EX-10.1 STOCK PURCHASE AGREEMENT



 






Exhibit 10.1




 

 





STOCK PURCHASE AGREEMENT


between


TRIUMPHE INSURANCE HOLDINGS LLC,


Seller,


and


NATIONAL INTERSTATE INSURANCE COMPANY,


Purchaser


Dated 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, is
made 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 Triumphe
Casualty Company (the “Company”), a Pennsylvania domiciled insurance company, with
seventy-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 desires
to purchase all of the Triumphe Shares from Seller, upon the terms and conditions and for the
consideration described below;



     WHEREAS, Purchaser acknowledges that the Company discontinued writing new and renewal
insurance policies on or about April 1, 2004 (the “Runoff Date”); and



     WHEREAS, since the Runoff Date the parties have worked together to transition various aspects
of the Company’s operations to Purchaser;



     NOW, THEREFORE, in consideration of the foregoing and the mutual promises made and the mutual
benefits to be derived from this Agreement, and for other good and valuable consideration, the
receipt 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 this
Agreement, shall have the following meanings for all purposes of this Agreement.



     “Admitted Assets” mean all of the assets whose values are permitted to be included
under the Pennsylvania insurance laws in the Company’s Statutory Statements.



 









 





     “Affiliate” of a specified Person means a Person that (at the time when the
determination 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 and
Seller or any Affiliate of Seller (excluding the Agency Agreement).



     “Agency Agreement” means the Agency Agreement executed July 2, 2001, between the
Company and VFS Insurance Services LLC, a North Carolina limited liability company, as amended May
31, 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 this
Agreement.



     “Approvals and Filings” shall have the meaning set forth in Section 3.2.3 of this
Agreement.



     “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 other
days 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 Closing
Effective Date.



     “Closing Date” means the date on which the Closing shall take place as set forth in
Section 2.3 of this Agreement.



     “Closing Effective Date” means January 1, 2006, at 12:00:01 a.m. Eastern Standard
Time.



     “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 any
successor thereto, including any rules and regulations issued thereunder.



     “Commissioner” means the Commissioner of Insurance of any jurisdiction in which the
Company 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.



2









 






     “Consolidated Return” means any consolidated, combined or unitary Tax Return which
includes 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 or
indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or otherwise.



     “Debt” means, with respect to any Person, all obligations (including all obligations
in respect of principal, accrued interest, penalties, fees and premiums) of such Person (a) for
borrowed money (including overdraft facilities), (b) evidenced by notes (including surplus notes),
bonds, debentures or similar contractual obligations, (c) for the deferred purchase price of
property, goods or services (other than trade payables or accruals incurred in the ordinary course
of business consistent with past practices), (d) under capital leases, (e) in respect of letters of
credit and bankers’ acceptances, (f) for swap agreements, collar agreements and other contractual
obligations relating to interest rate protection and (g) in the nature of guarantees of the
obligations described in clauses (a) through (f) above of any other Person.



     “Disclosure Schedule” means each of the Disclosure Schedules referred to herein, and
all exhibits thereto.



     “Escrow Agreement” shall mean the Escrow Agreement among Seller, Purchaser and
KeyBank, National Association governing the deposit, investment, and release of the Closing
Payment, 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 reference
to 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 this
Agreement.



     “Information Returns” means, with respect to any entity or group of entities, any and
all reports, returns, declarations or other filings (other than Tax Returns), including but not
limited to, federal and state wage reporting, employment and unemployment Tax Returns (e.g. IRS
Forms 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 Taxing
Authority.



     “Insurance Brokers” shall have the meaning set forth in Section 3.1.18 of this
Agreement.



3









 





     “Insurance Contracts” means the treaties, policies, binders, slips and other
agreements of insurance (including reinsurance) written, assumed, or ceded by the Company to the
extent 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 or
together 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 Operations
of the Company, or which would materially interfere with or delay the consummation of the
transactions contemplated hereunder, but shall in all cases exclude any effect from (i) general
economic conditions, (ii) actions taken with Purchaser’s knowledge and consent , (iii) the Company
discontinuing to write new and renewal insurance policies, or (iv) the ordinary and customary
conduct of the Company’s Operations since January 1, 2005.



     “Nonadmitted Assets” means those assets designated as such on page 2 of the Company’s
Statutory Statements.



     “Operations” means all insurance and reinsurance business of the Company, past or
present.



     “Parties” shall mean Seller and Purchaser.



     “Permitted Liens” shall mean any liens identified as such on Disclosure Schedule
3.1.3.



     “Person” means any individual, firm, partnership, association, corporation, limited
liability 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 Statements
of the Company, the statutory accounting practices prescribed or permitted by the Insurance
Department of the Commonwealth of Pennsylvania for the preparation of such annual and quarterly
statements.



     “Seller” shall have the meaning set forth in the Preamble of this Agreement.



4









 





     “Software” means all computer software used in the Operations and owned by the
Company, including but not limited to, application software and system software, including all
source code and object code versions thereof, in any and all forms and media, whether recorded on
paper, magnetic media or other electronic or non-electronic media (including data and related
documentation, user manuals, training materials, flow charts, diagrams, descriptive tests and
programs, computer print-outs, underlying tapes, computer databases and similar items), integrated
circuits, embedded systems, and other electromechanical or processor based systems.



     “Statutory Statements” shall have the meaning set forth in Section 3.1.5(a) of this
Agreement.



     “Statutory Surplus” means the Company’s surplus as regards policyholders as reported
in the Company’s Quarterly Statutory Statement for the period ended September 30, 2005, which shall
be prepared to include any adjustments from an audit by the Company’s independent accountants and
delivered to the Purchaser on or before November 7, 2005.



     “Straddle Period Taxes” shall have the meaning set forth in Section 6.1 of this
Agreement.



     “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 be
filed in connection with, any payment of any Tax.



     “Taxable Period” means, with respect to any Tax of any entity, or any group of
entities filing a Consolidated Return for federal, state, local or foreign Tax purposes, the period
for which the Tax is computed.



     “Taxing Authority” means the IRS and any other domestic or foreign governmental
authority 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, value
added, ad valorem, transfer, employment, social security, disability, health insurance, occupation,
property, severance, production, premium, payroll, real and personal property, stamp, unemployment
insurance, 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 to
the Seller, the actual knowledge, after due inquiry, of those officers set forth on Disclosure
Schedule 1.1 attached hereto and, with respect to the Purchaser, the actual knowledge, after due
inquiry 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.



5









 





ARTICLE 2




SALE OF THE TRIUMPHE SHARES AND CLOSING




     2.1. Sale of the Triumphe Shares. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants contained herein, at
the Closing provided for in Section 2.3, Seller will sell, and Purchaser will purchase, the
Triumphe 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 be
the Statutory Surplus of the Company as adjusted to reflect (i) the fair market value of the
Company’s investment portfolio as of the Closing Effective Date; (ii) any contingent
liabilities specified on Schedule 2.2 that are not reserved for in the Statutory Surplus or
indemnified by the Seller and VFS US LLC under Article 8, as such schedule may be amended by
mutual agreement of the Parties from time to time prior to the Closing as a result of
Purchaser’s continuing due diligence following the execution of this Agreement; (iii) an
amount equal to any uncollected premium (net of commissions) on the policies identified on
Schedule 2.2, which shall be collected and retained by Seller or an Affiliate following the
Closing; (iv) the amount of $100,000 to be used by Purchaser to defray the cost of extending
the reinsurance on or self-insuring with respect to the business underwritten by Mission
Insurance Company of Texas prior to acquisition by Seller (it being the intention of the
Parties that this purchase price adjustment is given as a concession to Purchaser in view of
the fact that no reserves have been or are required to be established with respect to such
business in accordance with sound actuarial principles as of the date hereof); and (v) the
value of Seller’s deferred tax asset as determined by Seller’s independent auditors as of
September 30, 2005.




     (b) No later than November 30, 2005, Purchaser shall deposit the Closing Payment in
escrow, which shall be released no later than the later of (i) the Closing, or (ii) if the
Purchase Price is not determined as of the Closing Date, then pursuant to the Arbitrator’s
Order. Except as set forth in this Section 2.2, interest on the escrow account shall inure
to the benefit of Seller and accrue in the escrow account so long as any unpaid portion of
the Purchase Price remains in the escrow account for the benefit of Seller. The escrow
account shall be established with KeyBank, National Association and administered in
accordance with the Escrow Agreement. Any fees charged by KeyBank to administer the escrow
account shall be borne equally between Seller and Purchaser.




     (c) If the parties agree upon the Purchase Price by November 30, 2005, then the parties
shall proceed to Closing. Should the final Purchase Price agreed upon by the parties be a
positive value and less than the Closing Payment, the Purchase Price plus accrued interest
specifically attributable to the Purchase Price will be released to Seller at Closing,



6









 







with
the remaining escrow balance returned to Purchaser at Closing. Should the Purchase Price be
a 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 will
concurrently make a payment to Seller in immediately available funds in an amount equal to
the 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 released
to Purchaser, and Seller will make a payment to Purchaser in an amount equal to the amount
the 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 with
respect to the Purchase Price to binding arbitration in Harrisburg, Pennsylvania, under the
Commercial Arbitration Rules and procedures of the American Arbitration Association to
determine the final Purchase Price. Should the final Purchase Price determined by the
Arbitrator’s Order be a positive value and less than the Closing Payment, the Purchase Price
plus accrued interest specifically attributable to the Purchase Price will be immediately
released to Seller, with the remaining escrow balance returned to Purchaser. Should the
Purchase 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, and
Purchaser will make a payment to Seller in an amount equal to the 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 released to Purchaser, and Seller
will make a payment to Purchaser in an amount equal to the amount the Purchase Price is
below zero dollars. The balances shall be settled by either party as the case may be within
fifteen (15) days of the arbitration award. All fees and expenses of the arbitration shall
be borne equally between Seller and Purchaser. For purposes of clarity, such fees and
expenses shall not include the parties’ respective legal and accounting fees, which shall be
the 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 and
purchase of the Triumphe Shares (the “Closing”) will take place at the offices of
the Company at 10:00 A.M., local time, on January 3, 2006, effective as of the Closing
Effective Date.




     (b) At the Closing:




          (i) Seller shall transfer to Purchaser, free and clear of all Liens (other than
restrictions on transfer under federal and state securities laws) the certificates
representing the Triumphe Shares, duly endorsed for transfer or accompanied by duly executed
stock powers in favor of Purchaser with all necessary stock transfer tax stamps affixed
thereto.




          (ii) Except as otherwise provided in Section 2.2, Purchaser shall cause the Purchase
Price to be paid to Seller.



7









 






          (iii) Seller shall assign to Purchaser any applicable trademark and servicemark
registration covering the “Triumphe” name, and shall thereafter take all measures necessary
to 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 to
Purchaser as follows:




     3.1.1. Organization, Authority, Standing of the Company. The Company is an
insurance company validly existing and in good standing under the laws of the Commonwealth
of Pennsylvania, having redomiciled from Texas on July 20, 2001. The Company has all
requisite corporate power and authority to carry on its business as presently conducted and
to own or lease and to operate its properties. The Company is duly qualified and in good
standing to do business in every jurisdiction in which such qualification is necessary
because of the nature of the property owned, leased or operated by it or the nature of the
business conducted by it, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on the Company. The Company is not transacting any insurance
or reinsurance business in any state or jurisdiction requiring a license or qualification
therefor in which it is not so licensed or qualified and where the failure to be so licensed
or qualified would have a Material Adverse Effect. No jurisdiction in which the Company is
not licensed or qualified has claimed in a writing received by the Company or Seller that
the Company is required to be qualified or licensed therein. The Company has no
subsidiaries.




     3.1.2. Triumphe Shares.




     (a) The Triumphe Shares have been duly authorized and validly issued and are fully
paid, 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 convertible
into, or exchangeable for, capital stock of the Company are outstanding, no authorization
therefor has been given and there are no agreements or commitments obligating the Company to
issue, sell or acquire any shares of its capital stock or any rights with respect thereto
and no Person has any right of first refusal, preemptive right, subscription right or
similar right with respect to any shares of the Company’s capital stock either pursuant to
any agreement or arrangement with the Company, or, to the Company’s knowledge, pursuant to
any agreement or arrangement with any other party.




     (b) Seller is the lawful record and beneficial owner of the Triumphe Shares free and
clear of any Liens, and, upon the delivery to Purchaser of the certificates representing the



8









 







Triumphe Shares, duly endorsed for transfer or accompanied by stock powers in favor of
Purchaser, 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 any
Liens, other than restrictions on transfer under federal and state securities laws and
regulations 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 good
standing under the laws of the State of Delaware, and has full corporate power and authority
to execute and deliver this Agreement and each of the other agreements, instruments and
documents contemplated hereby, to which Seller is a party, and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this Agreement and
each of the other agreements, instruments and documents required by the terms of this
Agreement to be executed and delivered by Seller or the Company, as the case may be, and the
performance of all transactions herein or therein contemplated, have been duly authorized by
all necessary action on the part of Seller or the Company, as the case may be, including the
consent of all stockholders to the extent required, and no further corporate or other action
on the part of Seller or the Company, as the case may be, is necessary to authorize such
execution, delivery and performance. This Agreement has been duly executed and delivered by
Seller and constitutes, and each of the other agreements, instruments and documents required
by the terms of this Agreement to be executed and delivered by Seller or the Company, as the
case may be, when so executed and delivered will constitute, the valid and legally binding
obligation of Seller or the Company, as the case may be, enforceable against Seller or the
Company, 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 the
Company, as the case may be, nor the consummation of the transactions
contemplated hereby or thereby will (i) conflict with, result in a breach or
violation of or constitute a default under the charter, by-laws or operating agreement of
Seller or the Company, as the case may be, or (ii) assuming all regulatory and
governmental approvals sought by the Parties hereunder have been obtained, conflict in any
respect with, result in a breach of or constitute a default under any court or
administrative order or process, judgment, decree, statute, law, ordinance, rule or
regulation or any agreement, license, binding arrangement or commitment to which Seller or
the 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 the
transactions contemplated herein or therein or have a Material Adverse Effect on the
Company, (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 Schedule
3.1.3), upon the property and assets of the Company or any Lien upon any of the Triumphe
Shares other than restrictions on transfer under federal and state securities laws and
regulations, or (iv) assuming all regulatory and governmental approvals sought by
the Parties hereunder have been obtained, violate the terms and conditions of, or



9









 







result in
the loss or suspension of, any license or other legal or contractual right enjoyed by the
Company.




     3.1.4. Consents. Assuming the accuracy of the representations and warranties
set forth in Section 3.2.3, no consent, license, approval, order, or authorization of, or
registration, 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 in
connection with the execution, delivery, performance, validity, and enforceability of this
Agreement, the sale of the Triumphe Shares or the consummation of any of the other
transactions contemplated hereunder, except for the following consents and approvals (the
“Consents”): (i) the filings to be made with, and approvals to be obtained
from, the Pennsylvania Department of Insurance with respect to the transfer of control of
the Company, (ii) the other consents, including without limitation any third-party
consents, 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 not
entailing any requirement of consent, license, approval, order or authorization on the part
of any governmental entity or third party, all of which are set forth on Disclosure Schedule
3.1.4.




     3.1.5. Financial Statements; Assets.




     (a) Seller has delivered or, in the case of the September 30, 2005 Quarterly Statutory
Statements will deliver to Purchaser, complete and correct copies of (i) the Annual
Statement of the Company filed with the Pennsylvania Department of Insurance for the years
ended December 31, 2001, 2002, 2003, and 2004 (the “Annual Statements”) and
(ii) the Quarterly Statutory Statements of the Company, for the periods ended March
31, June 30 and September 30, 2004 and March 31, June 30 and September 30, 2005 filed with
the Pennsylvania Department of Insurance (the “Quarterly Statutory Statements;” the
Annual Statements and the Quarterly Statutory Statements are collectively referred to as the
“Statutory Statements”), as well as the Company’s audited financial statements for
the years ended December 31, 2001, 2002, 2003, and 2004.




     (b) The Statutory Statements have been or, in the case of the September 30, 2005
Quarterly Statutory Statements will be, prepared in accordance with practices prescribed or
permitted by the Pennsylvania Department of Insurance, and all such accounting practices
have been applied on a consistent basis, except as expressly set forth or disclosed in the
notes, exhibits or schedules thereto or as required by changes in accounting conventions by
the Pennsylvania Department of Insurance. The Statutory Statements have been or, in the
case of the September 30, 2005 Quarterly Statutory Statements will be, prepared from the
books and records of the Company, which are maintained on a GAAP basis, and present fairly
or, in the case of the September 30, 2005 Quarterly Statutory Statements will present
fairly, in all material respects, the statutory financial condition of the Company as at the
dates thereof and the statutory results of its Operations, and statements of cash flow, in
accordance with accounting practices prescribed or permitted by the Pennsylvania Department
of Insurance. Except as set forth on Disclosure Schedule 3.1.5, no deficiency has been



10









 







communicated either orally or in writing to the Company with respect to any of the Statutory
Statements 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, or
Software (except as set forth on Disclosure Schedule 3.1.5) and is not party to any leases
regarding real property; any licenses for the use of Software by the Company, except as
disclosed 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 Permitted
Liens), 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 the
Company on June 30, 2005, including all of the deposits of the Company made pursuant to
applicable laws, as of such date. Disclosure Schedule 3.1.5 is true, accurate and complete
with respect to each item set forth therein in all material respects. The Company had good
and 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 Liens
on 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 applicable
Pennsylvania insurance laws. Each deposit set forth in said statement is acceptable to the
insurance department holding the deposit and is in compliance with the laws applicable
thereto.




     (e) The Admitted Assets, including statutorily required special deposits set forth in
Disclosure Schedule 3.1.5, are, as of the date hereof, and the Closing Admitted Assets will
be, as of the Closing Effective Date, sufficient to meet all statutory and regulatory
standards and requirements of the laws for the Company to maintain the licenses, approvals
and permits necessary for Company Operations. A schedule of the Admitted Assets will be
prepared as of November 30, 2005 and provided to Purchaser not less than five (5) Business
Days prior to Closing. At Closing, Seller will warrant that no material change (excluding
changes in market value, changes consented to by Purchaser, and changes resulting from the
normal conduct of the Company’s Operations) has occurred with respect to the Closing
Admitted Assets between November 30, 2005, when the schedule of Admitted Assets was
prepared, 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 the
Statutory Statements; (ii) liabilities incurred in the ordinary course of business since
June 30, 2005 consistent with past practice and the terms of this Agreement; and (iii) other
liabilities detailed on Disclosure Schedule 3.1.6, the Company does not have any liabilities
or obligations of any nature, whether absolute, accrued, contingent or otherwise, and
whether due or to become due, that would exceed (a) $5,000 for any individual liability or
obligation or (b) $25,000 in the aggregate for all such undisclosed liabilities or
obligations. Except to the extent included within the preceding sentence, the Company does
not have any liability in respect of Debt and has no obligation or practice to extend credit
to any Person.



11









 






     (b) The Company has established all claim and IBNR reserves in accordance with sound
actuarial principles and has established all claim and other reserves in accordance with
GAAP and SAP.




     (c) All insurance records and other data relating to the Company’s Operations and any
Insurance Contracts have been maintained by Seller and the Company in accordance with sound
corporate 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. All
such records and data of the Company will be transferred to Purchaser in the form of an SQL
2000 database file, and will contain sufficient information to permit the Company to process
any claims handling, salvage or subrogation issues or other insurance functions in the
ordinary course of business consistent with the Company’s past practice. The use of such
records and data by the Company after Closing will not require any extension of existing
Software licenses or other agreements.




     (d) All liability of the Company for any claims arising out of policies issued by
Mission Insurance Company of Texas is reinsured by General Reinsurance Corporation under
reinsurance agreement ACF-K820154 having an effective date of May 1, 2000, a claims reported
expiration date of May 1, 2010, and a $10 million aggregate limit. Seller has provided
Purchaser with access to all materials in Seller’s possession delivered by representatives
of Mission Insurance Company of Texas to Seller in connection with Seller’s acquisition
thereof. There are no claims pending or overtly threatened with respect to coverages
written by the Company prior to its acquisition by Seller, except as disclosed on Schedule
3.1.6.




     3.1.7. Litigation. Except as set forth on Disclosure Schedule 3.1.7, there is
no judicial, administrative, or regulatory action, proceeding, investigation, inquiry, claim
(other than any insurance claim in the ordinary course of business consistent with past
practice), 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 the
Company 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 the
Company pursuant hereto or in connection herewith or which questions the consummation of any
of the transactions contemplated hereby or declares or proposes to declare the same
unlawful. The Company has not been charged with, nor to the knowledge of Seller been
threatened with, any charges involving any violations of any provisions of any applicable
laws, regulations, ordinances, orders, or administrative rulings. The Company is not in
default with respect to any judgment, order, writ, injunction, or decree of any court or any
federal, 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 applicable
domestic and foreign laws, rules, regulations, judgments, and court or administrative
orders, permits, and approvals (including, without limitation, those of state insurance
departments),



12









 







except to the extent that noncompliance would not cause a Material Adverse
Effect. 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 business
and Operations. All such permits, licenses, orders, and approvals are in full force and
effect, neither Seller nor the Company has received any written or, to the knowledge of
Seller 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 Pennsylvania
Department of Insurance and each insurance department of any other state or jurisdiction
having jurisdiction required to be filed by it or otherwise provided pursuant to insurance
laws and the rules and regulations thereunder and has complied with all applicable
requirements of such laws and the rules promulgated thereunder, except to the extent that
failure to do so would not cause a Material Adverse Effect. All required regulatory
approvals in respect of any such filings are in full force and effect on the date
hereof. All such regulatory filings were in compliance with applicable law when filed
and, to the knowledge of Seller or the Company, no deficiencies have been asserted by any
governmental 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 jurisdictions
in which the Company holds a license or is otherwise authorized to conduct insurance
business or is authorized or accredited as a reinsurer. Complete and correct copies of
certificates of authority to conduct insurance business have been furnished to or made
available to Purchaser. Disclosure Schedule 3.1.9 also sets forth the jurisdictions in
which Company is authorized to write “Cargo,” “Non-Trucking Liability” and “Physical Damage”
coverage. Except for these lines of business in these specific jurisdictions (which
comprise the entire Operations of Company), the Company does not conduct any insurance
business in any other jurisdiction, and has not assumed any reinsurance from any other
entity 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 its
license 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 applicable
to the Company issued by any regulatory authority (other than regulations generally
applicable to companies in the same line of business) that restrict the Company’s ability to
pay dividends or regulate or establish levels of reserves or other financial ratios or that
otherwise 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 Taxing
Authorities all Tax Returns and Information Returns of the Company required to be filed
through the Closing Effective Date (taking into account all valid extensions as listed in
Disclosure Schedule 3.1.10) and all such Tax Returns and Information Returns are complete
and accurate in all material respects. In particular, and without in any manner limiting
the



13









 







foregoing, none of the foregoing returns contains any position which is or would be
subject to penalties under Section 6662 of the Code (or any corresponding provisions of
state, local or foreign tax laws).




     (b) All Taxes of the Company that are due and payable on or before the Closing
Effective Date have been timely paid.




     (c) The Company has provided a sufficient reserve for Taxes that are not yet due and
payable in accordance with GAAP and SAP in the Company’s accounting records as of the
Closing Effective Date whether or not the Closing Effective Date is at the end of a Taxable
Period.




     (d) There are no Liens for Taxes on any of the assets of the Company other than for
Taxes not yet due and payable.




     (e) The Company has withheld and timely paid or accrued all Taxes attributable to the
Company required to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third party.




     (f) No federal, state, local or foreign investigative audit or other administrative
proceeding or court proceeding (each an “Audit”) exists or has been initiated with regard to
Taxes or Tax Returns with respect to the Company. No notice has been received that any such
Audit is pending or threatened with respect to any Taxes due from the Company or any Tax
Return filed by the Seller with respect to the Company. Neither the Seller nor the Company
has waived any statute of limitations with respect to any taxes or has agreed to any
extension of time with respect to a tax assessment or deficiency.




     (g) All contracts or inter company account systems under which the Company has, or may
at any time in the future have, an obligation to assume, share, contribute or receive
payment of any portion of a Tax (or any amount calculated with reference to any portion of a
Tax) determined on a consolidated basis with respect to any group of corporations or other
entities of which the Company is or was a member shall terminate with respect to the Company
on or before the Closing Effective Date, and any payable or receivable thereunder shall be
paid 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 Tax
purposes is the calendar year.




     (j) The Company is not required to include in taxable income any adjustments under Code
Section 481(a) for any Taxable Period, or portion thereof, ending after the date of this
Agreement for matters arising through the Closing Effective Date.



14









 






     (k) Neither the Seller nor the Company has any income attributable to the Company and
which should be reported on a Tax Return for a Taxable Period ending after the Closing
Effective 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, that
resulted in a deferred reporting of income from such transaction (other than a “deferred
inter 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 of
a United States person (defined in Section 7701 of the Code) under Section 951 of the Code
for any Taxable Period ending on or before the Closing Effective Date; and (ii) is not a
passive foreign investment company within the meaning of Section 1297 of the Code as of the
Closing 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 being
owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, (ii) constitutes “tax-exempt use property” within the meaning of Section
168(h)(1) of the Code or (iii) is tax-exempt bond financed property within the meaning of
Section 168(g) of the Code.




     (o) The Company is not party to any contract, agreement or other arrangement which
could result in the payment of amounts that could be nondeductible by reason of Section 280G
or Section 162(m) of the Code;




     (p) There are no material elections with respect to Taxes affecting the Company as of
the date hereof. After the date hereof, no election with respect to Taxes affecting the
Company will be made without the written consent of Purchaser;




     (q) The representations and warranties of Seller contained in this Section 3.1.10 with
respect to any Tax shall survive until the later to occur of (i) the lapse of the statute of
limitations 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 Schedule
3.1.11, -since March 31, 2005, the Operations of the Company have been operated in the
ordinary course of business consistent with past practice and there has not been: (a) any
material adverse change in the business, Operations, assets, or financial condition of the
Company or the ability of the Company to carry on its business substantially as currently
conducted; (b) any damage, destruction or casualty loss, whether covered by insurance or
not, 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 provided
for in this Agreement, any entry into any agreement, commitment or transaction by the
Company, other than agreements, commitments or transactions entered into by the Company



15









 







in
the 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 into
the 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 in
connection with this Agreement or the transactions contemplated hereby so as to give rise to
any 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 from
and against any and all loss, claims, damage, cost, or expense arising out of or in
connection with any claim against Purchaser or its Affiliates for any such brokerage or
finder’s commission, fee, or similar compensation resulting from actions taken by Seller or
the Company.




     3.1.13. Conduct of Operations. Except as set forth in this Agreement and the
Disclosure Schedules, since June 30, 2005, the Company has not:




     (a) declared, set aside, made, or paid (in cash or property) any dividend or made any
other 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 any
recapitalization or reclassification or any other transfer of assets, property, contracts or
rights;




     (b) issued, sold, or delivered, or agreed to issue, sell, or deliver, any shares of its
capital stock or any securities convertible into, or options with respect to, or warrants to
purchase, 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 any
amount owed to such creditor when due or granted any extensions of credit other than in the
ordinary course of business consistent with past practices;




     (d) except as set forth on Disclosure Schedule 3.1.13, made, changed or revoked any
material Tax election, elected or changed any method of accounting for Tax purposes, settled
any action in respect of Taxes or entered into any contractual obligation in respect of
Taxes with any governmental authority; or




     (e) entered into any contractual obligation to do any of the things referred to
elsewhere in this Section 3.1.13.




     3.1.14. Absence of Claims. After giving effect to the termination of the
Affiliate Agreements, Seller will not have any contracts or agreements with, or claims
against, the Company (other than with respect to the Agency Agreement and, as of the
Closing, Seller hereby waives all known claims it may have against the Company, except for
those arising under the Agency Agreement, with respect to periods ending on or prior to the
Closing Effective Date). All payments owed by Company to Seller or any Affiliate are
reasonable and customary, and any agreements evidencing such obligations of Company have
been



16









 







approved (if required by applicable law) by the Pennsylvania Department of Insurance or
other regulatory entity.




     3.1.15. No Infringement. To Seller’s knowledge, the conduct of the Operations
and use of any Software by Company does not infringe on any rights of any Person in respect
of any intellectual property.




     3.1.16. Insurance Coverage. The Company has, or Seller has with respect to
Company, maintained in full force and effect insurance with respect to the Company’s assets
and Operations since June 16, 2000, in such amounts and against such losses and risks as is
customarily carried by Persons engaged in the same or similar business and as is required
under the terms of any applicable contractual obligations. All such policies (whether
maintained by the Company or the Seller or other Affiliates of the Seller) are in full force
and effect, and all premiums which are due thereon
have been paid, and such policies will continue to be in effect until the Closing, at
which 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 any
employees and has not incurred any liability under any “employee benefit plan” as such term
is defined in Section 3(3) of ERISA, or under Title IV of ERISA. In addition, to the best
of 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 and
correct list of the Company’s Insurance Contracts in force as of August 31, 2005, which will
be updated to the date hereof within two (2) Business Days after signing this Agreement (and
specifies the premiums with respect thereto), and all other contracts entered into by either
Company or Seller that are material to the conduct of the Company’s Operations, including
all contracts and arrangements with Seller or any Affiliate of Seller and with Persons
writing, selling or producing the Company’s insurance business (“Insurance
Brokers”), and all reinsurance arrangements whether the Company acts as reinsurer or
reinsured. Company warrants that all contracts with any Insurance Broker, whether oral or
written, along with any authority of any Insurance Broker to write business or in any way
bind the Company, have been terminated in compliance with all applicable laws, and that no
Insurance Contracts have been issued by the Company since the Runoff Date (other than
renewals to the extent required by applicable law). Except as specifically set forth in
Disclosure Schedule 3.1.18, Company is not and will not be required to pay commissions to
any Insurance Broker (except pursuant to arrangements newly entered into by the Company
after the Closing). Each of the Insurance Contracts is in full force and effect and is the
valid and binding obligation of each party thereto. Except as set forth in Disclosure
Schedule 3.1.18 hereto, neither the Seller nor the Company, or to the knowledge of the
Seller or the Company, any other Person is (or, with the giving of notice or the lapse of
time or both, will be) in material violation, breach of or default under any of the
Insurance Contracts or other listed contracts. No Insurance Contract has a change of
control or similar provision which requires a notice or consent in connection with the
consummation of the transaction contemplated hereby or that would entitle a third party to
cancel, terminate, alter, amend or significantly change any such Insurance Contract.




17









 







There exists no breach or event of default on the part of the Company with respect to
the Insurance Contracts, or other listed contracts which would constitute a Material Adverse
Effect.




     3.1.19. Powers of Attorney and Suretyship. The Company has no general or
special powers of attorney outstanding (whether as grantor or grantee thereof), nor any
obligation or liability (whether actual, accrued, accruing, contingent or otherwise) as
guarantor, surety, co-signer, endorser, comaker, indemnitor or otherwise in respect to the
obligation of any person, corporation, partnership, joint venture, association, organization
or other entity, except as endorser or maker of checks in the ordinary course of business
and except as may be required by generally-applicable licensure requirements imposed by any
department of insurance in any jurisdiction in which the Company is licensed.




     3.0.20. Disclosure. Neither this Agreement nor the Disclosure Schedules, nor
the certificates and other documents furnished or to be furnished by Seller or the Company
to 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 material
fact.



          3.2. Representations and Warranties of Purchaser. Purchaser represents and warrants
to Seller as follows:




     3.2.1. Organization and Standing of Purchaser. Purchaser is a corporation duly
organized and validly existing and in good standing under the laws of Ohio.




     3.2.2. Authority for Agreement. Purchaser has full corporate power and
authority 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 carry
out its obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and each of the other agreements, instruments and documents required to be
executed and delivered by Purchaser hereunder, and the performance of all transactions
herein or therein contemplated, have been duly authorized by all necessary action on the
part of Purchaser, and no further corporate action on the part of Purchaser is necessary to
authorize such execution, delivery and performance. This Agreement has been duly executed
and delivered by Purchaser and constitutes, and each of the other agreements, instruments
and documents required by the terms of this Agreement to be executed and delivered hereunder
by Purchaser, when so executed and delivered, will constitute, the valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with their respective
terms. 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 the
consummation of the transactions contemplated hereby or thereby will (i) conflict
with or result in any violation of or constitute a default under any provision of the
Articles of Incorporation or Code of Regulations of Purchaser, or (ii) assuming all
regulatory and governmental approvals sought by the Parties have been obtained, conflict in
any respect with, result in a breach of or constitute a default under any court or
administrative order or process, judgment, decree, statute, law, ordinance, rule or
regulation or any agreement or



18









 







commitment to which Purchaser is a party or
by which it (or any of its material properties or assets) is subject or bound, except
where such conflict, breach or default would not have a material adverse effect on Purchaser
or preclude the consummation of the transactions contemplated herein or therein.




     3.2.3. Consents. No consent, license, approval, order or authorization of, or
registration, declaration or filing (collectively, “Approvals and Filings”) with,
any third party or any governmental authority, agency, bureau or commission is required to
be obtained or made by Purchaser in connection with the Purchaser’s execution, delivery,
performance, validity and enforceability of this Agreement, the purchase of the Triumphe
Shares, or the consummation by the Purchaser of the other transactions contemplated
hereunder except for (i) the filings to be made by, and approvals to be obtained from, the
Pennsylvania 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 the
transactions contemplated by this Agreement, all of which are set forth on Disclosure
Schedule 3.2.3, (iii) the Consents and (iv) registrations, declarations or filings required
to 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 all
of which are set forth on Disclosure Schedule 3.2.3, and all of which will be solicited by
Purchaser in accordance Section 5.2.




     3.2.4. Purchase for Investment. Purchaser is acquiring the Triumphe Shares for
its 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 Triumphe
Shares acquired by it, or any interest therein, in such manner as to violate any
registration provision of the Securities Act of 1933, as amended, or any applicable state
securities law regulating the disposition thereof. Purchaser agrees that the certificate
representing the Triumphe Shares may bear legends to the effect that the Triumphe Shares
have not been registered under the Securities Act of 1933, as amended, or such other state
securities laws, and that no interest therein may be transferred or otherwise disposed of in
violation of the provisions thereof.




     3.2.5. Brokers. Purchaser has not taken any action in connection with this
Agreement or the transactions contemplated hereby so as to give rise to any valid claim
against Seller or the Company for any brokerage or finder’s commissions, fees or similar
compensation. Purchaser agrees that any such brokerage or finder’s commissions, fees or
similar compensation, if any, will be paid by Purchaser. Purchaser agrees to indemnify and
hold Seller harmless from and against any and all loss, claims, damage, cost or expense
arising out of or in connection with any claim against Seller or its Affiliates for any such
brokerage or finder’s commissions, fees or similar compensation resulting from actions taken
by Purchaser.




     3.2.6. Financing. Purchaser has, and at the Closing and all other relevant
times hereunder will have, sufficient resources to consummate the transactions contemplated



19









 






     hereby and to make the Closing Payment, to pay the Purchase Price, and to pay all of its
related fees and expenses.




     3.2.7. Litigation; Regulatory Standing. There is no action, suit or proceeding
pending or, to Purchaser’s knowledge, threatened which questions the legality or propriety
of the transactions contemplated in this Agreement. There are no orders or other regulatory
proceedings or actions pending or, to the Purchaser’s knowledge, threatened against the
Purchaser that could adversely affect the legality or propriety of the transactions
contemplated in this Agreement.




     3.2.8 Compliance with Law. To the Purchaser’s knowledge, the Purchaser
has conducted, and is now conducting, its business and operations in compliance with all
applicable domestic and foreign laws, rules, regulations, judgments, and court or
administrative orders, permits and approvals (including, without limitation, those of state
insurance departments), except to the extent that noncompliance would not cause a Material
Adverse 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 Insurance
and each insurance department of any other state or jurisdiction having jurisdiction
required to be filed by it or otherwise provided pursuant to insurance laws and the rules
and regulations thereunder and has complied with all applicable requirements of such laws
and the rules promulgated thereunder, except to the extent that failure to do so would not
cause a Material Adverse Effect. All required regulatory approvals in respect of any such
filings are in full force and effect on the date hereof.




     3.2.9. Disclosure. Neither this Agreement, nor the certificates or any other
documents furnished or to be furnished by Purchaser to Seller 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 material fact.



ARTICLE 4




CONDITIONS PRECEDENT




          4.1. Conditions to the Obligations of Purchaser and Seller. The obligation of Seller
hereunder to sell to Purchaser the Triumphe Shares, and the obligation of the Purchaser to purchase
the Triumphe Shares are subject to the fulfillment, prior to or at the Closing, of the following
conditions, unless waived in writing by Purchaser and Seller, except the condition set forth in
subsection (a) below, which is not waiveable:




     (a) all permits, orders, approvals and consents of, and notices to, registrations and
filings with the Pennsylvania Department of Insurance, or any other applicable insurance
regulatory authority, which are identified in Sections 3.1.4 and 3.2.3 or set forth on
Disclosure Schedules 3.1.4 and 3.2.3 and required in connection with (i) the execution and
delivery of this Agreement (including, without limitation, approval by the Commissioner of



20









 







Insurance of the Commonwealth of Pennsylvania for the acquisition by Purchaser of the
Company and any action contemplated by Section 2.3), (ii) the termination of the Affiliate
Agreements in the manner required by this Agreement, and the consummation of the
transactions contemplated hereby and thereby shall have
been received or made, and such permits, orders, approvals and consents shall be
effective and shall not have been suspended, revoked or stayed by action of any governmental
authority;




     (b) the Escrow Agreement shall have been executed and delivered;




     (c) the Purchaser shall have agreed to assume, concurrently with the execution of this
Agreement, 100% of the Interests and Liabilities under the Commercial Auto Quota Share
Reinsurance Agreement effective as of January 1, 2003, as amended, with such assumption to
be retroactive to January 1, 2005;




     (d) all other consents, authorizations, orders and approvals of, and filings and
registrations with, any United States Federal, state or local or foreign governmental
commission, board or other regulatory body which are required for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby, shall have
been obtained or made;




     (e) the consummation of the transactions contemplated hereunder shall not have been
prohibited 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 Treasury
in respect of the letters of credit identified on Schedule 2.2 shall be modified in a manner
mutually acceptable to Seller and Purchaser.



          4.2. Conditions to Purchaser’s Obligations. Purchaser’s obligation to purchase the
Triumphe Shares is subject to the fulfillment, prior to or at the Closing, of the following
additional conditions, unless waived in writing by Purchaser:




     4.2.1. Material Adverse Effect. Since June 30, 2005, no Material Adverse
Effect shall have occurred; provided that Purchaser shall not be able to claim the failure
of this condition precedent if Seller specifically disclosed and accurately described in all
material respects the event giving rise to Purchaser’s claim of a Material Adverse Effect in
this Agreement (including any Disclosure Schedule).




     4.2.2. Representations and Warranties. All representations and warranties of
Seller contained herein shall have been true and correct when made and all such
representations and warranties shall also be true and correct in all material respects (or
in all respects in the case of any representation or warranty containing any materiality
qualification of any kind) at and as of the Closing Date except as affected by actions taken
after the date hereof with the prior written consent of Purchaser or as specifically
contemplated by this Agreement, and except



21









 







for representations and warranties made as of a
specified date, which shall be true and correct as of such specified date.




     4.2.3. Performance. Seller shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this Agreement to be
performed and complied with by it prior to or at the Closing.




     4.2.4. Certificate. Seller shall have delivered to Purchaser an officer’s
certificate, signed by a Responsible Officer of Seller, dated the date of Closing, to the
effect 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 have
submitted his resignation effective as of the Closing.




     4.2.6. Termination of Certain Agreements. All Affiliate Agreements shall have
been terminated and all inter company accounts between the Company and Seller or any
Affiliate shall have been settled in each case without any condition or term materially
adverse to the Company, except with respect to the Agency Agreement.




     4.2.7. Shares and Transferred Assets; Other Agreements. Seller shall have
delivered documentation evidencing the transfer of title to the Triumphe Shares to
Purchaser, as well as any other agreements, documents and instruments to be delivered by
Seller required to be delivered by Seller by the terms hereof. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement shall be
reasonably 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 Purchaser
the Triumphe Shares is subject to the fulfillment, prior to or at the Closing, of each of the
following additional conditions, unless waived in writing by Seller:




     4.3.1. Representations and Warranties. The representations and warranties of
Purchaser contained herein shall have been true and correct when made and shall also be true
and correct in all material respects (or in all respects in the case of any representation
or warranty containing any materiality qualification of any kind) at and as of the Closing
Date except as affected by actions taken after the date hereof with the prior written
consent of Seller, and except for representations and warranties made as of a specified
date, which shall be true and correct as of such specified date.




     4.3.2. Performance. Purchaser shall have performed and complied in all
material respects with all agreements, covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing, including, but not
limited to, the delivery of the Closing Payment and Purchase Price pursuant to Section 2.2
of this Agreement and the Escrow Agreement.



22









 






     4.3.3. Certificate. Purchaser shall have delivered to Seller an officer’s
certificate, signed by a Responsible Officer of Purchaser, dated the date of Closing, to the
effect 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 from
the date hereof to the Closing Date, Seller will take all steps as may reasonably be
required to cause the Company not to (i) issue, sell, or pledge, or authorize or
propose the issuance, sale or pledge of, (A) additional shares of capital stock of any
class, or securities convertible into any such shares, or any rights, warrants, or options
to acquire any such shares or other convertible securities or (B) any other securities in
respect 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 respect
to, any merger, consolidation or business combination, or any acquisition of a material
amount of assets, (iv) agree in writing or otherwise to take any of the foregoing actions or
any action which would make any representation or warranty in Article 3 untrue or incorrect
in any material respect as of the Closing Date. From the date of this Agreement until the
Closing, neither the Seller nor the Company (nor any of their respective agents) shall
directly or indirectly: (x) solicit, initiate, or encourage the submission of any proposal
or offer from any Person relating to, or enter into or consummate any agreement or
transaction relating to, the acquisition of any equity interests in the Company or a
transaction of the type described in clause (iii) of this Section 5.1 above or any similar
transaction or alternative to the transactions contemplated by this Agreement; or (y)
participate in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing.




     (b) Except as otherwise expressly required by this Agreement, from the date of this
Agreement until the Closing Date, Seller shall, and shall cause the Company to (i) conduct
the Operations in a manner consistent with past practices as of the Runoff Date , (ii) use
commercially reasonable efforts to maintain all licenses set forth on Disclosure Schedule
3.1.9, and (iii) consult with, and obtain the consent of, the Purchaser prior to taking any
action or entering into any transaction that would be of strategic importance to the
Company;




     (c) In the event the Seller or the Company shall receive notice, written or oral, from
a 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 of
Authority (or similar license) to the
Company, or (iii) the transactions contemplated by this Agreement are or will be
disapproved by such agency, the recipient of such notice shall



23









 







immediately communicate such
information to the Purchaser, and the Seller shall use commercially reasonable efforts to
(i) avoid such suspension, revocation, cancellation or non-renewal, (ii) obtain the
reissuance of such Certificate of Authority (or similar license), or (iii) obtain such
agency’s approval of the transactions contemplated herein; and




     (d) From the date of this Agreement until the Closing Date, the Company shall not enter
into any arrangements or agreements with Seller or its Affiliates except as expressly
provided in this Agreement, and Seller shall cause there to be no contribution, renewal or
other movement of insurance policies from Seller or any Affiliate of Seller into the
Company.



          5.2. Filings and Authorizations.




     (a) No later than sixty (60) days after the date hereof (thirty (30) days with respect
to the Form A filing in Pennsylvania), Purchaser will file or supply, or cause to be filed
or supplied, all applications, notifications and information required to be filed or
supplied pursuant to applicable law, rule or regulation in connection with the consummation
of the transactions contemplated by this Agreement, including, without limitation, filings
with the offices of the Pennsylvania Department of Insurance with respect to the change of
control of the Company and any actions contemplated by Section 2.3, and will diligently
pursue commercially reasonable efforts to procure such consents following the submission of
such filings.




     (b) Purchaser will use its commercially reasonable efforts to obtain, or cause to be
obtained, all authorizations, approvals, consents and waivers from all Persons and
governmental authorities other than those listed in clause (a) above necessary to be
obtained by it in order for it so to consummate the transactions contemplated by this
Agreement, including, without limitation, obtaining the Consents, and will use its
commercially 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 to
approvals, consents or waivers from governmental authorities, all fees and expenses
(excluding legal fees and expenses) incurred as a result of filings to be made thereunder
shall be borne equally by the Parties. With respect to clause (b) above to the extent not
relating to approvals, consents or waivers from governmental authorities, all fees and
expenses incurred as a result of all authorizations, approvals, consents and waivers to be
obtained 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 the
information referred to in this Section 5.2 and supplying such reasonable assistance as may
be reasonably requested by each in connection with the foregoing. Each party shall have the
right to provide comments on and review any such applications, notifications and information
including, but not limited to, Form A filings, proposed to be filed or supplied by the other
party and, if such party elects to exercise such right, to complete such review
within a reasonable period of time before the other party may file or supply any such
applications, notifications or information.



24









 






     5.3. Name Change. As soon as practicable after the Closing, Seller will cause to be
filed all documents, and take such other steps, necessary to change the name of Seller and any of
its Affiliates to such other name that does not contain the word “Triumphe.”




     5.4 Confidentiality. The Seller acknowledges that the success of the Company after
the Closing depends upon the continued preservation of the confidentiality of certain information
with respect to the Operations of the Company possessed by the Seller, that the preservation of the
confidentiality of such information by the Seller is an essential premise of the bargain between
the Seller and the Purchaser, and that the Purchaser would be unwilling to enter into this
Agreement in the absence of this Section 5.4. Accordingly, Seller hereby agrees with the Purchaser
that Seller shall not, and that Seller shall cause its Affiliates (to the extent Seller has Control
of 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 any
confidential or proprietary information involving or relating to the Operations or Company;
provided, however, that the information subject to the foregoing provisions of this sentence shall
not include (a) any information generally available to, or known by, the public (other than as a
result of disclosure in violation of either this covenant or any other obligation of secrecy or
confidential treatment); (b) any information otherwise known on a non-confidential basis by Seller
or its Affiliates; (c) any information reported in any filings required by applicable law or with
respect to which disclosure is required in order for Seller and the Company to conduct business in
the ordinary course; and provided, further, that the provisions of this Section 5.4 shall not
prohibit any retention of records or disclosure (a) required by any applicable legal requirement so
long as reasonable prior notice is given of such disclosure and a reasonable opportunity is
afforded to contest the same or (b) made in connection with the enforcement of any right or remedy
relating to this Agreement. At or prior to the Closing, the Seller shall assign to the Company any
rights which such Person may have under any confidentiality agreements or similar contractual
obligations relating to the Company currently in effect.




     5.5 Non-Competition and Non-Solicitation. For a period of three (3) years from and
after 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 year
period from and after the Closing Date, neither Seller nor any of its then existing Affiliates
will, 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 its
Affiliates, any employee of the Purchaser or its Affiliates unless such employee is involuntarily
terminated by Purchaser or its Affiliates or unless Purchaser or such Affiliate gives its written
consent in connection therewith. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 5.5 is invalid or unenforceable, the parties
hereto agree that the court making the determination of invalidity or unenforceability shall have
the power to reduce the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Section 5.5
shall be enforceable as so modified after the expiration of the time within which the judgment may
be appealed.



25









 






     5.6 Updated Schedules. Notwithstanding any other provision of this Agreement to the
contrary, Seller shall have the right from time to time after the date hereof and prior to the
Closing Date to update the Disclosure Schedules to reflect occurrences, conditions or events that
first arise or become known to Seller after the date of this Agreement. Seller shall deliver such
updated 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 of
this Agreement), Purchaser shall not be obligated to consummate the transactions contemplated
hereby. Otherwise, the updated Disclosure Schedule shall be deemed properly to modify and to
disclose exceptions to the representations and warranties of Seller set forth in this Agreement and
delivery 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 the
Purchaser 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 could
reasonably be expected to have a Material Adverse Effect; or (b) any event or circumstance that
could reasonably be expected to result in a breach of, or inaccuracy in, any of the representations
and warranties of the Seller and the Company, whether or not an updated Schedule could properly be
delivered by Seller under this Section.




     5.7 Further Assurances.




     (a) From time to time after the Closing, each of Purchaser and Seller will take such
further action and execute and deliver, or cause to be executed and delivered, such
documents as either may reasonably request in order to consummate the transactions
contemplated hereunder including, but not limited to, (i) more effectively vesting in
Purchaser (or one of its Affiliates) good title to the Triumphe Shares; (ii) removing
existing restrictions on the Company’s Operations in the State of Texas as described in
Disclosure Schedule 3.1.9; and (iii) providing reasonable cooperation in the Purchaser’s
preparation of the Company’s 2005 Annual Statement. If Purchaser requests assistance
following the Closing that is, in Seller’s reasonable judgment, extraordinary, Seller shall
so advise Purchaser and Purchaser agrees thereafter to reimburse Seller at the rate of $100
per hour for such services (plus expenses), with invoices to be submitted on a monthly basis
and paid within 30 days thereafter; provided, however, that Seller shall not charge
Purchaser for assistance with preparing the 2005 Annual Statement of the Company unless and
until the total hours of Seller personnel supporting that effort exceed 30 between January
1, 2006 and March 1, 2006.




     (b) The Parties agree to use their reasonable and diligent efforts to cause the
transactions contemplated hereby to be consummated as soon as possible after the date
hereof. In furtherance of this undertaking, and not by way of limitation:




     (i) Seller will facilitate Purchaser’s access to the Company’s independent auditors and
actuaries so that Purchaser may make inquiry with regard to and monitor progress toward
completion of the audit and actuarial report to be delivered as conditions precedent to
the Closing, with the cost associated with such participation to be borne by Purchaser.
Following the execution of this Agreement, Seller will provide Purchaser with contact
information for representatives of its independent auditors and actuaries.



26









 






     (ii) Seller and Purchaser will use their best efforts to facilitate the orderly
transition of claims servicing responsibility related to policies issued under the programs
evidenced by the Insurance Contracts listed on Schedule 3.1.18, items 3 and 4 (all of which
programs are in runoff as more particularly described on Schedule 5.7(b)(ii)) which
servicing obligations are currently performed by Seller’s Affiliate, VFS Insurance Services
LLC. The transition will be evidenced by documentation in form and substance reasonably
acceptable to both Seller and Purchaser.




     (c) In order to facilitate the resolution of any regulatory inquiries or claims made by
or against or incurred by Seller, Purchaser or the Company under this Agreement, for a
period of five (5) years following the Closing or such longer period as may be required by
the record retention regulations, policies and procedures of the Internal Revenue Service,
Purchaser and Seller shall, and shall cause their respective Affiliates to (i) retain the
books and records of the Company in its possession which relate to periods prior to the
Closing in a manner reasonably consistent with the prior practice of the Company, and (ii)
upon reasonable notice, afford the officers, employees and authorized agents and
representatives of the other party reasonable access (including the right to make, at the
Seller’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 Affiliate
to collect amounts owing under the Agency Agreement. Premium billing and collection will
occur under the Agency Agreement, and any amounts collected by Seller or its Affiliates that
are properly attributable to the Company’s business will be promptly forwarded to Purchaser
as provided in the Agency Agreement. Seller also agrees to provide a data transfer to be
accomplished by delivery in a SQL 2000 database as soon as reasonably possible following the
Closing but in no event more than five business days thereafter. Seller agrees to provide
Purchaser with a test database as soon as reasonably possible after the execution of this
Agreement and to provide reasonable cooperation to Purchaser from the date hereof until such
final 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 best
efforts to (i) reduce the amount of any outstanding letters of credit relating to the
Company’s business, and (ii) prevent any liability under these letters of credit from being
attributed to Company or Purchaser and to prevent the presentation of a draw against any of
such 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 whose
coverage was written by the Kemper group of insurance companies and reinsured by Triumphe
(including both Physical Damage and Non-Trucking Liability coverages) from the current
Kemper policies to policies written directly by National Interstate.
Seller will cooperate with Purchaser to effectuate this transfer, which will then allow
Seller to cancel the Kemper policies and remove any prospective risk from the Kemper
companies.



27









 





ARTICLE 6




TAX MATTERS





     6.1. Indemnity.




     (a) Seller agrees to indemnify and hold harmless Purchaser against liability related to
any of the following Taxes: (i) Taxes imposed on the Company with respect to Taxable Periods
of the Company ending on or before the Closing Effective Date; (ii) with respect to Taxable
Periods beginning before the Closing Effective Date and ending after the Closing Effective
Date (“Straddle Period Taxes”), Taxes imposed on the Company which are allocable to the
portion of such period ending on the Closing Effective Date; and (iii) Taxes of any Affiliate
other than the Company under U.S. Treas. Reg. Section 1.1502-6 or any similar provision of
state, local or foreign law and (iv) Taxes imposed on the Company in a Taxable Period (or
portion thereof) ending after the Closing Effective Date arising from the settlement or other
resolution of a proposed Tax adjustment which relates to a Taxable period (or portion
thereof) 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 are
accrued or otherwise reserved in the Company’s financial records as of the Closing Effective
Date.




     (b) In the case of Straddle Period Taxes, the portion of any such Tax that is allocable
to 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 or
receipts, or (B) imposed in connection with any sale or other transfer or assignment of
property (real or personal, tangible or intangible), deemed equal to the amount which would
be 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 the
Company, 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 is
assessed (“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 a
fraction the numerator of which is the number of calendar days in the Assessment Period
ending on the Closing Effective Date and the denominator of which is the number of calendar
days in the entire Assessment Period.




     (c) Purchaser will promptly remit to Seller all refunds received by Purchaser and
attributable to Taxes paid by or on behalf of the Seller, unless and except to the extent
that any such refunds were accounted for in the Purchase Price.



28









 






     6.2. Returns and Payments.




     (a) Seller shall prepare and file or otherwise furnish in proper form to the appropriate
Taxing Authority (or cause to be prepared and filed or so furnished) in a timely manner all
Tax Returns with respect to the Company for Taxable Periods ending on or before the Closing
Effective Date. Purchaser shall prepare and file (or cause to be prepared and filed) all Tax
Returns with respect to the Company for any Taxable Period ending after the Closing Effective
Date. Tax Returns of the Company with respect to Straddle Period Taxes shall be prepared in
a 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 and
its authorized representatives with a copy of such completed Tax Return and statement
certifying the amount of Tax shown on such Tax Return that is allocable to Seller pursuant to
Section 6.1(b), together with appropriate supporting information and schedules at least
forty-five (45) days prior to the due date (including extensions thereof) for the filing of
such Tax Return, and such other party and its authorized representatives shall have the right
to review and comment on such Tax Return and statement prior to the filing of such Tax
Return.




     (b) Seller shall pay or cause to be paid when due and payable all Taxes with respect to
the Company for any Taxable Period ending on or before the Closing Effective Date to the
extent such Taxes exceed the amount, if any, accrued for such Taxes in the calculation of the
Purchase Price. To the extent the amount accrued for any Taxes as of the Closing Effective
Date exceeds the actual amount of such Taxes that are due and payable for periods ending on
or 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 promptly
notify Purchaser in writing of any written notice of a proposed assessment or claim in a
contest (“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 Affiliates
is a member, Seller shall control all such Contests in connection therewith. Prior to the
Closing Date, Seller shall control all Contests relating to non-Consolidated Returns of the
Company. After the Closing Date, in the case of a Contest that relates to a non-Consolidated
Return of the Company (or any item relating thereto or reported thereon) for a Taxable Period
ending on or before or that includes the Closing Effective Date, Seller shall have the right
at its expense to control the conduct of such Contest, and for all Taxable Periods
thereafter, Purchaser shall control such Contests. If Seller does not assume the defense of
any such Contest for a Taxable Period ending on or before or that includes the Closing
Effective 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 written
notice to Seller setting forth the terms and conditions of settlement. In the event of a
Contest covered by the third sentence of this paragraph, that involves issues relating to a
potential adjustment
for which Seller has



29









 







liability and that are required to be dealt with in a proceeding
that also involves separate issues relating to a potential adjustment for which Purchaser
would be liable, Purchaser shall have the right, at its expense, to control the Contest but
only with respect to the latter issues.




     (c) With respect to issues relating to a potential adjustment relating to
non-Consolidated Returns (or any item relating thereto or reported thereon) for which both
Seller 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 any
Contest without the prior consent of Seller if such settlement would result in an increase in
the indemnification obligation of Seller pursuant to this Agreement or if such settlement
would alter a tax position previously taken by the Seller. The principle set forth in the
immediately preceding sentence shall govern also for purposes of deciding any issue that must
be decided jointly (including, without limitation, choice of judicial forum) in situations in
which 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 any
claim pursuant to any Contest which would adversely affect the other party for such year or a
subsequent year without the written consent of the other party, which consent may not be
unreasonably withheld. Purchaser and Seller agree to cooperate, and Purchaser agrees to
cause the Company to cooperate, in the defense against or compromise of any claim in any
Contest.




          6.4. Time of Payment. Payment of any amounts due under this Article 6 in respect of
Taxes shall be made (i) in the case of Tax Returns that are required to be filed by either
Purchaser or Seller, as the case may be, after the Closing Date, no later than the due date of the
applicable Tax Return that shows Taxes due for which the other party is responsible under Section
6.1(a) and 6.1(b) and (ii) in all other cases within three (3) Business Days following an agreement
between Seller and Purchaser that an indemnity amount is payable, or a “determination” having been
made as such term is defined in Section 1313(a) of the Code. If liability under this Article 6 is
in respect of costs or expenses other than Taxes, payment of any amounts due under this Article 6
shall be made within five (5) Business Days after the Date when the relevant entity has been
notified that such entity has a liability for a determinable amount under this Article 6 and is
provided with calculations or other materials supporting such liability.




          6.5. Cooperation and Exchange of Information. Seller and Purchaser shall (i) each
provide the other, and Purchaser shall cause the Company to provide Seller, with such assistance as
may 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 proceedings
relating to liability for Taxes, (ii) each retain and provide the other, and Purchaser shall cause
the Company to retain and provide Seller, with any records of other information which may be
relevant to such Tax Return, Audit or examination, proceeding or determination, and (iii) each
provide the other with any final determination of any such Audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax Return of the other for any
Period. Without limiting the generality of the foregoing, Purchaser shall retain, and shall cause
the Company to retain, and Seller shall retain, until the applicable statutes of limitation
(including any extension) have



30









 




expired, copies of all Tax Returns, supporting work schedules and
other records or information which may be relevant to such returns for all Taxable Periods or portions thereof
ending before or including the Closing Effective Date and shall not destroy or otherwise dispose of
any such records without first providing the other party with a reasonable opportunity to review
and copy same.




          6.6 Transfer Taxes. Seller shall bear the cost of any documentary, stamp, stock
transfer or similar transfer Tax payable with respect to the transfer of the Triumphe Shares to the
Purchaser.



          6.7 Miscellaneous.




     (a) Seller and Purchaser agree to treat all payments made by either of them to or for
the benefit of the other (including any payments to the Company) under this Article 6, under
other indemnity provisions of the Agreement and for any misrepresentations or breaches of
warranties or covenants as adjustments to the Purchase Price or as capital contributions, as
the case may be, for Tax purposes and that such treatment shall govern for all purposes
hereof except to the extent that the laws of a particular jurisdiction provide otherwise, in
which case such payments shall be made in an amount sufficient to indemnify the relevant
party on an after-Tax basis.




     (b) For purposes of this Article 6, all Taxes of the Company for all pre-Closing
periods 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 Closing
Date by:




     (a) the mutual written consent of the Parties;




     (b) either Party, by written notice to the other Party, if the Closing shall not have
occurred on or before January 3, 2006, provided, however, that this
Agreement may not be terminated pursuant to the foregoing provision if the Parties are
proceeding 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 of
the 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 have
been timely made, are being prosecuted in good faith and have not been denied; or (ii) the
parties are engaged in arbitration as contemplated by Article 2 hereof. Notwithstanding the
provisions of this subsection (b), if the failure to close the transactions contemplated by
this Agreement within the time periods mentioned above is attributable to a Party’s
malfeasance or the breach of any



31









 







of its covenants hereunder such Party will not be entitled
to terminate this Agreement pursuant to this subsection (b);




     (c) either Party, at any time after the final refusal to consent to the transfer of the
Triumphe 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 of
the other Party (or, additionally in the case of Seller, the Company) hereunder and such
breach shall not have been remedied within fifteen (15) days after the receipt from the
non-breaching Party of a notice in writing specifying the nature of such breach and
requesting 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 in
bankruptcy, or is adjudicated bankrupt or insolvent, or if any receiver is appointed for its
business or property, or if any trustee in bankruptcy or insolvency shall be appointed under
the laws of the United States government or of the several states, and such receiver or
trustee 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 this
Agreement, 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 become
null and void and of no further force and effect and all rights and liabilities of the Parties
hereunder 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 respect
to 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 warranties
made by the Parties in this Agreement or pursuant to the Disclosure Schedules, or any other
schedule, certificate, instrument or document delivered pursuant to this Agreement shall survive
the execution and delivery of this Agreement, any examination by or on behalf of the Parties hereto
and 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) and
3.1.17 (No Employee Claims) shall terminate upon the expiration of the applicable statute of
limitations period (including extensions thereof) for any claims made in respect of the matters
referred to in such Sections and provided, further, that the representations and
warranties 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 and
remain in effect indefinitely. Any and all



32









 







covenants and agreements contained herein shall survive
until performed pursuant to the terms hereof or waived. Notwithstanding the foregoing, any
covenant, representation or warranty as to which a claim shall
have been instituted prior to the applicable expiration date as herein provided shall continue to
survive 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) “indemnifying
party” 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 reasonable
attorneys’ fees and expenses and court costs).



     8.3. Indemnity.




     (a) Seller hereby indemnifies Purchaser, its Affiliates (including the Company) and
their respective directors, officers, employees and agents, and holds such parties harmless
from and against and in respect of, and shall on demand pay or reimburse Purchaser, its
Affiliates (including the Company) and their respective directors, officers, employees and
agents, for, Indemnifiable Losses, whether or not 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 Seller or the Company contained in this
Agreement, (ii) the nonperformance, partial or total, of any covenant or agreement
of Seller or the Company contained in this Agreement, or (iii) the matters described on
Disclosure Schedule 8.3, as such schedule may be amended by mutual agreement of the Parties
from time to time as a result of Purchaser’s due diligence following the date of this
Agreement.




     (b) Purchaser hereby indemnifies Seller and its Affiliates, and their respective
directors, officers, employees and agents, and holds such parties harmless from and against
and in respect of, and shall on demand pay or reimburse Seller and its Affiliates, and their
respective directors, officers, employees and agents, for Indemnifiable Losses, whether or
not 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 Purchaser
contained in this Agreement, (ii) the nonperformance, partial or total, of any covenant or
agreement of Purchaser contained in this Agreement, or (iii) the operation of the Company
after the Closing Date (including but not limited to any act or omission by Purchaser or its
representatives (including but not limited to the Company after the Closing) that directly
causes a draw to be presented against any letter of credit issued on behalf of any Affiliate
of the Seller with respect to the business operations of the Company), except to the extent
attributable to any pre-Closing conduct of the business by Seller or the Company.




     (c) Notwithstanding anything herein to the contrary, Seller shall not be liable
hereunder for any amounts in excess of the Purchase Price.



33









 






     (d) Purchaser shall be entitled to indemnification hereunder only when the aggregate of
the Indemnifiable Losses exceeds $ 25,000 (the “Deductible Amount”), whereupon
Purchaser shall be entitled to indemnification for all Indemnifiable Losses in excess of the
Deductible Amount.



          8.4. Third Party Claims. If a claim by a third party is made against a party
indemnified pursuant to this Article 8, and if such indemnified party intends to seek indemnity
with respect thereto under this Article 8, the indemnified party shall promptly (and in any case
within 10 days after the indemnified party receives notice of such claim being made) notify the
indemnifying party of such claim; provided, however, that any failure of the
indemnified party to notify promptly the indemnifying party of such claim shall not relieve the
indemnifying party of its obligations pursuant to this Article 8 except to the extent that the
indemnifying party would be actually prejudiced under this Article 8 in any way as a result of such
failure. 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 good
faith, expeditiously, and diligently and (ii) provides the indemnified party a written
undertaking reasonably acceptable as to form to the indemnified party (A) to absolutely and
unconditionally, irrespective of any defense based on this Article 8 or otherwise, pay promptly the
full amount of any final judgment with respect to such claim and (B) to post any necessary bonds or
other security required in order to stay any judgment pending an appeal in the event that the
indemnifying party shall elect to prosecute such appeal; the indemnified party shall cooperate with
the indemnifying party or parties electing to defend in connection therewith, provided that the
indemnifying party shall permit the indemnified party or parties to participate in such settlement
or defense through counsel chosen by the indemnified party, provided that (except as provided
below) the fees and expenses of such counsel shall be borne by the indemnified party. Without the
prior written consent of the indemnified party, which consent shall not unreasonably be withheld or
delayed, the indemnifying party will not enter into any settlement of any such claim. If the
indemnifying party does not serve on the indemnified party by certified mail, postage prepaid,
return receipt requested (or nationally-recognized overnight courier, delivery confirmed), a
written notice of its intention to defend or does not commence to contest any matter within 10
Business 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 to
this Article 8 or fails to deliver the undertaking described above, the right to defend such claim
shall be deemed waived, and the indemnified party shall have full right and power to defend or
otherwise deal with, settle and dispose of the matter (and shall be indemnified for the fees and
expenses of counsel retained for such purpose); provided, however, that the
indemnified party or parties will not enter into any settlement or pay (except pursuant to a final
court order or judgment) any such claim without the prior written consent of the indemnifying
party, 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 the
prior written consent of the indemnifying party, provided that in such event such party or parties
shall waive any right to indemnity therefor by the indemnifying party.



          8.5 Indemnity Payments. The amount of any Indemnifiable Losses for which
indemnification is provided under this Article 8 shall be (i) net of (y) any amounts recovered or
recoverable by an indemnified party pursuant to any indemnification agreement with any third party,



34









 







other than any insurance policy, and (z) any insurance proceeds (net of associated incremental
premiums) available as an offset against such Indemnifiable Losses and (ii) increased to take
account of any net tax cost incurred by any indemnified party arising from the receipt or accrual
of indemnity payments hereunder and reduced to take account of any net tax benefit realized by any
indemnified party from the incurrence or payment of any such Indemnifiable Loss.



          8. 6. Exclusive Remedy. Other than with respect to Taxes, the indemnities provided
for in this Article 8 shall be the sole and exclusive remedies of the Purchaser, the Company or the
Seller, 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 respect
of fraud or intentional misrepresentation or omission by the other Party in connection herewith or
the transactions contemplated hereby or the rights of such Party to such equitable remedies as may
be available.



          8.7 Miscellaneous. The rights of each indemnified party under this Article 8 are
cumulative, and each such Person shall have the right in any particular circumstance, in its sole
discretion, to enforce any provision of this Article 8 without regard to the availability of a
remedy under any other provision of this Article 8. Seller hereby agrees that it shall not make
any claim for indemnification against the Purchaser or Company by reason of the fact that Seller
was a controlling person or representative of Company or was serving as such for another Person at
the request of Purchaser or Company with respect to any claim brought by Purchaser (or another
indemnified party) against Seller relating to this Agreement or the transactions contemplated
hereby, and Seller expressly waives any right of subrogation, contribution, advancement,
indemnification or other claim against Company with respect to any amounts owed by Seller pursuant
to this Article 8.



ARTICLE 9




MISCELLANEOUS




          9.1. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered by nationally-recognized overnight courier
service or by first-class registered or certified mail, postage prepaid, return receipt requested,
addressed:




     if to Seller:



Triumphe Insurance Holdings, LLC

c/o Volvo Commercial Finance

7025 Albert Pick Road, Suite 105

Greensboro, NC 27409

Attn: General Counsel/Legal Department




35









 






     if to Purchaser:



National Interstate Insurance Company

3250 Interstate Drive

Richfield, OH 44286-9000

Attention: General Counsel



Seller or Purchaser may designate another addressee or change its address for notices and other
communications hereunder by a notice given to the other Party in the manner provided for herein.




          9.2. Entire Agreement. This Agreement (including all exhibits and Disclosure
Schedules) supersedes all prior discussions and agreements between the Parties with respect to the
subject matter hereof, and contains the sole and entire agreement between the parties hereto with
respect to the subject matter hereof (except to the extent that the Confidentiality Agreement
described in Article VII hereof will survive in the event that this Agreement is terminated prior
to Closing).



          9.3. Expenses. Except as otherwise expressly provided in this Agreement, whether or
not the transactions contemplated hereby are consummated, each Party will pay its own costs and
expenses incurred in connection with the negotiation, execution and closing of this Agreement and
the transactions contemplated hereby.



          9.4. Public Announcements. At all times at or before the Closing, Seller and
Purchaser will not issue or make any reports, statements or releases to the public with respect to
this Agreement or the transactions contemplated hereby without the consent of the other. If either
party is unable to obtain the approval of its public report, statement or release from the other
party and such report, statement or release is, in the opinion of legal counsel to such party,
required by law in order to discharge such party’s disclosure obligations, then such party may make
or issue the legally required report, statement or release and promptly furnish the other party
with a copy thereof. Seller and Purchaser will also obtain the other party’s prior approval of any
press release to be issued immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement, such approval not to be unreasonably withheld.
Thereafter the provisions of this Section 9.4 shall cease to apply to Seller and Purchaser.



          9.5. Waiver; Construction.




     (a) Any term or condition of this Agreement may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective unless set forth
in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term
or condition of this Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not alternative. The
Parties intend that each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached or violated, or if there is an
inaccuracy in, any representation, warranty, or covenant contained herein in any respect,
the fact that



36









 







there exists another representation, warranty, or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the party has
not breached or violated, or in respect of which there is not an inaccuracy, shall not
detract from or mitigate the fact that the party has breached or violated, or there is an
inaccuracy in, the first representation, warranty or covenant.




     (b) Neither the listing nor description of any item, matter, or document in any
Disclosure Schedule hereto nor the furnishing or availability for review of any document
shall be construed to modify, qualify or disclose an exception to any representation or
warranty of any party
made herein or in connection herewith, except to the extent that such representation or
warranty specifically refers to such Disclosure Schedule and such modification,
qualification or exception is clearly described in such Disclosure Schedule.



          9.6. Amendment. This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.



          9.7. No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon
any other Person.



          9.8. No Assignment; Binding Effect. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the prior written consent of the
other party hereto and any attempt to do so will be void, except for assignments and transfers by
operation of law, and except that Purchaser may assign all of its rights hereunder to one or more
entities, 100% of the interests in which are owned directly or indirectly by Purchaser or National
Interstate Corporation (“Parent”), provided Purchaser remains liable for all obligations of
“Purchaser” hereunder and Parent’s undertaking set forth below remains in full force and effect.
Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.



          9.9. Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.



          9.10. Invalid Provisions. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, under any present or future law, and if the rights or obligations of any
party hereto under this Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.



37









 





          9.11. Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will constitute one and the
same instrument.



          9.12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without giving effect to the provisions thereof
relating to conflicts of law. The Parties each irrevocably submit to the non-exclusive
jurisdiction of any Pennsylvania State or United States Federal court sitting in the County of
Dauphin over any suit, action or proceeding arising out of or relating to this Agreement. The
Parties each irrevocably waive, to the fullest extent permitted by law, any objection which they
may now or hereafter have to the laying of the venue of any such proceeding brought in any such
court and any claim that any such proceeding brought in such court has been
brought in an inconvenient forum. The Parties each agree that final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding on it and may be
enforced in any court to the jurisdiction of which it is subject by a suit upon such judgment.



          9.13. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.13.



          9.14 Specific Performance. Each of the parties acknowledges and agrees that the other
party would be damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached or violated.
Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other
party shall be entitled to an injunction or injunctions to prevent breaches or violations of the
provisions of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or any state thereof
having jurisdiction over the parties and the matter in addition to any other remedy to which it may
be entitled, at law or in equity. Each party further agrees that, in the event of any action for
specific performance in respect of such breach or violation, it shall not assert that the defense
that a remedy at law would be adequate.



38









 





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



	 	 	 	 	 
	 	NATIONAL INTERSTATE INSURANCE COMPANY

 	 
	 	By:  	/s/ Gary N. Monda
 	 
	 	 	Title: Vice President 	 
	 	 	 	 
	 



Undertaking of National Interstate Corporation



National Interstate Corporation, an Ohio corporation and the Parent of Purchaser, acting by and
through its duly-authorized officer, joins in the execution of this Agreement for the exclusive
purpose of guaranteeing to Purchaser the timely payment of Purchaser’s obligations with respect to
Indemnifiable Losses as provided in Article 8 of this Agreement.




	 	 	 	 	 
	 	NATIONAL INTERSTATE CORPORATION

 	 
	 	By:  	/s/ Paul F. Haffner
 	 
	 	 	Title: Vice President 	 
	 	 	 	 
	 



[Signatures Continue on Following Page]




39









 






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



	 	 	 	 	 
	 	TRIUMPHE INSURANCE HOLDINGS LLC

 	 
	 	By:  	/s/ Larry A. Weisberg
 	 
	 	 	Title:  Larry A. Weisberg, President 	 
	 	 	 	 
	 



Undertaking of VFS US LLC



VFS US LLC, a Delaware Limited Liability Company and Affiliate of Seller, acting by and through its
duly-authorized officer, joins in the execution of this Agreement for the exclusive purpose of
guaranteeing to Purchaser the timely payment of Seller’s obligations with respect to Indemnifiable
Losses as provided in Article 8 of this Agreement.




	 	 	 	 	 
	 	VFS US LLC

 	 
	 	By:  	/s/ Teresa D. Davidson
 	 
	 	 	Title:  Teresa D. Davidson, Vice President 	 
	 	 	 	 
	 




40









 








EXHIBITS






Exhibit A        —        Escrow Agreement



 









 





DISCLOSURE SCHEDULES




	 	 	 
	Schedules	 	 
	1.1

	 	Officers of Seller
	 
	 	 
	1.2

	 	Officers of Purchaser
	 
	 	 
	2.2

	 	Contingent Liabilities
	 
	 	 
	3.1.3

	 	Permitted Liens
	 
	 	 
	3.1.4

	 	Seller Consents
	 
	 	 
	3.1.5

	 	Financial Statements; Assets
	 
	 	 
	3.1.6

	 	Liabilities
	 
	 	 
	3.1.7

	 	Litigation
	 
	 	 
	3.1.9

	 	Insurance Regulation
	 
	 	 
	3.1.10

	 	Taxes
	 
	 	 
	3.1.11

	 	Certain Changes
	 
	 	 
	3.1.13

	 	Conduct of Operations
	 
	 	 
	3.1.18

	 	Contracts
	 
	 	 
	3.1.19

	 	Powers of Attorney and Suretyship
	 
	 	 
	3.2.3

	 	Purchaser Consents
	 
	 	 
	5.7(b)(ii)

	 	Policy and Claims Summary for Programs in Runoff
	 
	 	 
	8.3

	 	Indemnifiable Losses






 









 






Exhibit A




ESCROW AGREEMENT





     This
Escrow Agreement (this “Agreement”) is made and
entered into as of [    ],
2005, by and among TRIUMPHE INSURANCE HOLDINGS LLC, a Delaware limited liability company
(“Seller”), NATIONAL INTERSTATE INSURANCE COMPANY, an Ohio corporation
(“Purchaser”), and KEYBANK NATIONAL ASSOCIATION, a national banking association, as escrow
agent (the “Escrow Agent”).




     WHEREAS, Seller and Purchaser have entered into a Stock Purchase Agreement, dated as of
September 30, 2005 (the “Purchase Agreement”), pursuant to which, among other things,
Seller has agreed to sell, and Purchaser has agreed to purchase, all of the Triumphe Shares.
Seller and Purchaser are required under the terms of the Purchase Agreement to enter into this
Agreement;




     WHEREAS, this Agreement sets forth the rights and obligations of Seller, Purchaser, and the
Escrow Agent concerning the opening, administration, and closing of the escrow account required to
be established pursuant to the Purchase Agreement; and




     WHEREAS, capitalized terms used but not otherwise defined in this Agreement shall have the
meanings ascribed to such terms in the Purchase Agreement.




     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller, Purchaser, and the Escrow Agent hereby agree as follows:




1.The Escrow Account.




1.1 Establishment of the Escrow Account. No later than November 30, 2005, Purchaser shall deposit with
the Escrow Agent the Closing Payment in immediately available funds (the “Escrow Amount”).
The Escrow Amount and all interest and earnings accrued on the Escrow Amount are hereinafter called
the “Escrow Funds.” The Escrow Funds shall be held and applied by Escrow Agent in accordance with
the terms set forth in this Agreement.




1.2 Investment of the Escrow Funds; Notice of Receipt; Information. The Escrow Agent shall, immediately
upon receipt of the Escrow Amount: (a) deposit the Escrow Amount in a separate account maintained
by the Escrow Agent; and (b) provide written notice to Seller and Purchaser of the Escrow Agent’s
receipt of the Escrow Amount. The Escrow Agent shall invest the Escrow Amount in money market
instruments. Any interest and earnings on the Escrow Funds shall, until disbursed in accordance
with the terms of this Agreement, be reinvested by the Escrow Agent in the same manner as the
Escrow Amount. Except as set forth in Section 2.2 of the Purchase Agreement, interest and earnings
on the Escrow Funds shall inure to the benefit of Seller and accrue in the escrow account so long
as any unpaid portion of the Purchase Price remains in the escrow account for the benefit of
Seller. The Escrow Agent shall inform Seller and Purchaser about the state of the Escrow Funds,
and the interest and earnings thereon, upon the written request of Seller or Purchaser.




2. Disbursement of the Escrow Funds. The disbursement of the Escrow Funds is governed by Article 2
and Section 7.2 of the Purchase Agreement. If the parties agree upon the Purchase Price by
November 30, 2005, then the parties shall proceed to Closing. Should the final Purchase Price
agreed
upon by the parties be a positive value and less than the Escrow Amount, the Purchase Price plus
accrued interest specifically attributable to the Purchase Price



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will be released to Seller at
Closing, with the remaining escrow balance returned to Purchaser at Closing. Should the Purchase
Price be a positive value and greater than the Escrow Amount, then at Closing the entire escrow
(Escrow Amount plus all accrued interest) will be released to Seller, and Purchaser will
concurrently make a payment to Seller in immediately available funds in an amount equal to the
Purchase Price less the Escrow Amount. Should the Purchase Price be a negative value, the entire
escrow (Escrow Amount plus all accrued interest) will be immediately released to Purchaser, and
Seller will make a payment to Purchaser in immediately available funds in an amount equal to the
amount the Purchase Price is below zero dollars.




     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 to binding arbitration in
Harrisburg, Pennsylvania under the rules and procedures of the American Arbitration Association to
determine the final Purchase Price. Should the final Purchase Price determined by the Arbitrator’s
Order be a positive value and less than the Escrow Amount, the Purchase Price plus accrued interest
specifically attributable to the Purchase Price will be immediately released to Seller, with the
remaining escrow balance returned to Purchaser. Should the Purchase Price be a positive value and
greater than the Escrow Amount, the entire escrow (Escrow Amount plus all accrued interest) will be
immediately released to Seller, and Purchaser will make a payment to Seller in immediately
available funds in an amount equal to the Purchase Price less the Escrow Amount. Should the
Purchase Price be a negative value, the entire escrow (Escrow Amount plus all accrued interest)
will be immediately released to Purchaser, and Seller will make a payment to Purchaser in
immediately available funds in an amount equal to the amount the Purchase Price is below zero
dollars. The balances shall be settled by either party as the case may be within fifteen (15) days
of the arbitration award. All fees and expenses of the arbitration shall be borne equally between
Seller and Purchaser. For purposes of clarity, such fees and expenses shall not include the
parties’ respective legal and accounting fees, which shall be the obligations of the respective
parties contracting for any such services.




3. Release of the Escrow Funds. The release of the Escrow Funds is governed by Article 2 and Section
7.2 of the Purchase Agreement. The Escrow Funds shall be released no later than the later of (i)
the Closing, or (ii) if the Purchase Price is not determined as of the Closing Date, then pursuant
to the Arbitrator’s Order. The Escrow Agent will disburse funds upon receipt of joint written
instructions executed by Purchaser and Seller or written instructions received from Arbitrator.
Escrow Agent will not be responsible for determining or calculating amounts to be disbursed.




4. General Provisions.




4.1 Records. The Escrow Agent shall maintain a record of all amounts deposited in the escrow account,
all interest and earnings on the Escrow Funds, and all disbursements made by it. The Escrow Agent
shall, upon reasonable request, make such records available to Seller and Purchaser for inspection
during normal business hours.




4.2 Limitation of the Escrow Agent’s Responsibility. In making disbursements under this Agreement, the
Escrow Agent shall not be required to use any funds other than the Escrow Funds, and the interest
and earnings thereon. The duties and obligations of the Escrow Agent hereunder shall be determined
solely pursuant to the express provisions of this Agreement.




4.3 Conditions of the Escrow Agent’s Obligations.




     (a) The Escrow Agent shall be entitled to rely, and shall be protected in acting in reliance,
upon any instructions or directions furnished to it in writing by Seller and/or Purchaser



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pursuant
to any provisions of this Agreement and shall be entitled to reasonably treat any such instruction
or direction as genuine and as the document it purports to be; provided that any disbursements
pursuant to Section 2 hereof and Section 2.2 of the Purchase Agreement shall be made only upon
joint written instructions of the Seller and Purchaser as contemplated by Section 4.5 hereof or the
Arbitrator’s Order. The Escrow Agent shall not be liable, except for its gross negligence or
willful misconduct and, except with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against the Escrow Agent, the other parties hereto shall
jointly and severally indemnify and hold harmless the Escrow Agent (and any successor escrow agent)
from and against any and all losses, liabilities, claims, actions, damages, and expenses, including
reasonable attorneys fees and disbursements, arising out of or in connection with this Agreement.




     (b) The Escrow Agent shall be entitled to a fee of One Thousand Dollars ($1,000.00) for its
services under this Agreement. The fee of the Escrow Agent shall be borne equally between Seller
and Purchaser.




     (c) The Escrow Agent may resign by giving Seller and Purchaser not less than seven (7) days
advance written notice of its intention to do so; provided, however, that the Escrow Agent shall
continue to serve until Seller and Purchaser shall have appointed a successor escrow agent. The
Escrow Agent may be removed and replaced following the giving of not less than seven (7) days prior
written notice to the Escrow Agent by both Seller and Purchaser.




4.4 Termination of this Agreement. This Agreement shall terminate, and the obligations of the Escrow
Agent under this Agreement shall be discharged, upon the disbursement of all of the Escrow Funds
and all interest and earnings thereon.




4.5 Joint Written Instructions. Notwithstanding any other provision of this Agreement, the Escrow
Agent shall at all times act with respect to the holding and disposition of the amounts held in the
escrow account in accordance with any joint written instructions signed on behalf of both Seller
and Purchaser which may include a copy of the signed Purchase Agreement.




4.6 Notices. All notices and other communications under this Agreement shall be given in accordance
with Section 9.1 of the Purchase Agreement, and shall be deemed to have been given as provided
therein, to the addresses of Seller and Purchaser as provided therein and to the following address
and facsimile number of the Escrow Agent:



KeyBank National Association

127 Public Square

Corporate Escrow Dept., 14th Floor

Cleveland, Ohio 44114

Attn: Terrence J. Stone

Facsimile: (216) 689-3777




     4.7 Governing Law; Modification; Binding Effect; Assignment.




    (a) The construction, validity and performance of this Agreement and all disputes, claims and
matters between the parties relating to this Agreement shall be governed in all respects by the
substantive laws of the state of Pennsylvania.




    (b) None of the terms or conditions of this Agreement may be changed, waived, modified, or
varied in any manner whatsoever unless made in a writing duly signed by Seller,



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Purchaser, and the
Escrow Agent. As between Seller and Purchaser, in the case of any inconsistency between the terms
of this Agreement and the terms of the Purchase Agreement, the terms of the Purchase Agreement
shall control.




    (c) This Agreement will be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided that, neither Purchaser nor Seller may assign,
delegate, or otherwise transfer any of their rights or obligations under this Agreement without the
written consent of the other party; provided, however, that Purchaser may assign, delegate, or
otherwise transfer its rights and obligations under this Agreement to an Affiliate of Purchaser to
which the Purchase Agreement has been rightfully assigned without the written consent of Seller.
Such an assignment, delegation or other transfer will not, however, release Seller or Purchaser
from any of its obligations under this Agreement. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to confer upon or
give to any third party any rights or remedies under or by reason of this Agreement.




4.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which shall together constitute but one and the same
instrument.




4.9 Escrow Agent Remedies.




        (a) In the event of any ambiguity or uncertainty under this Agreement or in any notice,
instruction or other communication received by the Escrow Agent hereunder, the Escrow Agent shall
refrain from taking any action other than retaining possession of and investing the Escrow Funds,
until the Escrow Agent receives joint written instructions, signed by Seller and Purchaser, which
eliminates such ambiguity or uncertainty.




        (b) In the event of any dispute between or conflicting claims by or between Seller and
Purchaser and/or any other person or entity with respect to any Escrow Funds, the Escrow Agent
shall refuse to comply with any and all claims, demands or instructions with respect to such Escrow
Funds so long as such dispute or conflict shall continue, and the Escrow Agent shall not be or
become liable in any way to Seller or Purchaser for failure or refusal to comply with such
conflicting claims, demands or instructions. The Escrow Agent shall refuse to act until such
conflicting or adverse claims or demands shall have been determined (i) pursuant to terms of this
Agreement or Article 2 or Section 7.2 of the Purchase Agreement by a final order, judgment or
decree of a court or arbitration tribunal of competent jurisdiction, which order, judgment or
decree is not subject to appeal; or (ii) settled by agreement between the conflicting parties as
evidenced in a written document signed by both Seller and Buyer and reasonably satisfactory to the
Escrow Agent.




        (c) The Escrow Agent may elect, in its sole discretion, to commence an interpleader action or
seek other judicial relief or orders as it may deem, in its sole discretion, necessary; provided
that the Escrow Agent shall not commence such an action until Seller and Purchaser have had a
reasonable amount of time in which to resolve such conflict, adverse claims or demands pursuant to
the terms of this
Agreement and the Purchase Agreement.




4.10 Legal Requirements. Seller and Purchaser shall provide the Escrow Agent with any and all documents
and information that the Escrow Agent requires to fulfil its legal obligations under any applicable
law with respect to this Agreement.



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[signatures follow on the next page]




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     IN WITNESS WHEREOF, Seller and Purchaser have each executed this Agreement as of the date
first written above.



	 	 	 	 	 
	 	TRIUMPHE INSURANCE HOLDINGS LLC

 	 
	 	By:  	
 	 
	 	 	Name:  		 
	 	 	Title:  		 
	 



	 	 	 	 	 
	 	NATIONAL INTERSTATE INSURANCE COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  		 
	 	 	Title:  		 
	 




     The Escrow Agent hereby agrees to be bound by the terms of this Agreement and to hold, invest
and disburse all amounts deposited with it hereunder in accordance with the terms and conditions
set forth in this Agreement.



	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION,

as the Escrow Agent

 	 
	 	By:  	
 	 
	 	 	Name:  		 
	 	 	Title:  		 
	 




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