of the Company will be transferred to Purchaser in the form of an SQL2000 database file, and will contain sufficient information to permit the Company to processany claims handling, salvage or subrogation issues or other insurance functions in theordinary course of business consistent with the Company’s past practice. The use of suchrecords and data by the Company after Closing will not require any extension of existingSoftware licenses or other agreements.     (d) All liability of the Company for any claims arising out of policies issued byMission Insurance Company of Texas is reinsured by General Reinsurance Corporation underreinsurance agreement ACF-K820154 having an effective date of May 1, 2000, a claims reportedexpiration date of May 1, 2010, and a $10 million aggregate limit. Seller has providedPurchaser with access to all materials in Seller’s possession delivered by representativesof Mission Insurance Company of Texas to Seller in connection with Seller’s acquisitionthereof. There are no claims pending or overtly threatened with respect to coverageswritten by the Company prior to its acquisition by Seller, except as disclosed on Schedule3.1.6.     3.1.7. Litigation. Except as set forth on Disclosure Schedule 3.1.7, there isno judicial, administrative, or regulatory action, proceeding, investigation, inquiry, claim(other than any insurance claim in the ordinary course of business consistent with pastpractice), administrative charge or complaint pending or, to the knowledge of Seller,threatened (or any material basis therefor is known to Seller or the Company) against theCompany which (i) if determined adversely would have a Material Adverse Effect or(ii) questions the validity of this Agreement or any action taken or to be taken by theCompany pursuant hereto or in connection herewith or which questions the consummation of anyof the transactions contemplated hereby or declares or proposes to declare the sameunlawful. The Company has not been charged with, nor to the knowledge of Seller beenthreatened with, any charges involving any violations of any provisions of any applicablelaws, regulations, ordinances, orders, or administrative rulings. The Company is not indefault with respect to any judgment, order, writ, injunction, or decree of any court or anyfederal, state, municipal, or other governmental department, commission, board, bureau,agency, or instrumentality.     3.1.8. Compliance with Law. Since June 16, 2000, the Company has conducted,and is now conducting, its business and Operations in compliance with all applicabledomestic and foreign laws, rules, regulations, judgments, and court or administrativeorders, permits, and approvals (including, without limitation, those of state insurancedepartments),
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except to the extent that noncompliance would not cause a Material AdverseEffect. The Company has all permits, licenses, orders, or approvals of any federal, state,or local governmental or regulatory body that are material to the conduct of its businessand Operations. All such permits, licenses, orders, and approvals are in full force andeffect, neither Seller nor the Company has received any written or, to the knowledge ofSeller or the Company, oral notice regarding any violations, and no proceeding is pending,or to the knowledge of Seller or the Company threatened, to revoke any such permit, license,order or approval. The Company has filed or otherwise provided all forms, reports,documents, data and other information with or to, as the case may be, the PennsylvaniaDepartment of Insurance and each insurance department of any other state or jurisdictionhaving jurisdiction required to be filed by it or otherwise provided pursuant to insurancelaws and the rules and regulations thereunder and has complied with all applicablerequirements of such laws and the rules promulgated thereunder, except to the extent thatfailure to do so would not cause a Material Adverse Effect. All required regulatoryapprovals in respect of any such filings are in full force and effect on the datehereof. All such regulatory filings were in compliance with applicable law when filedand, to the knowledge of Seller or the Company, no deficiencies have been asserted by anygovernmental authority with respect to any regulatory filings that have not been satisfied,except to the extent that noncompliance would not have a Material Adverse Effect.     3.1.9. Insurance Regulation. Disclosure Schedule 3.1.9 lists the jurisdictionsin which the Company holds a license or is otherwise authorized to conduct insurancebusiness or is authorized or accredited as a reinsurer. Complete and correct copies ofcertificates of authority to conduct insurance business have been furnished to or madeavailable to Purchaser. Disclosure Schedule 3.1.9 also sets forth the jurisdictions inwhich Company is authorized to write “Cargo,” “Non-Trucking Liability” and “Physical Damage”coverage. Except for these lines of business in these specific jurisdictions (whichcomprise the entire Operations of Company), the Company does not conduct any insurancebusiness in any other jurisdiction, and has not assumed any reinsurance from any otherentity for any other line of business. Except as set forth on Disclosure Schedule 3.1.9,the Company has not been involved in any proceeding to revoke, restrict or suspend itslicense or other qualification in any jurisdiction, nor are any such proceedings pending.Except as set forth on Disclosure Schedule 3.1.9, there are no outstanding orders applicableto the Company issued by any regulatory authority (other than regulations generallyapplicable to companies in the same line of business) that restrict the Company’s ability topay dividends or regulate or establish levels of reserves or other financial ratios or thatotherwise restrict the activities of the Company.     3.1.10. Taxes. Except as set forth on Disclosure Schedule 3.1.10:     (a) The Seller or its Affiliates have timely filed with the appropriate TaxingAuthorities all Tax Returns and Information Returns of the Company required to be filedthrough the Closing Effective Date (taking into account all valid extensions as listed inDisclosure Schedule 3.1.10) and all such Tax Returns and Information Returns are completeand accurate in all material respects. In particular, and without in any manner limitingthe
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foregoing, none of the foregoing returns contains any position which is or would besubject to penalties under Section 6662 of the Code (or any corresponding provisions ofstate, local or foreign tax laws).     (b) All Taxes of the Company that are due and payable on or before the ClosingEffective Date have been timely paid.     (c) The Company has provided a sufficient reserve for Taxes that are not yet due andpayable in accordance with GAAP and SAP in the Company’s accounting records as of theClosing Effective Date whether or not the Closing Effective Date is at the end of a TaxablePeriod.     (d) There are no Liens for Taxes on any of the assets of the Company other than forTaxes not yet due and payable.     (e) The Company has withheld and timely paid or accrued all Taxes attributable to theCompany required to have been withheld and paid in connection with amounts paid or owing toany employee, independent contractor, creditor, stockholder or other third party.     (f) No federal, state, local or foreign investigative audit or other administrativeproceeding or court proceeding (each an “Audit”) exists or has been initiated with regard toTaxes or Tax Returns with respect to the Company. No notice has been received that any suchAudit is pending or threatened with respect to any Taxes due from the Company or any TaxReturn filed by the Seller with respect to the Company. Neither the Seller nor the Companyhas waived any statute of limitations with respect to any taxes or has agreed to anyextension of time with respect to a tax assessment or deficiency.     (g) All contracts or inter company account systems under which the Company has, or mayat any time in the future have, an obligation to assume, share, contribute or receivepayment of any portion of a Tax (or any amount calculated with reference to any portion of aTax) determined on a consolidated basis with respect to any group of corporations or otherentities of which the Company is or was a member shall terminate with respect to the Companyon or before the Closing Effective Date, and any payable or receivable thereunder shall bepaid or otherwise settled at the time of such termination.     (h) [Intentionally Omitted].     (i) The taxable year of the Company for federal and state income and franchise Taxpurposes is the calendar year.     (j) The Company is not required to include in taxable income any adjustments under CodeSection 481(a) for any Taxable Period, or portion thereof, ending after the date of thisAgreement for matters arising through the Closing Effective Date.
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     (k) Neither the Seller nor the Company has any income attributable to the Company andwhich should be reported on a Tax Return for a Taxable Period ending after the ClosingEffective Date, but which is attributable to a transaction (e.g. an installment sale)occurring in a Taxable Period ending on or prior to the Closing Effective Date, thatresulted in a deferred reporting of income from such transaction (other than a “deferredinter company transaction” which is listed on Disclosure Schedule 3.10(k));     (l) The Company (i) has no income that is includable in computing the taxable income ofa United States person (defined in Section 7701 of the Code) under Section 951 of the Codefor any Taxable Period ending on or before the Closing Effective Date; and (ii) is not apassive foreign investment company within the meaning of Section 1297 of the Code as of theClosing Date.     (m) The Company has not filed a consent under Section 341(f) of the Code.     (n) No property owned by the Company (i) is property required to be treated as beingowned by another Person pursuant to the provisions of Section 168(f)(8) of the InternalRevenue Code of 1954, as amended and in effect immediately prior to the enactment of the TaxReform Act of 1986, (ii) constitutes “tax-exempt use property” within the meaning of Section168(h)(1) of the Code or (iii) is tax-exempt bond financed property within the meaning ofSection 168(g) of the Code.     (o) The Company is not party to any contract, agreement or other arrangement whichcould result in the payment of amounts that could be nondeductible by reason of Section 280Gor Section 162(m) of the Code;     (p) There are no material elections with respect to Taxes affecting the Company as ofthe date hereof. After the date hereof, no election with respect to Taxes affecting theCompany will be made without the written consent of Purchaser;     (q) The representations and warranties of Seller contained in this Section 3.1.10 withrespect to any Tax shall survive until the later to occur of (i) the lapse of the statute oflimitations for the assessment of such Tax, including any extensions thereof, or (ii) sixty(60) days after the final, non-appealable determination of a deficiency of such Tax.     3.1.11. Absence of Certain Changes. Except as set forth on Disclosure Schedule3.1.11, -since March 31, 2005, the Operations of the Company have been operated in theordinary course of business consistent with past practice and there has not been: (a) anymaterial adverse change in the business, Operations, assets, or financial condition of theCompany or the ability of the Company to carry on its business substantially as currentlyconducted; (b) any damage, destruction or casualty loss, whether covered by insurance ornot, materially and adversely affecting either in any case or in the aggregate the business,Operations, assets or financial condition of the Company; (c) except as expressly providedfor in this Agreement, any entry into any agreement, commitment or transaction by theCompany, other than agreements, commitments or transactions entered into by the Company
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inthe ordinary course of business consistent with past practices, (d) any contribution,renewal or other movement of insurance policies from Seller or any Affiliate of Seller intothe Company; or (e) any change by the Company in its underwriting, reinsurance, marketing,licensing, pricing, claims, or accounting principles, procedures, or practices.     3.1.12. Brokers. Neither the Seller nor the Company has taken any action inconnection with this Agreement or the transactions contemplated hereby so as to give rise toany valid claim against Purchaser or the Company for any brokerage or finder’s commissions,fees, or similar compensation. Seller agrees to indemnify and hold Purchaser harmless fromand against any and all loss, claims, damage, cost, or expense arising out of or inconnection with any claim against Purchaser or its Affiliates for any such brokerage orfinder’s commission, fee, or similar compensation resulting from actions taken by Seller orthe Company.     3.1.13. Conduct of Operations. Except as set forth in this Agreement and theDisclosure Schedules, since June 30, 2005, the Company has not:     (a) declared, set aside, made, or paid (in cash or property) any dividend or made anyother payment or distribution on or in respect of, or directly or indirectly purchased,retired, redeemed or otherwise acquired, any shares of, its capital stock or effected anyrecapitalization or reclassification or any other transfer of assets, property, contracts orrights;     (b) issued, sold, or delivered, or agreed to issue, sell, or deliver, any shares of itscapital stock or any securities convertible into, or options with respect to, or warrants topurchase, or rights to subscribe to, any shares of its capital stock;     (c) except as set forth on Disclosure Schedule 3.1.13, failed to pay any creditor anyamount owed to such creditor when due or granted any extensions of credit other than in theordinary course of business consistent with past practices;     (d) except as set forth on Disclosure Schedule 3.1.13, made, changed or revoked anymaterial Tax election, elected or changed any method of accounting for Tax purposes, settledany action in respect of Taxes or entered into any contractual obligation in respect ofTaxes with any governmental authority; or     (e) entered into any contractual obligation to do any of the things referred toelsewhere in this Section 3.1.13.     3.1.14. Absence of Claims. After giving effect to the termination of theAffiliate Agreements, Seller will not have any contracts or agreements with, or claimsagainst, the Company (other than with respect to the Agency Agreement and, as of theClosing, Seller hereby waives all known claims it may have against the Company, except forthose arising under the Agency Agreement, with respect to periods ending on or prior to theClosing Effective Date). All payments owed by Company to Seller or any Affiliate arereasonable and customary, and any agreements evidencing such obligations of Company havebeen
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approved (if required by applicable law) by the Pennsylvania Department of Insurance orother regulatory entity.     3.1.15. No Infringement. To Seller’s knowledge, the conduct of the Operationsand use of any Software by Company does not infringe on any rights of any Person in respectof any intellectual property.     3.1.16. Insurance Coverage. The Company has, or Seller has with respect toCompany, maintained in full force and effect insurance with respect to the Company’s assetsand Operations since June 16, 2000, in such amounts and against such losses and risks as iscustomarily carried by Persons engaged in the same or similar business and as is requiredunder the terms of any applicable contractual obligations. All such policies (whethermaintained by the Company or the Seller or other Affiliates of the Seller) are in full forceand effect, and all premiums which are due thereonhave been paid, and such policies will continue to be in effect until the Closing, atwhich time such coverages will be terminated as to the Company.     3.1.17. No Employee Claims. Since June 16, 2000, the Company has not had anyemployees and has not incurred any liability under any “employee benefit plan” as such termis defined in Section 3(3) of ERISA, or under Title IV of ERISA. In addition, to the bestof Seller’s knowledge, the Company has never had any employment related claims at any time.     3.1.18 Contracts. Disclosure Schedule 3.1.18 contains a true and complete andcorrect list of the Company’s Insurance Contracts in force as of August 31, 2005, which willbe updated to the date hereof within two (2) Business Days after signing this Agreement (andspecifies the premiums with respect thereto), and all other contracts entered into by eitherCompany or Seller that are material to the conduct of the Company’s Operations, includingall contracts and arrangements with Seller or any Affiliate of Seller and with Personswriting, selling or producing the Company’s insurance business (“InsuranceBrokers”), and all reinsurance arrangements whether the Company acts as reinsurer orreinsured. Company warrants that all contracts with any Insurance Broker, whether oral orwritten, along with any authority of any Insurance Broker to write business or in any waybind the Company, have been terminated in compliance with all applicable laws, and that noInsurance Contracts have been issued by the Company since the Runoff Date (other thanrenewals to the extent required by applicable law). Except as specifically set forth inDisclosure Schedule 3.1.18, Company is not and will not be required to pay commissions toany Insurance Broker (except pursuant to arrangements newly entered into by the Companyafter the Closing). Each of the Insurance Contracts is in full force and effect and is thevalid and binding obligation of each party thereto. Except as set forth in DisclosureSchedule 3.1.18 hereto, neither the Seller nor the Company, or to the knowledge of theSeller or the Company, any other Person is (or, with the giving of notice or the lapse oftime or both, will be) in material violation, breach of or default under any of theInsurance Contracts or other listed contracts. No Insurance Contract has a change ofcontrol or similar provision which requires a notice or consent in connection with theconsummation of the transaction contemplated hereby or that would entitle a third party tocancel, terminate, alter, amend or significantly change any such Insurance Contract.
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There exists no breach or event of default on the part of the Company with respect tothe Insurance Contracts, or other listed contracts which would constitute a Material AdverseEffect.     3.1.19. Powers of Attorney and Suretyship. The Company has no general orspecial powers of attorney outstanding (whether as grantor or grantee thereof), nor anyobligation or liability (whether actual, accrued, accruing, contingent or otherwise) asguarantor, surety, co-signer, endorser, comaker, indemnitor or otherwise in respect to theobligation of any person, corporation, partnership, joint venture, association, organizationor other entity, except as endorser or maker of checks in the ordinary course of businessand except as may be required by generally-applicable licensure requirements imposed by anydepartment of insurance in any jurisdiction in which the Company is licensed.     3.0.20. Disclosure. Neither this Agreement nor the Disclosure Schedules, northe certificates and other documents furnished or to be furnished by Seller or the Companyto Purchaser pursuant hereto, in light of the circumstances under which they were furnished,contain or will contain any untrue statement of material fact or omit to state a materialfact.          3.2. Representations and Warranties of Purchaser. Purchaser represents and warrantsto Seller as follows:     3.2.1. Organization and Standing of Purchaser. Purchaser is a corporation dulyorganized and validly existing and in good standing under the laws of Ohio.     3.2.2. Authority for Agreement. Purchaser has full corporate power andauthority to execute and deliver this Agreement and each of the other agreements,instruments and documents contemplated hereby, to which Purchaser is a party, and to carryout its obligations hereunder and thereunder. The execution, delivery and performance ofthis Agreement and each of the other agreements, instruments and documents required to beexecuted and delivered by Purchaser hereunder, and the performance of all transactionsherein or therein contemplated, have been duly authorized by all necessary action on thepart of Purchaser, and no further corporate action on the part of Purchaser is necessary toauthorize such execution, delivery and performance. This Agreement has been duly executedand delivered by Purchaser and constitutes, and each of the other agreements, instrumentsand documents required by the terms of this Agreement to be executed and delivered hereunderby Purchaser, when so executed and delivered, will constitute, the valid and legally bindingobligation of Purchaser, enforceable against Purchaser in accordance with their respectiveterms. Neither the execution and delivery of this Agreement, each of the other agreements,instruments and documents contemplated to be executed and delivered by Purchaser, nor theconsummation of the transactions contemplated hereby or thereby will (i) conflictwith or result in any violation of or constitute a default under any provision of theArticles of Incorporation or Code of Regulations of Purchaser, or (ii) assuming allregulatory and governmental approvals sought by the Parties have been obtained, conflict inany respect with, result in a breach of or constitute a default under any court oradministrative order or process, judgment, decree, statute, law, ordinance, rule orregulation or any agreement or
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commitment to which Purchaser is a party orby which it (or any of its material properties or assets) is subject or bound, exceptwhere such conflict, breach or default would not have a material adverse effect on Purchaseror preclude the consummation of the transactions contemplated herein or therein.     3.2.3. Consents. No consent, license, approval, order or authorization of, orregistration, declaration or filing (collectively, “Approvals and Filings”) with,any third party or any governmental authority, agency, bureau or commission is required tobe obtained or made by Purchaser in connection with the Purchaser’s execution, delivery,performance, validity and enforceability of this Agreement, the purchase of the TriumpheShares, or the consummation by the Purchaser of the other transactions contemplatedhereunder except for (i) the filings to be made by, and approvals to be obtained from, thePennsylvania Department of Insurance with respect to the transfer of control of the Company,(ii) the filings to be made with other state insurance departments for the approval of thetransactions contemplated by this Agreement, all of which are set forth on DisclosureSchedule 3.2.3, (iii) the Consents and (iv) registrations, declarations or filings requiredto be made subsequent to the Closing not entailing any requirement of consent, license,approval, order or authorization on the part of such governmental entity or third party allof which are set forth on Disclosure Schedule 3.2.3, and all of which will be solicited byPurchaser in accordance Section 5.2.     3.2.4. Purchase for Investment. Purchaser is acquiring the Triumphe Shares forits own account for investment and not with a present view to any distribution thereof.Purchaser will refrain from transferring or otherwise disposing of any of the TriumpheShares acquired by it, or any interest therein, in such manner as to violate anyregistration provision of the Securities Act of 1933, as amended, or any applicable statesecurities law regulating the disposition thereof. Purchaser agrees that the certificaterepresenting the Triumphe Shares may bear legends to the effect that the Triumphe Shareshave not been registered under the Securities Act of 1933, as amended, or such other statesecurities laws, and that no interest therein may be transferred or otherwise disposed of inviolation of the provisions thereof.     3.2.5. Brokers. Purchaser has not taken any action in connection with thisAgreement or the transactions contemplated hereby so as to give rise to any valid claimagainst Seller or the Company for any brokerage or finder’s commissions, fees or similarcompensation. Purchaser agrees that any such brokerage or finder’s commissions, fees orsimilar compensation, if any, will be paid by Purchaser. Purchaser agrees to indemnify andhold Seller harmless from and against any and all loss, claims, damage, cost or expensearising out of or in connection with any claim against Seller or its Affiliates for any suchbrokerage or finder’s commissions, fees or similar compensation resulting from actions takenby Purchaser.     3.2.6. Financing. Purchaser has, and at the Closing and all other relevanttimes hereunder will have, sufficient resources to consummate the transactions contemplated
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     hereby and to make the Closing Payment, to pay the Purchase Price, and to pay all of itsrelated fees and expenses.     3.2.7. Litigation; Regulatory Standing. There is no action, suit or proceedingpending or, to Purchaser’s knowledge, threatened which questions the legality or proprietyof the transactions contemplated in this Agreement. There are no orders or other regulatoryproceedings or actions pending or, to the Purchaser’s knowledge, threatened against thePurchaser that could adversely affect the legality or propriety of the transactionscontemplated in this Agreement.     3.2.8 Compliance with Law. To the Purchaser’s knowledge, the Purchaserhas conducted, and is now conducting, its business and operations in compliance with allapplicable domestic and foreign laws, rules, regulations, judgments, and court oradministrative orders, permits and approvals (including, without limitation, those of stateinsurance departments), except to the extent that noncompliance would not cause a MaterialAdverse Effect. Purchaser has filed or otherwise provided all forms, reports, documents,data and other information with or to, as the case may be, the Ohio Department of Insuranceand each insurance department of any other state or jurisdiction having jurisdictionrequired to be filed by it or otherwise provided pursuant to insurance laws and the rulesand regulations thereunder and has complied with all applicable requirements of such lawsand the rules promulgated thereunder, except to the extent that failure to do so would notcause a Material Adverse Effect. All required regulatory approvals in respect of any suchfilings are in full force and effect on the date hereof.     3.2.9. Disclosure. Neither this Agreement, nor the certificates or any otherdocuments furnished or to be furnished by Purchaser to Seller pursuant hereto, in light ofthe circumstances under which they were furnished, contain or will contain any untruestatement of material fact or omit to state a material fact.**ARTICLE 4****CONDITIONS PRECEDENT**          4.1. Conditions to the Obligations of Purchaser and Seller. The obligation of Sellerhereunder to sell to Purchaser the Triumphe Shares, and the obligation of the Purchaser to purchasethe Triumphe Shares are subject to the fulfillment, prior to or at the Closing, of the followingconditions, unless waived in writing by Purchaser and Seller, except the condition set forth insubsection (a) below, which is not waiveable:     (a) all permits, orders, approvals and consents of, and notices to, registrations andfilings with the Pennsylvania Department of Insurance, or any other applicable insuranceregulatory authority, which are identified in Sections 3.1.4 and 3.2.3 or set forth onDisclosure Schedules 3.1.4 and 3.2.3 and required in connection with (i) the execution anddelivery of this Agreement (including, without limitation, approval by the Commissioner of
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Insurance of the Commonwealth of Pennsylvania for the acquisition by Purchaser of theCompany and any action contemplated by Section 2.3), (ii) the termination of the AffiliateAgreements in the manner required by this Agreement, and the consummation of thetransactions contemplated hereby and thereby shall havebeen received or made, and such permits, orders, approvals and consents shall beeffective and shall not have been suspended, revoked or stayed by action of any governmentalauthority;     (b) the Escrow Agreement shall have been executed and delivered;     (c) the Purchaser shall have agreed to assume, concurrently with the execution of thisAgreement, 100% of the Interests and Liabilities under the Commercial Auto Quota ShareReinsurance Agreement effective as of January 1, 2003, as amended, with such assumption tobe retroactive to January 1, 2005;     (d) all other consents, authorizations, orders and approvals of, and filings andregistrations with, any United States Federal, state or local or foreign governmentalcommission, board or other regulatory body which are required for the execution and deliveryof this Agreement and the consummation of the transactions contemplated hereby, shall havebeen obtained or made;     (e) the consummation of the transactions contemplated hereunder shall not have beenprohibited or restrained by an order, injunction, decree or judgment of any court,governmental agency or other regulatory agency or commission; and     (f) the documentation evidencing the reimbursement obligations to Volvo Group Treasuryin respect of the letters of credit identified on Schedule 2.2 shall be modified in a mannermutually acceptable to Seller and Purchaser.          4.2. Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase theTriumphe Shares is subject to the fulfillment, prior to or at the Closing, of the followingadditional conditions, unless waived in writing by Purchaser:     4.2.1. Material Adverse Effect. Since June 30, 2005, no Material AdverseEffect shall have occurred; provided that Purchaser shall not be able to claim the failureof this condition precedent if Seller specifically disclosed and accurately described in allmaterial respects the event giving rise to Purchaser’s claim of a Material Adverse Effect inthis Agreement (including any Disclosure Schedule).     4.2.2. Representations and Warranties. All representations and warranties ofSeller contained herein shall have been true and correct when made and all suchrepresentations and warranties shall also be true and correct in all material respects (orin all respects in the case of any representation or warranty containing any materialityqualification of any kind) at and as of the Closing Date except as affected by actions takenafter the date hereof with the prior written consent of Purchaser or as specificallycontemplated by this Agreement, and except
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for representations and warranties made as of aspecified date, which shall be true and correct as of such specified date.     4.2.3. Performance. Seller shall have performed and complied in all materialrespects with all agreements, covenants and conditions required by this Agreement to beperformed and complied with by it prior to or at the Closing.     4.2.4. Certificate. Seller shall have delivered to Purchaser an officer’scertificate, signed by a Responsible Officer of Seller, dated the date of Closing, to theeffect that the conditions set forth in Sections 4.2.2 and 4.2.3 have been satisfied.     4.2.5. Resignation. Each director and officer of the Company shall havesubmitted his resignation effective as of the Closing.     4.2.6. Termination of Certain Agreements. All Affiliate Agreements shall havebeen terminated and all inter company accounts between the Company and Seller or anyAffiliate shall have been settled in each case without any condition or term materiallyadverse to the Company, except with respect to the Agency Agreement.     4.2.7. Shares and Transferred Assets; Other Agreements. Seller shall havedelivered documentation evidencing the transfer of title to the Triumphe Shares toPurchaser, as well as any other agreements, documents and instruments to be delivered bySeller required to be delivered by Seller by the terms hereof. All corporate and otherproceedings in connection with the transactions contemplated by this Agreement shall bereasonably satisfactory in form and substance to the Purchaser and its counsel.          4.3. Conditions to the Seller’s Obligations. Seller’s obligation to sell to Purchaserthe Triumphe Shares is subject to the fulfillment, prior to or at the Closing, of each of thefollowing additional conditions, unless waived in writing by Seller:     4.3.1. Representations and Warranties. The representations and warranties ofPurchaser contained herein shall have been true and correct when made and shall also be trueand correct in all material respects (or in all respects in the case of any representationor warranty containing any materiality qualification of any kind) at and as of the ClosingDate except as affected by actions taken after the date hereof with the prior writtenconsent of Seller, and except for representations and warranties made as of a specifieddate, which shall be true and correct as of such specified date.     4.3.2. Performance. Purchaser shall have performed and complied in allmaterial respects with all agreements, covenants and conditions required by this Agreementto be performed or complied with by it prior to or at the Closing, including, but notlimited to, the delivery of the Closing Payment and Purchase Price pursuant to Section 2.2of this Agreement and the Escrow Agreement.
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     4.3.3. Certificate. Purchaser shall have delivered to Seller an officer’scertificate, signed by a Responsible Officer of Purchaser, dated the date of Closing, to theeffect that the conditions set forth in Sections 4.3.1 through 4.3.2 have been satisfied.**ARTICLE 5****COVENANTS**          5.1. Conduct of Business of the Company.     (a) Except as otherwise consented to by Purchaser in writing, during the period fromthe date hereof to the Closing Date, Seller will take all steps as may reasonably berequired to cause the Company not to (i) issue, sell, or pledge, or authorize orpropose the issuance, sale or pledge of, (A) additional shares of capital stock of anyclass, or securities convertible into any such shares, or any rights, warrants, or optionsto acquire any such shares or other convertible securities or (B) any other securities inrespect of, in lieu of or in substitution for shares outstanding on the date hereof, (ii)declare or set aside any dividend or other distribution on any shares of its capital stock,(iii) authorize, recommend, or propose or enter into an agreement in principle with respectto, any merger, consolidation or business combination, or any acquisition of a materialamount of assets, (iv) agree in writing or otherwise to take any of the foregoing actions orany action which would make any representation or warranty in Article 3 untrue or incorrectin any material respect as of the Closing Date. From the date of this Agreement until theClosing, neither the Seller nor the Company (nor any of their respective agents) shalldirectly or indirectly: (x) solicit, initiate, or encourage the submission of any proposalor offer from any Person relating to, or enter into or consummate any agreement ortransaction relating to, the acquisition of any equity interests in the Company or atransaction of the type described in clause (iii) of this Section 5.1 above or any similartransaction or alternative to the transactions contemplated by this Agreement; or (y)participate in any discussions or negotiations regarding, furnish any information withrespect to, assist or participate in, or facilitate in any other manner any effort orattempt by any Person to do or seek any of the foregoing.     (b) Except as otherwise expressly required by this Agreement, from the date of thisAgreement until the Closing Date, Seller shall, and shall cause the Company to (i) conductthe Operations in a manner consistent with past practices as of the Runoff Date , (ii) usecommercially reasonable efforts to maintain all licenses set forth on Disclosure Schedule3.1.9, and (iii) consult with, and obtain the consent of, the Purchaser prior to taking anyaction or entering into any transaction that would be of strategic importance to theCompany;     (c) In the event the Seller or the Company shall receive notice, written or oral, froma Commissioner after the date of this Agreement and prior to Closing to the effect that (i)a Certificate of Authority previously issued to the Company may be or has been suspended,revoked, cancelled or not renewed, (ii) such agency will not reissue a Certificate ofAuthority (or similar license) to theCompany, or (iii) the transactions contemplated by this Agreement are or will bedisapproved by such agency, the recipient of such notice shall
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immediately communicate suchinformation to the Purchaser, and the Seller shall use commercially reasonable efforts to(i) avoid such suspension, revocation, cancellation or non-renewal, (ii) obtain thereissuance of such Certificate of Authority (or similar license), or (iii) obtain suchagency’s approval of the transactions contemplated herein; and     (d) From the date of this Agreement until the Closing Date, the Company shall not enterinto any arrangements or agreements with Seller or its Affiliates except as expresslyprovided in this Agreement, and Seller shall cause there to be no contribution, renewal orother movement of insurance policies from Seller or any Affiliate of Seller into theCompany.          5.2. Filings and Authorizations.     (a) No later than sixty (60) days after the date hereof (thirty (30) days with respectto the Form A filing in Pennsylvania), Purchaser will file or supply, or cause to be filedor supplied, all applications, notifications and information required to be filed orsupplied pursuant to applicable law, rule or regulation in connection with the consummationof the transactions contemplated by this Agreement, including, without limitation, filingswith the offices of the Pennsylvania Department of Insurance with respect to the change ofcontrol of the Company and any actions contemplated by Section 2.3, and will diligentlypursue commercially reasonable efforts to procure such consents following the submission ofsuch filings.     (b) Purchaser will use its commercially reasonable efforts to obtain, or cause to beobtained, all authorizations, approvals, consents and waivers from all Persons andgovernmental authorities other than those listed in clause (a) above necessary to beobtained by it in order for it so to consummate the transactions contemplated by thisAgreement, including, without limitation, obtaining the Consents, and will use itscommercially reasonable efforts to take, or cause to be taken, all other actions necessary,proper or advisable in order for it to fulfill its obligations hereunder.     (c) With respect to clause (a) above, and clause (b) above to the extent relating toapprovals, consents or waivers from governmental authorities, all fees and expenses(excluding legal fees and expenses) incurred as a result of filings to be made thereundershall be borne equally by the Parties. With respect to clause (b) above to the extent notrelating to approvals, consents or waivers from governmental authorities, all fees andexpenses incurred as a result of all authorizations, approvals, consents and waivers to beobtained or made thereunder shall be paid by the Party required to obtain such approval.Seller and Purchaser will coordinate and cooperate with one another in exchanging theinformation referred to in this Section 5.2 and supplying such reasonable assistance as maybe reasonably requested by each in connection with the foregoing. Each party shall have theright to provide comments on and review any such applications, notifications and informationincluding, but not limited to, Form A filings, proposed to be filed or supplied by the otherparty and, if such party elects to exercise such right, to complete such reviewwithin a reasonable period of time before the other party may file or supply any suchapplications, notifications or information.
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     5.3. Name Change. As soon as practicable after the Closing, Seller will cause to befiled all documents, and take such other steps, necessary to change the name of Seller and any ofits Affiliates to such other name that does not contain the word “Triumphe.”     5.4 Confidentiality. The Seller acknowledges that the success of the Company afterthe Closing depends upon the continued preservation of the confidentiality of certain informationwith respect to the Operations of the Company possessed by the Seller, that the preservation of theconfidentiality of such information by the Seller is an essential premise of the bargain betweenthe Seller and the Purchaser, and that the Purchaser would be unwilling to enter into thisAgreement in the absence of this Section 5.4. Accordingly, Seller hereby agrees with the Purchaserthat Seller shall not, and that Seller shall cause its Affiliates (to the extent Seller has Controlof such Affiliates), agents and representatives not to, at any time on or after the Closing Date,directly or knowingly indirectly, without the prior written consent of the Purchaser, disclose anyconfidential or proprietary information involving or relating to the Operations or Company;provided, however, that the information subject to the foregoing provisions of this sentence shallnot include (a) any information generally available to, or known by, the public (other than as aresult of disclosure in violation of either this covenant or any other obligation of secrecy orconfidential treatment); (b) any information otherwise known on a non-confidential basis by Selleror its Affiliates; (c) any information reported in any filings required by applicable law or withrespect to which disclosure is required in order for Seller and the Company to conduct business inthe ordinary course; and provided, further, that the provisions of this Section 5.4 shall notprohibit any retention of records or disclosure (a) required by any applicable legal requirement solong as reasonable prior notice is given of such disclosure and a reasonable opportunity isafforded to contest the same or (b) made in connection with the enforcement of any right or remedyrelating to this Agreement. At or prior to the Closing, the Seller shall assign to the Company anyrights which such Person may have under any confidentiality agreements or similar contractualobligations relating to the Company currently in effect.     5.5 Non-Competition and Non-Solicitation. For a period of three (3) years from andafter the Closing Date, neither the Seller nor its then existing Affiliates will write “Cargo,”“Non-Trucking Liability” or “Physical Damage” coverage in the United States. For the one yearperiod from and after the Closing Date, neither Seller nor any of its then existing Affiliateswill, directly or indirectly, solicit, recruit, offer employment, employ, engage as a consultant,lure or entice away or in any other manner persuade to leave the employ of the Purchaser or itsAffiliates, any employee of the Purchaser or its Affiliates unless such employee is involuntarilyterminated by Purchaser or its Affiliates or unless Purchaser or such Affiliate gives its writtenconsent in connection therewith. If the final judgment of a court of competent jurisdictiondeclares that any term or provision of this Section 5.5 is invalid or unenforceable, the partieshereto agree that the court making the determination of invalidity or unenforceability shall havethe power to reduce the scope, duration, or area of the term or provision, to delete specific wordsor phrases, or to replace any invalid or unenforceable term or provision with a term or provisionthat is valid and enforceable and that comes closest to expressing the intention of the invalid orunenforceable term or provision, and this Section 5.5shall be enforceable as so modified after the expiration of the time within which the judgment maybe appealed.
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     5.6 Updated Schedules. Notwithstanding any other provision of this Agreement to thecontrary, Seller shall have the right from time to time after the date hereof and prior to theClosing Date to update the Disclosure Schedules to reflect occurrences, conditions or events thatfirst arise or become known to Seller after the date of this Agreement. Seller shall deliver suchupdated Disclosure Schedules to Purchaser for review. If any such updated Disclosure Schedule,individually or in the aggregate, discloses a Material Adverse Effect (as used in Section 4.2.1 ofthis Agreement), Purchaser shall not be obligated to consummate the transactions contemplatedhereby. Otherwise, the updated Disclosure Schedule shall be deemed properly to modify and todisclose exceptions to the representations and warranties of Seller set forth in this Agreement anddelivery thereof shall not be deemed a breach or violation of any provision of this Agreement.From the date of the Agreement until the Closing Date, the Seller and the Company shall give thePurchaser prompt written notice upon becoming aware of (a) any development affecting the assets,liabilities, business, financial condition or Operations of the Company that has or couldreasonably be expected to have a Material Adverse Effect; or (b) any event or circumstance thatcould reasonably be expected to result in a breach of, or inaccuracy in, any of the representationsand warranties of the Seller and the Company, whether or not an updated Schedule could properly bedelivered by Seller under this Section.     5.7 Further Assurances.     (a) From time to time after the Closing, each of Purchaser and Seller will take suchfurther action and execute and deliver, or cause to be executed and delivered, suchdocuments as either may reasonably request in order to consummate the transactionscontemplated hereunder including, but not limited to, (i) more effectively vesting inPurchaser (or one of its Affiliates) good title to the Triumphe Shares; (ii) removingexisting restrictions on the Company’s Operations in the State of Texas as described inDisclosure Schedule 3.1.9; and (iii) providing reasonable cooperation in the Purchaser’spreparation of the Company’s 2005 Annual Statement. If Purchaser requests assistancefollowing the Closing that is, in Seller’s reasonable judgment, extraordinary, Seller shallso advise Purchaser and Purchaser agrees thereafter to reimburse Seller at the rate of $100per hour for such services (plus expenses), with invoices to be submitted on a monthly basisand paid within 30 days thereafter; provided, however, that Seller shall not chargePurchaser for assistance with preparing the 2005 Annual Statement of the Company unless anduntil the total hours of Seller personnel supporting that effort exceed 30 between January1, 2006 and March 1, 2006.     (b) The Parties agree to use their reasonable and diligent efforts to cause thetransactions contemplated hereby to be consummated as soon as possible after the datehereof. In furtherance of this undertaking, and not by way of limitation:     (i) Seller will facilitate Purchaser’s access to the Company’s independent auditors andactuaries so that Purchaser may make inquiry with regard to and monitor progress towardcompletion of the audit and actuarial report to be delivered as conditions precedent tothe Closing, with the cost associated with such participation to be borne by Purchaser.Following the execution of this Agreement, Seller will provide Purchaser with contactinformation for representatives of its independent auditors and actuaries.
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     (ii) Seller and Purchaser will use their best efforts to facilitate the orderlytransition of claims servicing responsibility related to policies issued under the programsevidenced by the Insurance Contracts listed on Schedule 3.1.18, items 3 and 4 (all of whichprograms are in runoff as more particularly described on Schedule 5.7(b)(ii)) whichservicing obligations are currently performed by Seller’s Affiliate, VFS Insurance ServicesLLC. The transition will be evidenced by documentation in form and substance reasonablyacceptable to both Seller and Purchaser.     (c) In order to facilitate the resolution of any regulatory inquiries or claims made byor against or incurred by Seller, Purchaser or the Company under this Agreement, for aperiod of five (5) years following the Closing or such longer period as may be required bythe record retention regulations, policies and procedures of the Internal Revenue Service,Purchaser and Seller shall, and shall cause their respective Affiliates to (i) retain thebooks and records of the Company in its possession which relate to periods prior to theClosing in a manner reasonably consistent with the prior practice of the Company, and (ii)upon reasonable notice, afford the officers, employees and authorized agents andrepresentatives of the other party reasonable access (including the right to make, at theSeller’s expense, photocopies), during normal business hours, to such books and records.     (d) The Purchaser agrees to cooperate with the Seller to permit the Seller’s Affiliateto collect amounts owing under the Agency Agreement. Premium billing and collection willoccur under the Agency Agreement, and any amounts collected by Seller or its Affiliates thatare properly attributable to the Company’s business will be promptly forwarded to Purchaseras provided in the Agency Agreement. Seller also agrees to provide a data transfer to beaccomplished by delivery in a SQL 2000 database as soon as reasonably possible following theClosing but in no event more than five business days thereafter. Seller agrees to providePurchaser with a test database as soon as reasonably possible after the execution of thisAgreement and to provide reasonable cooperation to Purchaser from the date hereof until suchfinal data transfer to facilitate the delivery contemplated by this section 5.7(d).     (e) Both prior to and after the Closing, Seller and Purchaser will use their bestefforts to (i) reduce the amount of any outstanding letters of credit relating to theCompany’s business, and (ii) prevent any liability under these letters of credit from beingattributed to Company or Purchaser and to prevent the presentation of a draw against any ofsuch letters of credit. In furtherance of this objective, and not by way of limitation,Purchaser agrees to use reasonable efforts to transfer any remaining active customers whosecoverage was written by the Kemper group of insurance companies and reinsured by Triumphe(including both Physical Damage and Non-Trucking Liability coverages) from the currentKemper policies to policies written directly by National Interstate.Seller will cooperate with Purchaser to effectuate this transfer, which will then allowSeller to cancel the Kemper policies and remove any prospective risk from the Kempercompanies.
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**ARTICLE 6****TAX MATTERS**     6.1. Indemnity.     (a) Seller agrees to indemnify and hold harmless Purchaser against liability related toany of the following Taxes: (i) Taxes imposed on the Company with respect to Taxable Periodsof the Company ending on or before the Closing Effective Date; (ii) with respect to TaxablePeriods beginning before the Closing Effective Date and ending after the Closing EffectiveDate (“Straddle Period Taxes”), Taxes imposed on the Company which are allocable to theportion of such period ending on the Closing Effective Date; and (iii) Taxes of any Affiliateother than the Company under U.S. Treas. Reg. Section 1.1502-6 or any similar provision ofstate, local or foreign law and (iv) Taxes imposed on the Company in a Taxable Period (orportion thereof) ending after the Closing Effective Date arising from the settlement or otherresolution of a proposed Tax adjustment which relates to a Taxable period (or portionthereof) ending on or before the Closing Effective Date. Notwithstanding the foregoing,Seller shall not be required to indemnify Purchaser against liability for any Taxes that areaccrued or otherwise reserved in the Company’s financial records as of the Closing EffectiveDate.     (b) In the case of Straddle Period Taxes, the portion of any such Tax that is allocableto the portion of the Taxable Period ending on the Closing Effective Date shall be:     (i) In the case of Taxes that are either (A) based upon or related to income orreceipts, or (B) imposed in connection with any sale or other transfer or assignment ofproperty (real or personal, tangible or intangible), deemed equal to the amount which wouldbe payable if the Taxable Period ended with the Closing Effective Date; and     (ii) In the case of Taxes imposed on a periodic basis with respect to the assets of theCompany, or otherwise measured by the level of any item not listed in Section 6.1(b)(i)above, deemed to be the amount of such Taxes for the entire period for which such Tax isassessed (“Assessment Period”) (or, in the case of such Taxes determined on an arrears basis,the amount of such Taxes for the immediately preceding Assessment Period), multiplied by afraction the numerator of which is the number of calendar days in the Assessment Periodending on the Closing Effective Date and the denominator of which is the number of calendardays in the entire Assessment Period.     (c) Purchaser will promptly remit to Seller all refunds received by Purchaser andattributable to Taxes paid by or on behalf of the Seller, unless and except to the extentthat any such refunds were accounted for in the Purchase Price.
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     6.2. Returns and Payments.     (a) Seller shall prepare and file or otherwise furnish in proper form to the appropriateTaxing Authority (or cause to be prepared and filed or so furnished) in a timely manner allTax Returns with respect to the Company for Taxable Periods ending on or before the ClosingEffective Date. Purchaser shall prepare and file (or cause to be prepared and filed) all TaxReturns with respect to the Company for any Taxable Period ending after the Closing EffectiveDate. Tax Returns of the Company with respect to Straddle Period Taxes shall be prepared ina manner reasonably consistent with past practices employed with respect to the Company,except where a contrary manner is required by law. Purchaser shall provide the Seller andits authorized representatives with a copy of such completed Tax Return and statementcertifying the amount of Tax shown on such Tax Return that is allocable to Seller pursuant toSection 6.1(b), together with appropriate supporting information and schedules at leastforty-five (45) days prior to the due date (including extensions thereof) for the filing ofsuch Tax Return, and such other party and its authorized representatives shall have the rightto review and comment on such Tax Return and statement prior to the filing of such TaxReturn.     (b) Seller shall pay or cause to be paid when due and payable all Taxes with respect tothe Company for any Taxable Period ending on or before the Closing Effective Date to theextent such Taxes exceed the amount, if any, accrued for such Taxes in the calculation of thePurchase Price. To the extent the amount accrued for any Taxes as of the Closing EffectiveDate exceeds the actual amount of such Taxes that are due and payable for periods ending onor before the Closing Effective Date, Purchaser shall promptly remit such excess to Seller.     6.3. Consents.     (a) After the Closing, Purchaser shall promptly notify Seller or Seller shall promptlynotify Purchaser in writing of any written notice of a proposed assessment or claim in acontest (“Contest”) of Purchaser or Seller which, if determined adversely to the taxpayer,would be grounds for indemnification under this Article 6.     (b) For all Consolidated Returns for any group of which Seller or any of its Affiliatesis a member, Seller shall control all such Contests in connection therewith. Prior to theClosing Date, Seller shall control all Contests relating to non-Consolidated Returns of theCompany. After the Closing Date, in the case of a Contest that relates to a non-ConsolidatedReturn of the Company (or any item relating thereto or reported thereon) for a Taxable Periodending on or before or that includes the Closing Effective Date, Seller shall have the rightat its expense to control the conduct of such Contest, and for all Taxable Periodsthereafter, Purchaser shall control such Contests. If Seller does not assume the defense ofany such Contest for a Taxable Period ending on or before or that includes the ClosingEffective Date, Purchaser may defend the same in such manner as it may deem appropriate,including, but not limited to, settling such contest after giving ten days prior writtennotice to Seller setting forth the terms and conditions of settlement. In the event of aContest covered by the third sentence of this paragraph, that involves issues relating to apotential adjustmentfor which Seller has
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liability and that are required to be dealt with in a proceedingthat also involves separate issues relating to a potential adjustment for which Purchaserwould be liable, Purchaser shall have the right, at its expense, to control the Contest butonly with respect to the latter issues.     (c) With respect to issues relating to a potential adjustment relating tonon-Consolidated Returns (or any item relating thereto or reported thereon) for which bothSeller and Purchaser could be liable, (i) each party may participate in the Contest, and (ii)the Contest shall be controlled by Purchaser; provided, however, Purchaser may not settle anyContest without the prior consent of Seller if such settlement would result in an increase inthe indemnification obligation of Seller pursuant to this Agreement or if such settlementwould alter a tax position previously taken by the Seller. The principle set forth in theimmediately preceding sentence shall govern also for purposes of deciding any issue that mustbe decided jointly (including, without limitation, choice of judicial forum) in situations inwhich separate issues are otherwise controlled under this Article 6 by Purchaser and Seller.     (d) Neither Purchaser nor Seller shall enter into any compromise or agree to settle anyclaim pursuant to any Contest which would adversely affect the other party for such year or asubsequent year without the written consent of the other party, which consent may not beunreasonably withheld. Purchaser and Seller agree to cooperate, and Purchaser agrees tocause the Company to cooperate, in the defense against or compromise of any claim in anyContest.          6.4. Time of Payment. Payment of any amounts due under this Article 6 in respect ofTaxes shall be made (i) in the case of Tax Returns that are required to be filed by eitherPurchaser or Seller, as the case may be, after the Closing Date, no later than the due date of theapplicable Tax Return that shows Taxes due for which the other party is responsible under Section6.1(a) and 6.1(b) and (ii) in all other cases within three (3) Business Days following an agreementbetween Seller and Purchaser that an indemnity amount is payable, or a “determination” having beenmade as such term is defined in Section 1313(a) of the Code. If liability under this Article 6 isin respect of costs or expenses other than Taxes, payment of any amounts due under this Article 6shall be made within five (5) Business Days after the Date when the relevant entity has beennotified that such entity has a liability for a determinable amount under this Article 6 and isprovided with calculations or other materials supporting such liability.          6.5. Cooperation and Exchange of Information. Seller and Purchaser shall (i) eachprovide the other, and Purchaser shall cause the Company to provide Seller, with such assistance asmay reasonably be requested by any of them in connection with the preparation of any Tax Return,Audit or other examination by any Taxing Authority or judicial or administrative proceedingsrelating to liability for Taxes, (ii) each retain and provide the other, and Purchaser shall causethe Company to retain and provide Seller, with any records of other information which may berelevant to such Tax Return, Audit or examination, proceeding or determination, and (iii) eachprovide the other with any final determination of any such Audit or examination, proceeding ordetermination that affects any amount required to be shown on any Tax Return of the other for anyPeriod. Without limiting the generality of the foregoing, Purchaser shall retain, and shall causethe Company to retain, and Seller shall retain, until the applicable statutes of limitation(including any extension) have
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expired, copies of all Tax Returns, supporting work schedules andother records or information which may be relevant to such returns for all Taxable Periods or portions thereofending before or including the Closing Effective Date and shall not destroy or otherwise dispose ofany such records without first providing the other party with a reasonable opportunity to reviewand copy same.          6.6 Transfer Taxes. Seller shall bear the cost of any documentary, stamp, stocktransfer or similar transfer Tax payable with respect to the transfer of the Triumphe Shares to thePurchaser.          6.7 Miscellaneous.     (a) Seller and Purchaser agree to treat all payments made by either of them to or forthe benefit of the other (including any payments to the Company) under this Article 6, underother indemnity provisions of the Agreement and for any misrepresentations or breaches ofwarranties or covenants as adjustments to the Purchase Price or as capital contributions, asthe case may be, for Tax purposes and that such treatment shall govern for all purposeshereof except to the extent that the laws of a particular jurisdiction provide otherwise, inwhich case such payments shall be made in an amount sufficient to indemnify the relevantparty on an after-Tax basis.     (b) For purposes of this Article 6, all Taxes of the Company for all pre-Closingperiods shall be determined without regard to the carryback of any net operating loss,capital loss, general business credit or other Tax attribute from a post-Closing period.**ARTICLE 7****TERMINATION**          7.1. Termination. This Agreement may be terminated at any time prior to the ClosingDate by:     (a) the mutual written consent of the Parties;     (b) either Party, by written notice to the other Party, if the Closing shall not haveoccurred on or before January 3, 2006, provided, however, that thisAgreement may not be terminated pursuant to the foregoing provision if the Parties areproceeding diligently and in good faith to close the transactions contemplated hereby and(i) the only unfulfilled condition precedent to Closing is the approval or disapproval ofthe transactions contemplated by this Agreement by the Pennsylvania Department of Insurance(or the Ohio Department of Insurance, to the extent required), and the required filings havebeen timely made, are being prosecuted in good faith and have not been denied; or (ii) theparties are engaged in arbitration as contemplated by Article 2 hereof. Notwithstanding theprovisions of this subsection (b), if the failure to close the transactions contemplated bythis Agreement within the time periods mentioned above is attributable to a Party’smalfeasance or the breach of any
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of its covenants hereunder such Party will not be entitledto terminate this Agreement pursuant to this subsection (b);     (c) either Party, at any time after the final refusal to consent to the transfer of theTriumphe Shares as contemplated herein by the Pennsylvania Department of Insurance;     (d) a Party, if there has been any material breach of any representation or covenant ofthe other Party (or, additionally in the case of Seller, the Company) hereunder and suchbreach shall not have been remedied within fifteen (15) days after the receipt from thenon-breaching Party of a notice in writing specifying the nature of such breach andrequesting that such breach be cured; or     (e) a Party, if the other Party (or, additionally in the case of Seller, the Company)shall be unable to pay its liabilities when due, or has filed a voluntary petition inbankruptcy, or is adjudicated bankrupt or insolvent, or if any receiver is appointed for itsbusiness or property, or if any trustee in bankruptcy or insolvency shall be appointed underthe laws of the United States government or of the several states, and such receiver ortrustee has not been discharged within thirty (30) days after such appointment.          7.2. Effect of Termination. If this Agreement is terminated pursuant to Section 7.1,the entire escrow (Closing Payment plus accrued interest) shall be released to Purchaser and thisAgreement, other than the provisions of Sections 3.1.12 (Brokers), 3.2.5 (Brokers), 9.3 (Expenses),9.4 (Public Announcements), 9.12 (Governing Law), and 9.13 (Waiver of Jury Trial), shall becomenull and void and of no further force and effect and all rights and liabilities of the Partieshereunder shall terminate, except for liabilities with respect to breaches of any representations,warranties or covenants of this Agreement prior to the date of termination pursuant to Section 7.1.Additionally, the provisions of the Confidentiality Agreement dated February 3, 2004 with respectto the transaction contemplated hereby shall continue in full force and effect through December 31,2006.**ARTICLE 8****INDEMNIFICATION**          8.1. Survival of Representations and Warranties. All representations and warrantiesmade by the Parties in this Agreement or pursuant to the Disclosure Schedules, or any otherschedule, certificate, instrument or document delivered pursuant to this Agreement shall survivethe execution and delivery of this Agreement, any examination by or on behalf of the Parties heretoand the Closing for a period of eighteen (18) months after the Closing Date; provided,however, that the representations and warranties contained in Sections 3.1.10 (Taxes) and3.1.17 (No Employee Claims) shall terminate upon the expiration of the applicable statute oflimitations period (including extensions thereof) for any claims made in respect of the mattersreferred to in such Sections and provided, further, that the representations andwarranties of Seller contained in Sections 3.1.2 (Triumphe Shares) and 3.1.12 (Brokers), and 3.1.14(Absence of Claims), and of Purchaser in Section 3.2.5 (Brokers) shall survive the Closing andremain in effect indefinitely. Any and all
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covenants and agreements contained herein shall surviveuntil performed pursuant to the terms hereof or waived. Notwithstanding the foregoing, anycovenant, representation or warranty as to which a claim shallhave been instituted prior to the applicable expiration date as herein provided shall continue tosurvive until such claim has been finally decided, settled or adjudicated.     8.2. Additional Definitions. For purposes of this Agreement, (i) “indemnified party”means a Person asserting a claim for indemnification under this Agreement, (ii) “indemnifyingparty” means a Person against whom a claim for indemnification is asserted under this Agreement,and (iii) “Indemnifiable Losses” means any and all actual damages, claims, suits, actions, demands,losses, judgments, settlements, liabilities or out-of-pocket expenses (including reasonableattorneys’ fees and expenses and court costs).     8.3. Indemnity.     (a) Seller hereby indemnifies Purchaser, its Affiliates (including the Company) andtheir respective directors, officers, employees and agents, and holds such parties harmlessfrom and against and in respect of, and shall on demand pay or reimburse Purchaser, itsAffiliates (including the Company) and their respective directors, officers, employees andagents, for, Indemnifiable Losses, whether or not resulting from third party claims,resulting from or arising out of or relating to, directly or indirectly (i) thebreach of any representation or warranty of Seller or the Company contained in thisAgreement, (ii) the nonperformance, partial or total, of any covenant or agreementof Seller or the Company contained in this Agreement, or (iii) the matters described onDisclosure Schedule 8.3, as such schedule may be amended by mutual agreement of the Partiesfrom time to time as a result of Purchaser’s due diligence following the date of thisAgreement.     (b) Purchaser hereby indemnifies Seller and its Affiliates, and their respectivedirectors, officers, employees and agents, and holds such parties harmless from and againstand in respect of, and shall on demand pay or reimburse Seller and its Affiliates, and theirrespective directors, officers, employees and agents, for Indemnifiable Losses, whether ornot resulting from third party claims, resulting from or arising out of or relating to,directly or indirectly, (i) the breach of any representation or warranty of Purchasercontained in this Agreement, (ii) the nonperformance, partial or total, of any covenant oragreement of Purchaser contained in this Agreement, or (iii) the operation of the Companyafter the Closing Date (including but not limited to any act or omission by Purchaser or itsrepresentatives (including but not limited to the Company after the Closing) that directlycauses a draw to be presented against any letter of credit issued on behalf of any Affiliateof the Seller with respect to the business operations of the Company), except to the extentattributable to any pre-Closing conduct of the business by Seller or the Company.     (c) Notwithstanding anything herein to the contrary, Seller shall not be liablehereunder for any amounts in excess of the Purchase Price.
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     (d) Purchaser shall be entitled to indemnification hereunder only when the aggregate ofthe Indemnifiable Losses exceeds $ 25,000 (the “Deductible Amount”), whereuponPurchaser shall be entitled to indemnification for all Indemnifiable Losses in excess of theDeductible Amount.          8.4. Third Party Claims. If a claim by a third party is made against a partyindemnified pursuant to this Article 8, and if such indemnified party intends to seek indemnitywith respect thereto under this Article 8, the indemnified party shall promptly (and in any casewithin 10 days after the indemnified party receives notice of such claim being made) notify theindemnifying party of such claim; provided, however, that any failure of theindemnified party to notify promptly the indemnifying party of such claim shall not relieve theindemnifying party of its obligations pursuant to this Article 8 except to the extent that theindemnifying party would be actually prejudiced under this Article 8 in any way as a result of suchfailure. The indemnifying party shall have the right (but not the obligation) to undertake,conduct, and control, through counsel of its own choosing and at the indemnifying party’s expense,the settlement or defense thereof, provided the indemnifying party (i) proceeds in goodfaith, expeditiously, and diligently and (ii) provides the indemnified party a writtenundertaking reasonably acceptable as to form to the indemnified party (A) to absolutely andunconditionally, irrespective of any defense based on this Article 8 or otherwise, pay promptly thefull amount of any final judgment with respect to such claim and (B) to post any necessary bonds orother security required in order to stay any judgment pending an appeal in the event that theindemnifying party shall elect to prosecute such appeal; the indemnified party shall cooperate withthe indemnifying party or parties electing to defend in connection therewith, provided that theindemnifying party shall permit the indemnified party or parties to participate in such settlementor defense through counsel chosen by the indemnified party, provided that (except as providedbelow) the fees and expenses of such counsel shall be borne by the indemnified party. Without theprior written consent of the indemnified party, which consent shall not unreasonably be withheld ordelayed, the indemnifying party will not enter into any settlement of any such claim. If theindemnifying party does not serve on the indemnified party by certified mail, postage prepaid,return receipt requested (or nationally-recognized overnight courier, delivery confirmed), awritten notice of its intention to defend or does not commence to contest any matter within 10Business Days after receipt of notice from the indemnified party of the existence of such matter,or if the indemnifying party disputes it is liable to the indemnified party for any sum pursuant tothis Article 8 or fails to deliver the undertaking described above, the right to defend such claimshall be deemed waived, and the indemnified party shall have full right and power to defend orotherwise deal with, settle and dispose of the matter (and shall be indemnified for the fees andexpenses of counsel retained for such purpose); provided, however, that theindemnified party or parties will not enter into any settlement or pay (except pursuant to a finalcourt order or judgment) any such claim without the prior written consent of the indemnifyingparty, which consent shall not unreasonably be withheld or delayed. Notwithstanding the foregoing,the indemnified party or parties shall have the right to pay or settle any such claim without theprior written consent of the indemnifying party, provided that in such event such party or partiesshall waive any right to indemnity therefor by the indemnifying party.          8.5 Indemnity Payments. The amount of any Indemnifiable Losses for whichindemnification is provided under this Article 8 shall be (i) net of (y) any amounts recovered orrecoverable by an indemnified party pursuant to any indemnification agreement with any third party,
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other than any insurance policy, and (z) any insurance proceeds (net of associated incrementalpremiums) available as an offset against such Indemnifiable Losses and (ii) increased to takeaccount of any net tax cost incurred by any indemnified party arising from the receipt or accrualof indemnity payments hereunder and reduced to take account of any net tax benefit realized by anyindemnified party from the incurrence or payment of any such Indemnifiable Loss.          8. 6. Exclusive Remedy. Other than with respect to Taxes, the indemnities providedfor in this Article 8 shall be the sole and exclusive remedies of the Purchaser, the Company or theSeller, as the case may be, with respect to the transaction contemplated by this Agreement;provided, that nothing herein shall limit in any way any such Party’s remedies in respectof fraud or intentional misrepresentation or omission by the other Party in connection herewith orthe transactions contemplated hereby or the rights of such Party to such equitable remedies as maybe available.          8.7 Miscellaneous. The rights of each indemnified party under this Article 8 arecumulative, and each such Person shall have the right in any particular circumstance, in its solediscretion, to enforce any provision of this Article 8 without regard to the availability of aremedy under any other provision of this Article 8. Seller hereby agrees that it shall not makeany claim for indemnification against the Purchaser or Company by reason of the fact that Sellerwas a controlling person or representative of Company or was serving as such for another Person atthe request of Purchaser or Company with respect to any claim brought by Purchaser (or anotherindemnified party) against Seller relating to this Agreement or the transactions contemplatedhereby, and Seller expressly waives any right of subrogation, contribution, advancement,indemnification or other claim against Company with respect to any amounts owed by Seller pursuantto this Article 8.**ARTICLE 9****MISCELLANEOUS**          9.1. Notices. All notices and other communications hereunder shall be in writing andshall be deemed to have been given when delivered by nationally-recognized overnight courierservice or by first-class registered or certified mail, postage prepaid, return receipt requested,addressed:     if to Seller:Triumphe Insurance Holdings, LLC