AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT


           This Amended and Restated Employment  Agreement is entered into as of
the 1st  day of  November,  1998,  by and  between  INTERSTATE  NATIONAL  DEALER
SERVICES,  INC., a Delaware corporation (the "Company"),  and CINDY H. LUBY (the
"Executive").

                                    RECITALS:

           WHEREAS,  the Company and the  Executive are parties to an Employment
Agreement  entered into as of December 1, 1993,  as amended by the  Amendment to
the Employment Agreement,  dated as of November 1, 1995, by the Amendment to the
Employment  Agreement,  dated  as of  May  1,  1996,  by  the  Amendment  to the
Employment  Agreement,  dated as of October 1, 1997 and by the  Amendment to the
Employment  Agreement,  dated as of February 13, 1998 (collectively,  the "Prior
Employment Agreement"); and

           WHEREAS,  the Board of  Directors  of the Company  (the  "Board") has
determined that it is in the best interests of the Company and its  shareholders
to assure that the Company will have the  continued  dedication of the Executive
by providing her with compensation and benefit arrangements that are competitive
with those of other similar corporations;

           WHEREAS,  in furtherance  of the  foregoing,  the Board has deemed it
advisable  to amend  and  restate  in full the  Prior  Employment  Agreement  as
provided herein; and

           WHEREAS,  the Board  approved  the  execution  and  delivery  of this
Agreement by the Company at a meeting of the Board held on September 29, 1998;

                                   AGREEMENT:

           NOW,  THEREFORE,  in  consideration  of the  mutual  promises  herein
contained, the parties hereby agree as follows:

           1. Position and Duties.  The Company  agrees to employ the Executive,
and the  Executive  agrees to be  employed,  as  President  and Chief  Operating
Officer of the Company,  subject to the  supervision  of, and reporting only to,
the  Chairman of the Board and/or the Board.  Executive  shall have such duties,
responsibilities,  titles and authority normally associated with the position of
president and chief operating officer of a company the size and structure of the
Company,  limited, however, to those duties and responsibilities as historically
performed by the Executive.



<PAGE>


                During the Term (as  defined  in Section 4 below) and  excluding
any  periods of  Personal  Time-Off  (as  defined in Section  3(g)  below),  the
Executive agrees to devote reasonable  attention and time during normal business
hours to the business and affairs of the Company,  and, to the extent  necessary
to  discharge  the  duties  and  responsibilities   assigned  to  the  Executive
hereunder,  to use the Executive's reasonable best efforts to perform faithfully
and efficiently such duties and responsibilities.

                It shall not be a violation of this  Agreement for the Executive
to  engage  in the  following  activities,  so long as  such  activities  do not
significantly   interfere  with  the  performance  of  Executive's   duties  and
responsibilities:  (a)  serve  on  corporate,  civic  or  charitable  boards  or
committees;  (b) deliver  lectures,  fulfill  speaking  engagements  or teach at
educational  institutions;  (c)  manage  personal  investments;  or  (d)  attend
conferences conducted by business organizations including but not limited to the
Young Presidents Organization,  and, should Executive become a member, the World
Presidents Organization and the Chief Executives  Organization.  It is expressly
understood and agreed that to the extent that any  activities  described in (a),
(b), (c) or (d) above have been conducted by the Executive  prior to the date of
this  Agreement,  the continued  conduct of such  activities  (or the conduct of
activities  similar  in nature and scope  thereto)  during the Term shall not be
deemed  to  interfere  with  the  performance  of  the  Executive's  duties  and
responsibilities  to the Company.  The Company agrees that  Executive's  current
activities  with respect to, and without any material  changes in the  financial
structure or operations  of, Target  Agency,  Inc.,  Target  Insurance  Ltd. and
Dealers  Extended  Services,  Inc.  do  not  significantly  interfere  with  the
performance of the Executive's  duties and  responsibilities  to the Company and
shall not constitute a violation of this Agreement.

           2. Compensation.  For all services rendered by the Executive pursuant
to  this  Agreement,  the  Company  shall  annually  pay  to the  Executive  the
compensation  set forth in clauses 2(a),  (b) and (c) below (each an "Element"),
the sum of which Elements shall be Executive's "Total Compensation" for any such
year.

                (a) Annual  Salary.  The Company shall pay Executive a salary at
the rate of $175,000 per year during the Term,  subject to future increases (the
"Annual  Salary")  and subject to  applicable  tax,  Social  Security  and other
legally required withholding ("Withholding"). The Annual Salary shall be paid in
accordance  with the  customary  payroll  practices  of the  Company  at regular
intervals,  but in no event less frequently than every month, as the Company may
establish from time to time for employees of the Company generally.  The Company
shall conduct an annual performance appraisal and salary review on behalf of the
Executive and adjust the Annual Salary accordingly but never below $175,000.

                (b) Annual Bonus. In addition to the Annual Salary,  the Company
shall pay each fiscal  year to the  Executive  an amount  equal to three and one
half per cent  (3-1/2%) of the  Company's  Earnings  Before  Interest  and Taxes
("EBIT") for such fiscal year (the "Annual  Bonus").  EBIT shall be as reflected
on the  Company's  audited  consolidated  financial  statements  and computed in
accordance with United States generally accepted accounting principles. However,
in no event shall any Annual Bonus be less than $100,000.



<PAGE>



                     The Company shall pay each Annual Bonus to
the  Executive  no later  than  thirty  (30) days  after the  completion  of the
Company's audited  consolidated  financial  statements by the Company's auditors
for the subject  fiscal year (the "Bonus Payment  Deadline").  Each Annual Bonus
payment shall be subject to Withholding.


                     Along with the payment of each Annual Bonus,
the Company  shall also  deliver to the  Executive a written  statement  setting
forth the basis of its  calculation of such Annual Bonus.  The Executive and the
Executive's  representatives  shall have the right, at the Executive's  cost, to
inspect the records of the Company with respect to the  calculation  of any such
Annual Bonus, to make copies of said records utilizing the Company's  facilities
without charge,  and to have free and full access thereto upon reasonable notice
during the normal business hours of the Company.

                     In the event that such inspection reveals an
underpayment  by the  Company of any Annual  Bonus due the  Executive,  then the
Company shall  immediately  pay to the Executive the balance of all such amounts
found to be due ("Bonus  Balance")  plus  interest,  at the Prime Rate in effect
during such period as set forth in The Wall Street Journal,  Eastern Edition, on
such  Bonus  Balance  from (and  including)  the date the  Annual  Bonus for the
subject  fiscal year was paid to (but  excluding) the date such Bonus Balance is
received  by  Executive.  If such  inspection  discloses  that the  Company  has
underpaid the Annual Bonus due for the period by ten percent (10%) or more, then
the Company shall also pay the reasonable  professional  fees of the Executive's
representatives engaged to conduct or review such inspection or audit.

                (c)  Performance  Bonus.  In addition to any other  compensation
provided  for in this  Section  2, the  Company  may  award to the  Executive  a
performance  bonus at any time in such  amount as the Board may  determine  (the
"Performance  Bonus"),  in its sole discretion,  after taking into consideration
other  compensation  paid or payable to the Executive under this  Agreement,  as
well as the financial and non-financial  progress of the business of the Company
and the  contributions  of the Executive  toward that progress.  Any Performance
Bonus shall be subject to Withholding.

                (d) Elements  Earned Pro Rata.  Each Element of the  Executive's
Total Compensation shall be deemed to be earned by Executive on a pro rata basis
throughout each fiscal year,  based on the number of days elapsed in such fiscal
year,  for  purposes of  determining  amounts  accrued or owing but not yet paid
under this Agreement.  The pro rata portion of any Annual Bonus accrued or owing
as a result of an Early  Termination  (as  defined in Section 5 below)  shall be
paid to the Executive on or before the Bonus Payment Deadline.

           3.   Benefits.

                (a)  Medical,  etc.  The  Executive  shall be  entitled  to such
medical and other  benefits  as are  customarily  made  available  to  executive
officers of the Company and upon the same  terms.  The  Executive  shall also be
entitled  to  receive  those  benefits  and  privileges   that  the  Corporation
currently, and may at any time in the future, provide for its executive officers
upon the same terms.



<PAGE>



                (b) Company Car. For the Executive's  sole use in fulfilling her
obligations under this Agreement and for personal use, the Company shall provide
the Executive  with an  automobile in a style  comparable to the Lexus ES 300 or
BMW 500 series model (the "Company Car"). The Company Car shall be leased by the
Company in the  Executive's  name and on terms  acceptable  to the Company.  The
Company shall pay for or reimburse the Executive for the annual garage  expenses
at one location as the Executive  shall select and for all automobile  insurance
premiums  for the  Company  Car.  With  respect to other  expenses  incurred  in
connection  with the use and  maintenance  of the Company Car, the Company shall
pay for or reimburse the Executive for all reasonable  expenses  incurred by the
Executive   solely  in  connection  with  the  performance  of  her  duties  and
responsibilities  under this Agreement upon submission of appropriate  receipts.
The Executive shall not be reimbursed for expenses,  such as tolls and any other
expenses,  incurred by the Executive in connection  with her personal use of the
Company  Car,  other than  those  expenses  as  historically  reimbursed  by the
Company.


                (c)  Expenses.  The Executive shall: (i) receive a
non-accountable expense allowance of $500.00 per month; and (ii)
be reimbursed by the Company, in accordance with customary
procedures, for all expenses actually and necessarily incurred by
Executive in the performance of her services.

                (d) Annual  Conferences.  The Executive  shall be reimbursed for
any and all expenses she incurs,  including travel, in connection with attending
the annual meetings or conferences of the Young  Presidents  Organization,  and,
should  Executive  become a member,  the World  Presidents  Organization and the
Chief Executives Organization.

                (e)  Membership Dues.  The Company shall pay
Executive's lifetime membership dues of the World Presidents
Organization and the Chief Executives Organization upon her
joining those organizations.

                (f) Office and Support  Staff.  During the Term,  the  Executive
shall be  entitled  to an office or offices of a size and with  furnishings  and
other  appointments,   including   exclusive  personal   secretarial  and  other
assistance,  at least equal to the most  favorable of the foregoing  provided to
the  Executive by the Company at any time during the 90-day  period  immediately
preceding the date of this Agreement, or, if more favorable to the Executive, as
provided at any time after such date to Executive or other executive officers of
the Company.

                (g) Personal  Time-Off.  The  Executive  shall be entitled  each
fiscal year during the Term to such number of personal days off, for purposes of
vacations or other personal affairs  ("Personal  Time-Off"),  as are approved by
the Board,  but not less than the greater of: (i) thirty (30) business  days; or
(ii) the  Personal  Time-Off  generally  given by the  Company to its  executive
officers.  Personal  Time-Off  shall be in  addition  to regular  paid  holidays
provided to all employees of the Company and shall be taken as determined by the
Executive in her reasonable and good faith  discretion.  The Executive  shall be
fully  compensated with respect to Personal  Time-Off but shall not be permitted
to carry forward into a subsequent  fiscal year any accrued but unused  Personal
Time-Off.



<PAGE>



                (h)  Tax and  Financial  Services.  The  Company  shall  provide
Executive with tax and financial advisory and tax return preparation services at
an annual cost to the Company not to exceed three thousand five hundred  dollars
($3,500),  adjusted  annually to reflect inflation as measured by changes in the
Consumer Price Index or other comparable index.


           4. Term. The term of this  Agreement (the "Term") shall  terminate on
December 31, 2008 (the "Termination Date"); provided,  however, that on December
31 of each year  commencing  December 31, 1999,  the Term and  Termination  Date
shall automatically extend for an additional one-year period unless either party
hereto provides written notice not less than 60 days prior to December 31 of any
year that no further  automatic  extensions shall be granted.  In the event that
the  Executive   continues  her  employment  after  the  Termination  Date,  her
employment  will be deemed  "at will"  under the same terms as  provided  herein
unless otherwise  expressly agreed to by further written  agreement  between the
Company and the Executive.

           5. Early Termination.  The employment by the Company of the Executive
shall be terminated  prior to the  Termination  Date as a result of the death or
disability of the Executive and may be terminated  prior to the Termination Date
for proper  cause by the Company,  for good reason by the  Executive or upon the
Executive's retirement (each an "Early Termination") as set forth below:

                (a) Death.  If the  Executive  shall die  during the Term,  this
Agreement  shall  thereupon   terminate,   except  that   notwithstanding   such
termination the Company shall:

                     (i)  pay to the legal representative of the
Executive's  estate,  within thirty (30) days of Executive's  date of death, all
amounts  accrued or owing but not yet paid under  this  Agreement  and any other
benefits in accordance  with the terms of any  applicable  plans and programs of
the Company;

                     (ii)  pay to the legal representative of the
Executive's  estate an amount  equal to a factor of five (5)  multiplied  by the
dollar amount of the Annual  Salary paid or payable to the  Executive  hereunder
for the Company's most recent fiscal year  immediately  prior to the Executive's
date of death (the "Death  Benefit").  Such Death  Benefit  shall be paid in one
lump sum within sixty (60) days of the Executive's date of death; and

                     (iii) provide the Executive's then current
spouse, for a one year period,  with the same level of health/medical  insurance
or coverage that was provided to him immediately prior to the Executive's death,
with  the  cost of such  continued  insurance  or  coverage  being  borne by the
Company. Alternatively, the Executive's then current spouse may elect to receive
from the Company,  for a one year period, a monthly payment equal to his monthly
cost to obtain comparable  health/medical  insurance or coverage through another
provider.



<PAGE>



                (b) Disability. The Company or the Executive, upon not less than
thirty (30) days written notice to the other party, may terminate the employment
by the Company of the Executive if the  Executive has been unable,  by reason of
physical or mental disability,  to render, for 90 successive days or for shorter
periods aggregating 180 days or more in any twelve month period, services of the
character  contemplated by this Agreement and will be unable to resume providing
such services within a reasonable  period of time by reason of such  disability.
The  determination  of whether  the  Executive  has become  disabled  within the
meaning of this Section 5(b) shall be made (i) in the case of a  termination  of
employment by the Company,  by a medical doctor selected by the Company, or (ii)
in the case of a  termination  of employment by the  Executive,  by  Executive's
medical  doctor.  In the event the  Company  gives a notice  of  termination  of
employment under this Section 5(b), the Executive or her  representative  may at
any time prior to the effective date of termination  contest the termination and
cause a determination of disability to be made by Executive's medical doctor. In
the event the Executive  gives a notice of termination of employment  under this
Section  5(b),  the  Company  may at any  time  prior to the  effective  date of
termination  contest the termination and cause a determination  of disability to
be made by a medical  doctor  selected by the Company.  In either case,  if such
medical  doctors do not agree with regard to the  determination  of  disability,
they shall mutually choose a third medical doctor to examine the Executive,  and
the disability  determination of such third medical doctor shall be binding upon
both the Company and the Executive.


                     If the employment by the Company of the
Executive is terminated by reason of Executive's disability, the Company shall:

                     (i)  pay to the Executive, within thirty (30)
days of such disability  termination  date, all amounts accrued or owing but not
yet paid under this  Agreement  and any other  benefits in  accordance  with the
terms of any applicable plans and programs of the Company;

                     (ii)  pay to the Executive annually, in
installments  at least as frequent as monthly,  an amount equal to fifty percent
(50%)  of the  average  Total  Compensation  paid or  payable  to the  Executive
hereunder for the Company's three most recent fiscal years  immediately prior to
the Executive's  disability termination less the amount, if any, of any payments
received by the Executive  from the  Company's  disability  insurance  plan (the
"Disability  Benefit").  Such Disability Benefit shall be subject to Withholding
and shall be payable for the longer of two (2) years or the balance of the Term;
and

                     (iii)  for the longer of two (2) years or the
balance of the Term,  provide  Executive and/or her then current spouse with the
same level of health/medical insurance or coverage provided immediately prior to
such  disability  termination,  with the  cost of such  continued  insurance  or
coverage being borne by the Company.  Alternatively,  the Executive, or her then
current spouse after  Executive's  death,  may elect to receive from the Company
instead of such  insurance or coverage,  a monthly  payment equal to the cost to
the Executive and/or her then current spouse to obtain comparable health/medical
insurance or coverage through another provider.

                  Any payments due to the Executive hereunder may be paid to her
then current spouse or legal  representative  for  Executive's  benefit,  to the
extent warranted by Executive's incapacity.



<PAGE>



                (c) Proper Cause. The Company,  upon not less than ten (10) days
written notice to the Executive,  may terminate the employment by the Company of
the Executive if the Board has established and unanimously  concluded (excluding
the vote of the Executive  and/or any member of her immediate family who is then
on the Board), during a properly called meeting or meetings,  that the Executive
has  engaged  in any of the  following  conduct  (each a  "Proper  Cause"):  (1)
willfully refused or failed to carry out specific  directions of the Board which
are not inconsistent with the duties and responsibilities set forth in Section 1
hereof  and  which  are   material  to  the   performance   of  her  duties  and
responsibilities under said Section 1, or willfully refused or failed to perform
a material part of such duties and responsibilities  hereunder;  (2) committed a
material  breach  of  any of  the  provisions  of  Sections  8, 9 or 10 of  this
Agreement;  (3) acted  fraudulently  or  dishonestly  in her relations  with the
Company;  (4) been  convicted of a felony  involving an act of moral  turpitude,
fraud or  misrepresentation;  (5)  engaged in the use of illegal  substances  or
alcohol, which use has impaired the Executive's ability, on an ongoing basis, to
perform her duties and responsibilities;  or (6) willfully engaged in misconduct
which materially injured the reputation,  business or business  relationships of
the Company, monetarily or otherwise.


                No act, or failure to act, on the part of the Executive shall be
deemed "willful" unless done, or omitted to be done, by the Executive  otherwise
than in good faith and in a manner that the Executive reasonably believed was in
or not opposed to the best interests of the Company and its shareholders.  In no
event shall the  employment by the Company of the  Executive be  terminated  for
Proper  Cause unless and until the Board has  provided  the  Executive  with the
following:  (x) written  notice  specifying the details of the Proper Cause (the
"Notice");  (y) an  opportunity or  opportunities  to appear before the Board to
respond to such  Notice;  and (z) thirty (30) days after  receiving  such Notice
during  which to remedy,  terminate,  cure or correct  the  conduct  referred to
therein.

                  As a result of any such  termination  for  Proper  Cause,  the
Company  shall pay,  within  thirty (30) days of such  termination,  all amounts
accrued  or owing but not yet paid  under  this  Agreement  through  the date of
termination  and  any  other  benefits  in  accordance  with  the  terms  of any
applicable plans and programs of the Company.

                (d)  By  Executive  For  Good  Reason;  Other  Termination.  The
Executive may terminate the  employment by the Company of the Executive upon not
less than ten (10) days' written notice to the Company based upon her reasonable
determination  that one or more of the  following  events has  occurred  (each a
"Good Reason"):

                     (1) any of the Company's representations or
warranties in this Agreement is not materially true, accurate
and/or complete;

                     (2) the Company intentionally and continually
breached  or  wrongfully  failed to  fulfill  or  perform  (A) its  obligations,
promises or covenants under this Agreement; or (B) any warranties,  obligations,
promises  or  covenants  of  the  Company  in any  agreement  (other  than  this
Agreement) entered into between the Company and the Executive,  without cure, if
any, as provided in such agreement;



<PAGE>



                     (3) the Company terminated the Executive's
employment hereunder, and such termination does not constitute
Proper Cause (as defined herein);


                     (4) without the consent of the Executive, the
Company:  (A)  substantially  altered or  materially  diminished  the  position,
nature,  status,  prestige or  responsibilities  of the Executive  from those in
effect by mutual  agreement  of the  parties  from  time-to-time;  (B)  assigned
additional  duties or  responsibilities  to the Executive  which were wholly and
clearly   inconsistent   with  the  position,   nature,   status,   prestige  or
responsibilities  of the Executive  then in effect;  or (C) removed or failed to
reappoint  or re-elect  the  Executive  to the  Executive's  offices  under this
Agreement  (as they may be  changed  or  augmented  from  time-to-time  with the
consent of the Executive),  except in connection with the death or disability of
the Executive;

                     (5) without the consent of the Executive, the
Company relocated the Company's  principal  operating offices from their present
location and as a result  increased the  Executive's  ordinary  commute from the
Executive's residence by more than thirty (30) miles;

                     (6) the Company intentionally required the
Executive to commit or participate in any felony or other serious
crime;

                     (7) there has been a Change in Control of the
Company (as defined in Section 6(a) below); and/or

                     (8) the Company engaged in other conduct
constituting legal cause for termination.

                     If any event of Good Reason occurs, and such
event is reasonably susceptible of being cured, the Company shall be entitled to
one period of thirty (30) days during  which to cure such event,  following  the
receipt of written notice of such event from Executive.  As a result of any such
termination for Good Reason, or if the Company  terminates the employment of the
Executive for any reason other than as set forth in Sections 5(a), 5(b) or 5(c),
the Company shall:

                          (i)  within thirty (30) days of such
termination,  pay to the Executive all amounts accrued or owing but not yet paid
under this Agreement and any other benefits in accordance  with the terms of any
applicable plans and programs of the Company;

                          (ii)  pay Executive an amount equal to
the dollar  amount of the Total  Compensation  paid or payable to the  Executive
hereunder for the Company's  most recent  fiscal year  immediately  prior to the
Executive's termination multiplied by a factor which shall be the greater of two
(2) or the number of years (including  fractions  thereof) remaining in the Term
(the "Severance Benefit").  Such Severance Benefit shall be paid in one lump sum
within  forty-five  (45) days of the Executive's  termination  date and shall be
subject to Withholding; and



<PAGE>



                          (iii)  for the longer of two (2) years
or the balance of the Term: (x) provide Executive and/or her then current spouse
with the same level of health/medical insurance or coverage provided immediately
prior to such termination, with the cost of such continued insurance or coverage
being borne by the Company;  alternatively,  the Executive,  or her then current
spouse after Executive's  death, may elect to receive from the Company,  instead
of such  insurance or coverage,  a monthly  payment equal to the monthly cost to
the Executive and/or her then current spouse to obtain comparable health/medical
insurance or coverage through another provider; however, the Company shall in no
event be  required to provide any such  coverage or monthly  payment  after such
time as Executive  becomes entitled to receive (without regard to any individual
waivers of coverage or other  similar  arrangements)  comparable  health/medical
benefits of the same type from  another  employer or  recipient  of  Executive's
services; and (y) continue the benefits associated with both the Company Car and
the Tax and  Financial  Services  as set forth  above in  Section  3(b) and 3(h)
respectively.


                (e) Retirement. At any time after reaching age 65, the Executive
may retire at any time during the Term upon ten (10) days written  notice to the
Company. As a result of any such retirement, the Company shall:

                     (i)  within thirty (30) days of such
retirement,  pay to the Executive all amounts  accrued or owing but not yet paid
under this Agreement and any other benefits in accordance  with the terms of any
applicable plans and programs of the Company;

                     (ii)   pay Executive annually, in
installments at least as frequently as monthly, an amount equal to fifty percent
(50%) of the  dollar  amount of the Total  Compensation  paid or  payable to the
Executive  hereunder for the Company's most recent fiscal year immediately prior
to the  Executive's  retirement  (the  "Retirement  Benefit").  Such  Retirement
Benefit  shall be  subject  to  Withholding  and  shall  be  payable  until  the
Executive's death; and

                     (iii) for the longer of two (2) years or the
balance of the Term: (x) provide  Executive  and/or her then current spouse with
the same level of  health/medical  insurance  or coverage  provided  immediately
prior to such retirement,  with the cost of such continued insurance or coverage
being borne by the Company;  alternatively,  the Executive,  or her then current
spouse after Executive's  death, may elect to receive from the Company,  instead
of such  insurance or coverage,  a monthly  payment equal to the monthly cost to
the Executive and/or her then current spouse to obtain comparable health/medical
insurance or coverage  through another  provider;  and (y) continue the benefits
associated  with both the Company Car and the Tax and Financial  Services as set
forth above in Section 3(b) and 3(h) respectively.

                (f) Termination By Executive for Other Reason.  If the Executive
terminates  the  employment by the Company of the Executive  other than for Good
Reason under  Section 5(d) or retirement  under Section 5(e) above,  the Company
shall pay, within thirty (30) days of such  termination,  all amounts accrued or
owing but not yet paid under this Agreement  through the date of termination and
any other  benefits in  accordance  with the terms of any  applicable  plans and
programs of the Company.



<PAGE>



           6.   Change Of Control.  In the event that the
Executive is an employee of the Company at the moment immediately
prior to a Change in Control of the Company (as defined below),
the Executive shall be entitled to receive all benefits described
in this Section 6.


                (a) For purposes of this Agreement,  a "Change in Control of the
Company" shall be deemed to occur if:

                     (i)  there shall have occurred a change in
control of a nature  that would be  required  to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934,  as amended,  as in effect on the date  hereof,  whether or not the
Company is then subject to such reporting requirement,  provided,  however, that
there  shall not be deemed to be a Change in  Control  of the  Company  if:  (A)
immediately  prior to the  occurrence  of what  would  otherwise  be a Change in
Control of the Company,  the Executive is the other party to the  transaction (a
"Control of the Company Event");  or (B) immediately  prior to the occurrence of
what would otherwise be a Change in Control of the Company,  the Executive is an
executive officer, trustee, director or more than 25% equity holder of the other
party  to the  Control  of the  Company  Event  or of any  entity,  directly  or
indirectly, controlling such other party;

                     (ii)  the Company merges or consolidates
with, or sells all or substantially all of its assets to, another company (each,
a "Transaction"),  provided,  however, that a Transaction shall not be deemed to
result in a Change in Control of the Company if (A)  immediately  prior  thereto
the  circumstances  in  (a)(i)(A)  or  (a)(i)(B)  above  exist,  or (B)  (1) the
shareholders of the Company,  immediately  before such Transaction own, directly
or indirectly, immediately following such Transaction in excess of fifty percent
(50%) of the combined voting power of the outstanding  voting  securities of the
corporation or other entity  resulting  from such  Transaction  (the  "Surviving
Corporation")  in  substantially  the same  proportion as their ownership of the
voting securities of the Company immediately before such Transaction  ("Shares")
and (2) the  individuals  who were members of the  Company's  Board of Directors
immediately  prior  to  the  execution  of  the  agreement  providing  for  such
Transaction  constitute  at least a  majority  of the  members  of the  board of
directors of the  Surviving  Corporation,  or of a  corporation  or other entity
beneficially  directly or indirectly owning a majority of the outstanding voting
securities of the Surviving Corporation; or



<PAGE>



                     (iii)  the Company acquires assets of another
company or a  subsidiary  of the Company  merges or  consolidates  with  another
company (each, an "Other  Transaction") and (A) the shareholders of the Company,
immediately   before  such  Other   Transaction  own,  directly  or  indirectly,
immediately following such Other Transaction, 50% or less of the combined voting
power of the  outstanding  voting  securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving Corporation") or (B)
the individuals who were members of the Company's Board of Directors immediately
prior to the  execution of the agreement  providing  for such Other  Transaction
constitute  less than a majority of the members of the board of directors of the
Other Surviving  Corporation,  or of a corporation or other entity  beneficially
directly or indirectly owning a majority of the outstanding voting securities of
the Other Surviving  Corporation,  provided,  however, that an Other Transaction
shall  not be  deemed  to  result  in a Change  in  Control  of the  Company  if
immediately  prior  thereto the  circumstances  in (a)(i)(A) or (a)(i)(B)  above
exist.


                (b) In the  event  that  the  Executive  is an  employee  of the
Company at the moment immediately prior to a Change of Control of the Company:

                     (i) the Company shall pay to the Executive
additional compensation in the form of cash equal to, on the date of a Change in
Control of the Company and with  respect to each option to purchase  Shares held
by the Executive whether or not such option has vested or is exercisable on such
date (an "Option"),  the number of Shares  underlying the Option,  multiplied by
the amount,  if any, that the exercise  price of the Option or the Closing Share
Value (as defined below), whichever is less, exceeds the Initial Share Value (as
defined below);

                     (ii) with respect to each Option, in the
event that the Closing  Share Value is greater than the  exercise  price of such
Option, then the Executive can (A) retain the Option or (B) exercise the Option,
or (C) forfeit the Option and  receive,  in exchange  therefor,  a cash  payment
equal to the number of Shares  underlying  the Option  multiplied  by the amount
that the Closing Share Value exceeds the exercise price of the Option;

                     (iii) upon the occurrence of a Change of
Control, all Options then held by the Executive shall immediately
vest and become exercisable; and

                     (iv) for purposes of this subsection, the
"Initial  Share Value" of an Option shall mean the average of the Closing Prices
of the Shares for the  period  commencing  on the 180th day prior to the date of
the Change in Control  of the  Company  and ending on the 150th day prior to the
date of the Change in Control of the  Company,  and the  "Closing  Share  Value"
shall mean the Closing  Price of the Shares on the date of the Change in Control
of the Company. For purposes of this subsection,  the "Closing Price" of a Share
on any date shall mean the last sale  price,  regular  way,  or, in case no such
sale takes place on such date,  the average of the closing bid and asked prices,
regular  way,  in  either  case  as  reported  in  the  principal   consolidated
transaction  reporting system with respect to securities listed on the principal
national  securities  exchange  on which the Shares are  listed or  admitted  to
trading or, if the Shares are not listed or admitted to trading on any  national
securities exchange,  the last quoted price, or if not so quoted, the average of
the  highest  bid and  lowest  ask  prices in the  over-the-counter  market,  as
reported by the National  Association  of  Securities  Dealers,  Inc.  Automated
Quotation  System or, if such  system is no longer  used,  the  principal  other
automated  quotation  system  that may then be in use or, if the  Shares are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a  professional  market maker making the market in the Shares as
such  person is  selected  from time to time by the  Board of  Directors  of the
Company or, if there are no  professional  market  makers making a market in the
Shares,  then the value as  determined  in good faith  judgement of the Board of
Directors of the Company.



<PAGE>



           7. Advances. The Company may, upon written consent of the Board, make
an advance to the Executive against any compensation or other amounts to be paid
by the  Company to the  Executive  (an  "Advance").  Any  amounts due under this
Agreement to the Executive  shall, at the election of the Company,  be offset by
any then  outstanding  Advances.  In the  event of  Executive's  termination  of
employment, Executive agrees that the Company shall have the right to offset the
amount of any and all  outstanding  Advance(s)  against any  compensation or any
other  amounts due to the  Executive  from the Company,  and that any  remaining
balance of the  Advance(s)  shall be repaid by the Executive  within ninety (90)
days after the termination of Executive's employment by the Company.


           8. Non-Competition.  In order to induce the Company to enter into and
perform this Agreement and, as additional  consideration  for the payment of the
Total Compensation  provided herein, so long as the Executive is employed by the
Company  and for the three (3) year  period  following  the  termination  of the
Executive's  employment  pursuant to Section 5(b)  (pertaining  to  disability),
Section  5(c)  (pertaining  to  proper  cause),   Section  5(e)  (pertaining  to
retirement)  or Section 5(f)  (pertaining  to  termination  by the Executive for
other reasons), the Executive will not, either separately or in association with
others, directly or indirectly, in the continental United States, (i) establish,
engage in or become interested in, as an employee,  consultant,  advisor, agent,
owner, partner, co-venturer,  principal, stockholder, director or otherwise, any
company the primary business of which is the  administration  of vehicle service
contracts and warranties, or (ii) solicit, interfere with, or endeavor to entice
away from the Company any dealers,  independent agents or insurance underwriters
party to an agreement with the Company as of the date of Executive's termination
of employment. Mere passive ownership of stock representing five percent (5%) or
less of the  capital  stock of a  publicly  held  company  shall not be deemed a
breach of this Section 8. However,  Company agrees that Executive's  current and
future activities with respect to Target Agency, Inc., Target Insurance Ltd. and
Dealers Extended Services, Inc. shall not constitute a violation of this Section
8.

           9.  Confidential  Information.  During  the  Term  and  at  any  time
thereafter,  the Executive shall not divulge,  furnish or make accessible to any
person  or  business  entity  any  of  the  Company's  trade  secrets  or  other
information  of a  confidential  nature  including,  but  not  limited  to,  the
Company's   business  methods,   operational   procedures  and  cost  and  price
information, without the prior written consent of the Company.

           10. Non-Interference.  The Executive, during the time period referred
to in Section 8 hereof, will not cause or influence any employee,  consultant or
advisor now employed or in the future to be employed by the Company,  to work in
any way for the Executive or in any  enterprise  in which the  Executive  owns a
participation, directly or indirectly.

           11. Unenforceability.  If any provision of Sections 8, 9 or 10 herein
is  held to be  unenforceable  because  of the  scope,  duration  or area of its
applicability,  such scope,  duration or area, or all of them, shall be modified
to the minimum extent possible to make such provision(s)  enforceable,  and such
provision(s) shall then be applicable in such modified form.



<PAGE>



           12. Return of Property.  Upon  Executive's  termination of employment
with the  Company,  the  Executive  shall  promptly  deliver to the  Company all
memoranda,  notes, records,  reports,  manuals,  drawings,  blueprints and other
documents (and all copies thereof) relating to the business of the Company,  and
all property associated therewith,  which she may then possess or have under her
control.


           13. Injunctive Relief. The Executive agrees that the restrictions and
covenants  contained  in Sections 8, 9, 10 and 12 herein are  necessary  for the
protection  of the  Company  and any  breach  thereof  will  cause  the  Company
irreparable  damages for which there is no adequate remedy at law. The Executive
further agrees that, in the event of a breach of her obligations thereunder, the
Company  shall have the  absolute  right,  in addition to any other  remedy that
might be  available to it, to obtain from any court  having  jurisdiction,  such
equitable relief as might be appropriate,  including  temporary,  interlocutory,
preliminary and permanent decrees or injunctions enjoining any further breach of
such provisions.

           14.  Miscellaneous.

                (a)  Severability.   If  any  provision  of  this  Agreement  is
determined to be invalid or  unenforceable,  it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.

                (b)  Notices.  Any  and  all  notices  or  other  communications
required or permitted  hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or if mailed, first class, postage prepaid,
registered or certified mail,  return receipt  requested to the addresses of the
parties set forth below or, as to each party,  at such other address as shall be
designated in a written notice to the other party.

                     To the Company:
                     Interstate National Dealer Services, Inc.
                               The Omni, Suite 700
                          333 Earle Ovington Boulevard
                            Mitchel Field, NY, 11553

                     To the Executive:
                     Ms. Cindy H. Luby
                              201 East 69th Street
                               New York, NY 10021

                (c) Waiver.  No waiver by either  party  hereto of any breach of
any  provision of this  Agreement  shall be deemed a waiver of any  preceding or
succeeding breach of such provision or any other provision herein contained.

                (d)  Governing Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to the conflict of law
principles thereof.



<PAGE>



                (e)  Entire  Agreement.  This  Agreement  sets  forth the entire
agreement of the parties hereto with respect to the subject  matter hereof,  and
is intended to supersede all prior employment  negotiations,  understandings and
agreements. No provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or change.


                (f)  Successors: Binding Agreement.

                     (i) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or  substantially  all of the  business  and/or  assets of the  Company,  by
agreement in form and  substance  satisfactory  to the  Executive,  expressly to
assume and agree to perform  this  Agreement  in the same manner and to the same
extent  that the Company  would be required to perform it if no such  succession
had taken place.

                     (ii) This Agreement and all rights of the
Executive  hereunder,  shall inure to the benefit of and be  enforceable  by the
Executive's  personal  or  legal  representatives,   executors,  administrators,
successors, heirs, distributees, devisees and legatees.

                (g)  Counterparts.  This Agreement may be executed
in counterparts, each of which shall be an original, but together
shall constitute one and the same instrument.




                The rest of this page intentionally left blank.



<PAGE>



      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.



                               INTERSTATE NATIONAL DEALER
                                SERVICES, INC.


                                       By:
                               Name:Chester J. Luby
                               Title:     Chairman of the Board





                                Cindy H.  Luby