Document:

EXHIBIT 10.1
                      AGREEMENT AND PLAN OF REORGANIZATION
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                      Agreement and Plan of Reorganization

                                 by and between
                       Southern Group International, Inc.
                              a Florida corporation
                                       and
                               National Coal Corp.
                             a Tennessee corporation

                              dated: April 11, 2003

<PAGE>
                      AGREEMENT AND PLAN OF REORGANIZATION

                       Southern Group International, Inc.
                                       and
                               National Coal Corp.

     This Agreement and Plan of Reorganization ("Agreement"),  dated as of April
11, 2003, among Southern Group International, Inc. (SGI), a Florida Corporation,
National  Coal Corp.  ("NCC"),  a  Tennessee  Corporation,  and the  subscribing
shareholders  of National  Coal Corp.  ("NCC  Shareholders")  who will join this
Agreement by execution.

                              W I T N E S S E T H:

     A. WHEREAS,  NCC and SGI are corporations  duly organized under the laws of
the State of Tennessee and Florida, respectively.

     B. Plan of Reorganization.  The subscribing NCC Shareholders are the owners
of at least  100%of the issued and  outstanding  common  stock of NCC. It is the
intention that 100% of the issued and outstanding stock of NCC shall be acquired
by SGI in exchange solely for its voting stock.  For federal income tax purposes
it is intended that this exchange shall qualify as a  reorganization  within the
meaning of SEC 368  (a)(1)(B) of the Internal  Revenue Code of 1986,  as amended
(the "Code").

     C. Exchange of Shares.  SGI and the subscribing NCC Shareholders agree that
100% of the  17,100,000  common  shares issued and  outstanding  of NCC shall be
exchanged  with SGI for  34,200,000  shares of the common  stock of SGI. The SGI
shares,  on  the  closing  date,  shall  be  delivered  ratably  divided  to the
individual  subscribing  shareholders of NCC in exchange for their NCC shares as
hereinafter set forth.

     D. WHEREAS, the parties hereto wish to enter into this Agreement,  pursuant
to the provisions of the Florida Business Corporation Act.

     NOW, THEREFORE, it is agreed among the parties as follows:

                                    ARTICLE I

                                The Consideration

     1.1 Subject to the conditions set forth herein on the "Effective  Date" (as
herein defined), the subscribing Shareholders of NCC shall exchange all of their
shares of NCC  (constituting at least 100% of the issued and outstanding  common
stock of NCC) for

<PAGE>

34,200,000  common shares of SGI common stock. The transactions  contemplated by
this  Agreement  shall be completed at a closing  ("Closing")  on a closing date
("Closing  Date") which shall be as soon as  practicable  after  joinder in this
exchange by NCC Shareholders  holding 100% of the outstanding NCC common shares,
except that such transaction must be completed on or before May 31, 2003 or this
Agreement shall expire unless extended in writing.

     On the Closing  Date,  all of the documents to be furnished to SGI and NCC,
including  the  documents  to be  furnished  pursuant  to  Article  VII of  this
Agreement,  shall be delivered to M.A.  Littman,  to be held in escrow until the
Effective  Date or the date of termination of this  Agreement,  whichever  first
occurs,  and  thereafter  shall be promptly  distributed to the parties as their
interests may appear.

     1.2 At the Effective  Date,  NCC shall become a wholly owned  subsidiary of
SGI.  Shareholders  shall  receive  pro rata  shares of voting  common  stock as
follows:

               SGI shall issue 34,200,000 of its shares of common stock for 100%
               of the  outstanding  common  shares  of  NCC  to the  subscribing
               shareholders of NCC, ratably according to their interests.

     1.3 If  this  Agreement  is duly  executed  by the  holders  of 100% of the
outstanding  common stock of NCC,  subject to the other  provisions  hereof,  it
shall become effective,  and such date of final execution shall be the effective
date of this Agreement.

                                   ARTICLE II

                         Issuance and Exchange of Shares

     2.1 The shares of $.001 par value common stock of SGI shall be issued by it
to the subscribing NCC shareholders at Closing.

     2.2 SGI represents that no outstanding options or warrants for its unissued
shares exist.

     2.3 The stock transfer books of NCC shall be closed on the Effective  Date,
and thereafter no transfers of the stock of NCC shall be made. NCC shall appoint
an exchange agent  ("Exchange  Agent"),  to accept surrender of the certificates
representing  the common  shares of NCC,  and to deliver  in  exchange  for such
surrendered  certificates,  shares of common stock of SGI. The  authorization of
the  Exchange  Agent may be  terminated  by SGI after six months  following  the
Effective Date. Upon  termination of such  authorization,  any shares of NCC and
any funds held by the Exchange Agent for payment to NCC shareholders pursuant to
this Agreement  shall be  transferred  to SGI or its designated  agent who shall
thereafter  perform  the  obligations  of the  Exchange  Agent.  If  outstanding
certificates for shares of NCC are not surrendered or the payment

<PAGE>

for them not claimed prior to such date on which such payments  would  otherwise
escheat to or become  the  property  of any  governmental  unit or  agency,  the
unclaimed items shall, to the extent  permitted by abandoned  property and other
applicable  law,  become  the  property  of SGI  (and to the  extent  not in its
possession  shall be paid over to it),  free and clear of all claims or interest
of any persons previously entitled to such items. Notwithstanding the foregoing,
neither the Exchange  Agent nor any party to this  Agreement  shall be liable to
any holder of NCC shares for any amount paid to any governmental  unit or agency
having jurisdiction of such unclaimed item pursuant to the abandoned property or
other applicable law of such jurisdiction.

     2.4 No  fractional  shares of SGI stock  shall be issued as a result of the
Agreement. Shares issued in exchange shall be rounded up to nearest whole share.

     2.5 At the Effective  Date,  each holder of a certificate  or  certificates
representing  common  shares of NCC,  upon  presentation  and  surrender of such
certificate or certificates to the Exchange Agent,  shall be entitled to receive
the  consideration  set forth herein,  except that holders of those shares as to
which dissenters' rights shall have been validly asserted and perfected pursuant
to Tennessee  law shall not be converted  into shares of SGI common  stock,  but
shall represent only such dissenters' rights. Upon such presentation, surrender,
and exchange as provided in this Section 2.5,  certificates  representing shares
of NCC previously  held shall be canceled.  Until so presented and  surrendered,
each certificate or certificates which represented issued and outstanding shares
of NCC at the  Effective  Date shall be deemed for all  purposes to evidence the
right to receive the  consideration  set forth in Section 1.2 of this Agreement.
If the certificates representing shares of NCC have been lost, stolen, mutilated
or destroyed,  the Exchange  Agent shall require the  submission of an indemnity
agreement and may require the submission of a bond in lieu of such certificate.

                                   ARTICLE III

                           Representations, Warranties
                      and Covenants of National Coal Corp.

     No  representations  or  warranties  are  made  by any  director,  officer,
employee  or  shareholder  of NCC as  individuals,  except as and to the  extent
stated in this Agreement or in a separate written statement (the "NCC Disclosure
Statement"), if any. NCC hereby represents, warrants and covenants to SGI except
as stated in the NCC Disclosure Statement, as follows:

     3.1 NCC is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Tennessee,  and has the corporate  power
and authority to own or lease its  properties and to carry on its business as it
is now being conducted.  The Certificate of Incorporation  and Bylaws of NCC are
complete and  accurate,  and the minute books of NCC contain a record,  which is
complete  and  accurate  in all  material  respects,  of all  meetings,  and all
corporate actions of the shareholders and board of directors of NCC.

     3.2 The  aggregate  number of shares  which NCC is  authorized  to issue is
20,000,000  shares of common  stock of which  17,100,000  shares  are issued and
outstanding.

<PAGE>

     3.3 NCC has complete  and  unrestricted  power to enter into and,  upon the
appropriate  approvals  as  required  by law,  to  consummate  the  transactions
contemplated by this Agreement.

     3.4 Neither the making of nor the compliance  with the terms and provisions
of this Agreement and  consummation of the transactions  contemplated  herein by
NCC will  conflict  with or result in a breach or  violation  of the Articles of
Incorporation or Bylaws of NCC.

     3.5 The execution, delivery and performance of this Agreement has been duly
authorized and approved by NCC's Board of Directors.

     3.6 There are no legal  proceedings  or  regulatory  proceedings  involving
material claims pending,  or to the knowledge of the executive  officers of NCC,
threatened against NCC or affecting any of its assets or properties,  and to the
knowledge of NCC' officers, NCC is not in any material breach or violation of or
default under any contract or  instrument to which NCC is a party,  or under its
respective  Articles  of  Incorporation  or  Bylaws,  nor is there  any court or
regulatory order pending, applicable to NCC.

     3.7 The  representations and warranties of NCC shall be true and correct as
of the date hereof and as of the Effective Date.

     3.8 No  representation  or  warranty  by NCC in  this  Agreement,  the  NCC
Disclosure  Statement or any certificate  delivered pursuant hereto contains any
untrue  statement  of a  material  fact or  omits  to state  any  material  fact
necessary to make such representation or warranty not misleading.

                                   ARTICLE IV

                  Representations, Warranties and Covenants of
                       Southern Group International, Inc..

     No  representations  or  warranties  are  made  by any  director,  officer,
employee  or  shareholder  of SGI as  individuals,  except as and to the  extent
stated in this Agreement or in a separate written statement.

     SGI hereby represents,  warrants and covenants to NCC and its shareholders,
except as stated in the SGI Disclosure Statement, as follows:

     4.1 SGI is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Florida, and has the corporate power and
authority to own or lease its  properties  and to carry on its business as it is
now being conducted.  The Articles of Incorporation and Bylaws of SGI, copies of
which have been  delivered to NCC, are  complete  and  accurate,  and the minute
books of SGI contain a record,  which is complete  and  accurate in all material
respects,  of all meetings,  and all corporate  actions of the  shareholders and
Board of Directors of SGI.

     4.2 The  aggregate  number of shares  which SGI is  authorized  to issue is
80,000,000  shares of common stock and 10 million shares of preferred  stock, of
which 1,728,931  shares of such common stock are issued and  outstanding,  fully
paid and non-assessable,  at the Closing under this Agreement. SGI will have, on
the Closing Date, no outstanding options, warrants or other rights to purchase,

<PAGE>

or subscribe to, or securities  convertible  into or exchangeable for any shares
of capital stock. No preferred stock of SGI is outstanding.

     4.3 SGI has complete  and  unrestricted  power to enter into and,  upon the
appropriate  approvals  as  required  by law,  to  consummate  the  transactions
contemplated by this Agreement.

     4.4 Neither the making of nor the compliance  with the terms and provisions
of this Agreement and  consummation of the transactions  contemplated  herein by
SGI will  conflict  with or result in a breach or  violation  of the Articles of
Incorporation or Bylaws of SGI.

     4.5 The execution of this  Agreement has been duly  authorized and approved
by the Board of Directors of SGI.

     4.6 SGI has  delivered  to NCC audited  financial  statements  of SGI dated
December 31, 2002.  Such  statements,  herein  sometimes  called "SGI  Financial
Statements,"  are (and will be) complete  and correct in all  material  respects
and, together with the notes to these financial  statements,  present fairly the
financial  position and results of operations of SGI for the periods  indicated.
All  statements  of SGI will have been  prepared in  accordance  with  generally
accepted accounting principles.

     4.7 Since the dates of the SGI  Financial  Statements,  there have not been
any  material  adverse  changes  in the  business  or  condition,  financial  or
otherwise,  of SGI. SGI does not have any material  liabilities or  obligations,
secured or unsecured  except as shown on the updated SGI dated December 31, 2002
(whether accrued, absolute, contingent or otherwise).

     4.8 There are no legal  proceedings  or  regulatory  proceedings  involving
material claims pending, or, to the knowledge of the officers of SGI, threatened
against SGI or affecting any of its assets or properties,  and SGI is not in any
material  breach or violation of or default  under any contract or instrument to
which SGI is a party,  and no event has occurred which with the lapse of time or
action by a third party could  result in a material  breach or  violation  of or
default by SGI under any contract or other instrument to which SGI is a party or
by which they or any of their respective properties may be bound or affected, or
under their respective  Articles of  Incorporation  or Bylaws,  nor is there any
court or  regulatory  order  pending,  applicable  to SGI.  There are,  however,
several  judgments  which  have been  disclosed  to NCC,  and are  listed on the
disclosure schedule 4.9 attached hereto and made a part hereof.

     4.9 SGI shall not enter into or consummate  any  transactions  prior to the
Effective  Date other than in the  ordinary  course of business  and will pay no
dividend,  or increase the  compensation of officers and will not enter into any
agreement or transaction  which would adversely  affect its financial  condition
except  pursuant  to the  proposed  minutes  of the  Board of  Directors  of SGI
presented herewith for approval by NCC.

<PAGE>

     4.10 The representations and warranties of SGI shall be true and correct as
of the date hereof and as of the Effective Date.

     4.11 SGI corporate  books and records are true records of its actions.  SGI
will also deliver to NCC on or before the Closing  Date any reports  relating to
the financial  and business  condition of SGI which occur after the date of this
Agreement and any other  reports sent  generally to its  shareholders  after the
date of this Agreement.

     4.12 SGI has no employee  benefit plan in effect at this time,  except ESOP
and officers and Directors but no options are outstanding.

     4.13 SGI is current in its filing  obligations under the federal securities
laws.  No  report  filed by SGI  with the  Securities  and  Exchange  Commission
contains any untrue  statement of a material fact or omits to state any material
fact necessary to make such  representation or warranty not misleading,  and all
such reports  comply as to form and substance in all material  respects with all
applicable SEC requirements. .

     4.14 SGI agrees that all rights to indemnification now existing in favor of
the employees,  agents,  directors or officers of NCC and its  subsidiaries,  as
provided in the  Articles of  Incorporation  or Bylaws or otherwise in effect on
the date hereof shall survive the transactions contemplated hereby in accordance
with their terms, and SGI expressly assumes such indemnification  obligations of
NCC.

                                    ARTICLE V

              Obligations of the Parties Pending the Effective Date

     5.1 At all times prior to the Effective Date during regular business hours,
each party will  permit the other to examine its books and records and the books
and records of its subsidiaries  and will furnish copies thereof on request.  It
is recognized  that,  during the performance of this  Agreement,  each party may
provide the other parties with information  which is confidential or proprietary
information.  The recipient of such information  shall at all times protect such
information from disclosure, other than disclosure required by rule, regulation,
or law,  other than to members of its own or  affiliated  organizations  and its
professional advisers, in the same manner as it protects its own confidential or
proprietary  information  from  unauthorized   disclosure,   and  not  use  such
information to the competitive  detriment of the disclosing  party. In addition,
if this Agreement is terminated for any reason, each party shall promptly return
or  cause  to be  returned  all  documents  or  other  written  records  of such
confidential  or  proprietary  information,  together  with all  copies  of such
writings and, in addition,  shall either  furnish or cause to be  furnished,  or
shall destroy, or shall maintain with such standard of care as is exercised with
respect to its own confidential or proprietary information, all

<PAGE>

copies of all documents or other written  records  developed or prepared by such
party  on  the  basis  of  such  confidential  or  proprietary  information.  No
information  shall  be  considered  confidential  or  proprietary  if it is  (a)
information  already in the possession of the party to whom  disclosure is made,
(b) information  acquired by the party to whom the disclosure is made from other
sources,  or (c)  information  in the public  domain or  generally  available to
interested  persons or which at a later date  passes  into the public  domain or
becomes available to the party to whom disclosure is made without any wrongdoing
by the party to whom the disclosure is made.

     5.2 SGI and NCC shall  promptly  provide each other with  information as to
any significant  developments  in the  performance of this Agreement,  and shall
promptly  notify  the  other if it  discovers  that any of its  representations,
warranties  and  covenants  contained  in  this  Agreement  or in  any  document
delivered  in  connection  with this  Agreement  was not true and correct in all
material respects or became untrue or incorrect in any material respect.

     5.3 All  parties to this  Agreement  shall  take all such  action as may be
reasonably  necessary and  appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.

                                   ARTICLE VI

                             Procedure For Exchange

     6.1 At the Closing Date, the exchange  shall be effected  within 4 business
days after  receipt by M. A.  Littman,  as  attorney  for SGI, of the NCC common
stock certificates  representing 100% of the issued and outstanding common stock
of NCC, together with the signed Exchange Agreements, containing the information
necessary  to issue the SGI shares to the  exchanging  shareholders  of NCC,  by
instructing the transfer agent of SGI to issue the new  certificates and sending
the certificates of SGI by Federal Express to the exchanging shareholders.

<PAGE>

                                   ARTICLE VII

                           Conditions Precedent to the
                          Consummation of the Exchange

     The following are conditions precedent to the consummation of the Agreement
on or before the Effective Date:

     7.1  NCC  and  SGI  shall  have  performed  and  complied  with  all of its
respective  obligations  hereunder which are to be complied with or performed on
or before the  Effective  Date and SGI and NCC shall  provide one another at the
Closing with a certificate  to the effect that such party has performed  each of
the acts and  undertakings  required  to be  performed  by it on or  before  the
Closing Date pursuant to the terms of this Agreement.

     7.2 This Agreement,  the transactions  contemplated  herein shall have been
duly  and  validly  authorized,   approved  and  adopted,  at  meetings  of  the
shareholders of NCC duly and properly called for such purpose in accordance with
the applicable laws.

     7.3 No action,  suit or proceeding shall have been instituted or shall have
been  threatened  before any court or other  governmental  body or by any public
authority to restrain,  enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their  directors or officers
to any material liability,  fine,  forfeiture or penalty on the grounds that the
transactions  contemplated  hereby,  the parties  hereto or their  directors  or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection  with the  transactions  contemplated  hereby,  and the
parties  hereto  have been  advised  by  counsel  that,  in the  opinion of such
counsel,  such action, suit or proceeding raises substantial questions of law or
fact which could  reasonably  be decided  adversely  to any party  hereto or its
directors or officers.

     7.4 All actions,  proceedings,  instruments and documents required to carry
out this  Agreement and the  transactions  contemplated  hereby and the form and
substance of all legal  proceedings and related matters shall have been approved
by counsel for NCC and SGI.

     7.5  The  representations  and  warranties  made  by NCC  and  SGI in  this
Agreement shall be true as though such  representations  and warranties had been
made or given on and as of the Closing Date.

     7.6  Securities  Laws  Compliance.  Each  shareholder  of NCC shall sign an
Exchange Agreement as contained on Schedule A.

<PAGE>

     7.7  SGI  shall  furnish  NCC  with a  certified  copy of a  resolution  or
resolutions  duly  adopted  by the Board of  Directors  of SGI,  approving  this
Agreement and the transactions contemplated by it.

     7.8 It is  anticipated  that the following SEC filings will need to be made
as a result of the Plan and Agreement and the  exchange:  Forms 8-K,  8K12(g) 3,
13d and 13g, and appropriate  amendments to the forms 8-k as may be necessary to
include pro forma financials and consolidated financials.

     7.9 All  debts of SGI shown on the books of SGI,  or not  disclosed,  shall
have been paid and released on or before closing hereunder.

                                  ARTICLE VIII

                           Termination and Abandonment

     8.1 Anything  contained in this Agreement to the contrary  notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Effective
Date:

          (a) By mutual consent of NCC and SGI;

          (b) By NCC, or SGI, if any condition set forth in Article VII relating
     to the other party has not been met by the  effective  date or has not been
     waived in writing by the other party;

          (c) By NCC, or SGI, if any suit,  action or other  proceeding shall be
     pending or threatened by the federal or a state government before any court
     or  governmental  agency,  in which it is sought to  restrain,  prohibit or
     otherwise affect the consummation of the transactions contemplated hereby;

          (d)  By  any  party,  if  there  is  discovered  any  material  error,
     misstatement or omission in the  representations  and warranties of another
     party;

          (e) By any party if the Agreement Effective Date is not within 30 days
     from the date hereof, or if the Closing Date passes without performance.

          (f) If the Share Purchase  Agreement  executed and dated  concurrently
     between  Surinder  Rametra and  National  Coal Corp.  is not closed for any
     reason.

     8.2 Any of the  terms or  conditions  of this  Agreement  may be  waived in
writing at any time by the party which is entitled  to the benefit  thereof,  by
action taken by its Board of Directors provided; however, that such action shall
be taken only if, in the judgment of the Board of  Directors  taking the action,
such waiver will not have a materially  adverse effect on the benefits  intended
under this Agreement to the party waiving such term or condition.

<PAGE>

                                   ARTICLE IX

                        Termination of Representation and
                        Warranties and Certain Agreements

     9.1 The  respective  representations  and  warranties of the parties hereto
shall expire  with,  and be  terminated  and  extinguished  four years after the
Effective  Date of the  Agreement;  provided,  however,  that the  covenants and
agreements of the parties hereto shall survive in accordance with their terms.

                                    ARTICLE X

                                  Miscellaneous

     10.1 This Agreement embodies the entire agreement between the parties,  and
there have been and are no agreements,  representations  or warranties among the
parties other than those set forth herein or those provided for herein.

     10.2  To  facilitate  the  execution  of  this  Agreement,  any  number  of
counterparts  hereof may be executed,  and each such counterpart shall be deemed
to  be  an  original  instrument,  but  all  such  counterparts  together  shall
constitute but one instrument.

     10.3 All parties to this  Agreement  agree that if it becomes  necessary or
desirable to execute further instruments or to make such other assurances as are
deemed  necessary,  the party  requested  to do so will use its best  efforts to
provide such executed  instruments or do all things necessary or proper to carry
out the purpose of this Agreement.

     10.4 This  Agreement may be amended upon approval of the Board of Directors
of each party provided that the shares  issuable  hereunder shall not be amended
without approval of the requisite shareholders of NCC.

     10.5 Any notices,  requests, or other communications  required or permitted
hereunder shall be delivered  personally or sent by overnight  courier  service,
fees prepaid, addressed as follows:

         To: National Coal Corp.:   Attn:  Jon Nix, President
                                    1308 Joe Hinton Road, Unit 1
                                    Knoxville, TN  37931

          To: Southern Group International, Inc.:

or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.

<PAGE>

     10.6 No press release or public  statement  will be issued  relating to the
transactions  contemplated  by this Agreement  without prior approval of NCC and
SGI. However, either NCC or SGI may issue at any time any press release or other
public  statement  it  believes  on the advice of its  counsel  it is  obligated
toissue to avoid liability under the law relating to disclosures,  but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior  notice of and  opportunity  to  participate  in such
release or statement.

     10.7 The Board of Directors of SGI shall appoint the following  individuals
to the Board of Directors of SGI concurrent  with the closing of the transaction
contemplated in this agreement  subject to Notice pursuant to Section 14f of the
Securities Exchange act of 1934.

                           A)       Charles Kite
                           B)       Jon Nix
                           C)       Farrald Belote

     10.8 Mr. Nix shall be  appointed  to the Board  effective  immediately  and
Mssrs.  Kite and Belote  shall  become  effective  upon the  resignation  of the
current Board members and  compliance  with Section 14f  approximately  ten days
after the closing  hereunder.  The  Parties to this  agreement  hereby  agree as
follows:  As soon after  closing as  possible,  SGI shall take  action to obtain
shareholder approval of a name change to a name to National Coal Corp.

     10.9 Within ten days after the date of this Agreement, five shareholders of
NCC holding a total of 100% of the issued and outstanding shares

<PAGE>

     of NCC shall join this  Agreement by execution of the signature page hereon
or by execution of an Exchange  Agreement as contained on Exhibit A hereto which
incorporates  this Plan and  Agreement  of  Reorganization.  In the  event  this
provision is not complied within the time specified,  this Agreement and Plan of
Reorganization shall be null and void and all agreements terminated.

<PAGE>

     IN WITNESS  WHEREOF,  the parties  have set their hands and seals this 11th
day of April, 2003.

                                            SOUTHERN GROUP INTERNATIONAL, INC.

                                            By: __________________________
                                                     President

                                            Attest:________________________
                                                     Secretary

                                            NATIONAL COAL CORP.

                                            By: ____________________________
                                                     President

                                            Attest: ________________________
                                                     Secretary

National Coal Corp. SHAREHOLDERS (by signature below or pursuant to execution of
the Exchange Agreement and Representations incorporating this Agreement by
reference.)

         Signatures                            Please Print Names

         1_________________________         _____________________________

         2_________________________         _____________________________

         3_________________________         _____________________________

         4_________________________         _____________________________

         5_________________________         _____________________________EXHIBIT 10.24

                   COMMERCIAL AND PRIVATE PASSENGER AUTOMOBILE
                               QUOTA SHARE TREATY
                  (hereinafter referred to as the "Agreement")

                                     between

                      FEDERATED NATIONAL INSURANCE COMPANY
                   (hereinafter referred to as the "Company")

                                       and

                        TRANSATLANTIC REINSURANCE COMPANY
                  (hereinafter referred to as the "Reinsurer")

<PAGE>

                                Table of Contents

PREAMBLE....................................................................1

ARTICLE 1 - BUSINESS REINSURED..............................................1
ARTICLE 2 - COVER...........................................................1
ARTICLE 3 - COMMENCEMENT AND TERMINATION....................................2
ARTICLE 4 - NON-TRADITIONAL QUOTA SHARE OPTION..............................3
ARTICLE 5 - SPECIAL TERMINATION.............................................3
ARTICLE 6 - TERRITORY.......................................................3
ARTICLE 7 - EXCLUSIONS......................................................4
ARTICLE 8 - REPORTS AND REMITTANCES.........................................5
ARTICLE 9 - CEDING COMMISSION...............................................6
ARTICLE 10 - DEFINITIONS....................................................6
ARTICLE 11 - ORIGINAL CONDITIONS............................................7
ARTICLE 12 - CURRENCY.......................................................8
ARTICLE 13 - TAXES......................................................... 8
ARTICLE 14 - LOSS AND LOSS EXPENSE......................................... 8
ARTICLE 15 - EXCESS OF POLICY LIMITS....................................... 8
ARTICLE 16 - EXTRA CONTRACTUAL OBLIGATIONS................................. 8
ARTICLE 17 - DELAY, OMISSION OR ERROR...................................... 8
ARTICLE 18 - INSPECTION.................................................... 8
ARTICLE 19 - OFFSET........................................................ 8
ARTICLE 20 - SALVAGE AND SUBROGATION....................................... 8
ARTICLE 21 - WARRANTY...................................................... 9
ARTICLE 22 - ARBITRATION................................................... 9
ARTICLE 23 - INSOLVENCY....................................................10
ARTICLE 24 - EXECUTION.....................................................10

<PAGE>

                   COMMERCIAL AND PRIVATE PASSENGER AUTOMOBILE
                               QUOTA SHARE TREATY
                  (hereinafter referred to as the "Agreement")

                                     between

                      FEDERATED NATIONAL INSURANCE COMPANY
                   (hereinafter referred to as the "Company")

                                       and

                        TRANSATLANTIC REINSURANCE COMPANY
                  (hereinafter referred to as the "Reinsurer")

                                    PREAMBLE

In consideration of the mutual covenants hereinafter contained the parties
hereto agree as follows:

                         ARTICLE 1 - BUSINESS REINSURED

This Agreement is to share with the Reinsurer the interests and liabilities of
the Company under all policies for Commercial and/or Non-Standard Private
Passenger Automobile Liability and Physical Damage Business written or renewed
by or on behalf of the Company during the term of this Agreement, subject to the
terms and conditions herein contained.

                                ARTICLE 2 - COVER

A.       The Company will cede, and the Reinsurer will accept as reinsurance, a
         40% share of all business reinsured (Sections A and B) hereunder
         subject to the maximum Policy limits stated below:

B.       SECTION A: For the basic limits program, the following maximum limits
         will be offered:

                  Bodily Injury/Per Person                    $10,000

                  Bodily Injury/Per Occurrence                $20,000

                  Property Damage Liability                   $10,000
                  Automobile Physical Damage (ACV)
                  Private Passenger                           $50,000
                  Commercial                                  $40,000
                  Personal Injury Protection
                  Statutory Uninsured Motorist/Bodily Injury  $10,000

                                  Page 1 of 13
<PAGE>
C.       SECTION B: For the increased limits program, the following maximum
         limits will be offered:

                  Bodily Injury/Per Person                    $100,000

                  Bodily Injury/Per Occurrence                $300,000

                  Property Damage Liability                   $50,000

                  Uninsured Motorist
                  Bodily Injury/Per Person                    $100,000
                  Bodily Injury/Per Occurrence                $300,000

Basic limits and increased limits will be reported separately.

D.       The limit of liability of the Reinsurer as respects Excess of Policy
         Limits or Extra Contractual Obligations shall be $500,000 inclusive of
         contractual loss.

E.       The maximum limit of liability of the Reinsurer in any one Agreement
         Year as respects Excess of Policy Limits or Extra Contractual
         Obligations only, shall be $1,500,000.

F.       In the event of an act of terrorism this agreement will be subject to
         an annual limit of $1,000,000 for all losses incurred by the act of
         terrorism.

                    ARTICLE 3 - COMMENCEMENT AND TERMINATION

A.       This Agreement shall become effective at 12:01 a.m., Eastern Standard
         Time, December 31, 2002 and shall remain in full force and effect until
         terminated as provided in the following paragraph.

B.       Either the Company or the Reinsurer shall have the right to terminate
         this Agreement at any June 30th or December 31st by giving the other
         party 90 days prior notice in writing via either Certified or
         Registered Mail, return receipt requested.

C.       As respects policies ceded hereunder which are still in force at the
         termination of this Agreement, The Reinsurer shall remain liable on
         such policies for a further twelve (12) months plus odd time, not to
         exceed eighteen (18) months in all or until the natural expiration,
         renewal or cancellation of such policies, whichever occurs first. The
         Company may at its option, however, elect to terminate the entire
         liability of the Reinsurer for losses occurring subsequent to the time
         and date of termination in which event the Reinsurer shall return the
         appropriate unearned premium reserve to the Company less the commission
         previously allowed thereon.

                                  Page 2 of 13
<PAGE>
D.       Regardless of the method of termination the liability of the Reinsurer
         will continue in the event that the Company is bound by statute or
         regulation.

                 ARTICLE 4 - NON-TRADITIONAL QUOTA SHARE OPTION

The Reinsurer will have the option at July 15, 2002 to modify the terms of this
Agreement to a Non-Standard Quota Share treaty to include the following:

1.       Change would be retroactive to December 31, 2001;

2.       Reinsurer's margin- 4% (Combined Ratio = 96%);

3.       Reinsurer will transfer funds to establish a Funds Withheld structure
         with the Company retaining all funds except for Reinsurer's margin;

4.       Ceding commission- 30% at a 66% ratio of losses incurred to premiums
         earned with Company realizing 100% of the profits under a 66% ratio of
         losses incurred to premiums earned;

5.       Profit Commission to be calculated 24 months from inception with a 6.5%
         IBNR factor applied;

6.       The Company to assume 100% of incurred losses from a 66% ratio of
         losses incurred to premiums earned to an 86% ratio of losses incurred
         to premiums earned;

7.       Establishment of a ratio of losses incurred to premiums earned cap of
         110%.

                         ARTICLE 5 - SPECIAL TERMINATION

A.       Either party to this Agreement shall have the right to cancel this
         Agreement immediately by giving 10 days written notice to the other
         party by registered mail in the event that one party:

         1.       Has its financial condition impaired by a reduction of surplus
                  as regards policyholders of 15% or more in any twelve month
                  period from the inception date of this Agreement;

         2.       Is declared insolvent or put in liquidation by any competent
                  regulatory authority or court of competent jurisdiction;

         3.       Loses its operating license, or has its operating license
                  suspended, in any jurisdiction;

         4.       Ceases writing new or renewal business;

         5.       Has any change in ownership, which is considered to be 10% or
                  more of its stock and/or a change in management;

         6.       Fails to remit premiums/losses in accordance with the terms of
                  this Agreement. The coverage afforded by this Agreement shall
                  cease as of the date of termination except in the case of
                  failure to remit premium, termination shall be effective as at
                  the date through which premium has been paid.

B.       The Reinsurer shall have the right to cancel this Agreement 90 days
         notice if A.M. Best rating is reduced to B or lower or its S&P rating
         reduced to BB+ or lower.

C.       Subject to the Special Termination items above, the party giving notice
         shall have the option to return or request the return of the unearned
         premium, if any, on the business in force at the date of cancellation,
         less any commission allowed thereon, thereby terminating this agreement
         on a cutoff basis.

D.       Regardless of the method of termination the liability of the Reinsurer
         will continue in the event that the Company is bound by statute or
         regulation.

                              ARTICLE 6 - TERRITORY
         .
This Agreement applies to losses arising out of Policies written in Florida,
occurring in the United States of America, its territories and possessions, and
Puerto Rico or as per original Policies.

                                  Page 3 of 13
<PAGE>
                             ARTICLE 7 - EXCLUSIONS

This Agreement does not apply to and specifically excludes the following:

1.       Financial Guarantee and insolvency.

2.       All excess of loss reinsurance assumed by the Company.

3.       Reinsurance assumed by the Company under obligatory reinsurance
         agreements.

4.       Business written to apply in excess of a deductible of more than
         $5,000, and business issued to apply specifically in excess over
         underlying insurance.

5.       Liability as a member, subscriber or reinsurer of any pool, syndicate
         or association; and any combination of insurers or reinsurers formed
         for the purpose of covering specific perils, specific classes of
         business or for the purpose of insuring risks located in specific
         geographical areas; but this exclusion shall not apply to Assigned Risk
         Plans or FAIR Plans or to Coastal Pools, Beach Plans or similar plans,
         however styled. It is understood and agreed, however, that this
         reinsurance does not include any increase in liability to the Company
         resulting from (a) the inability of any other participant in a FAIR
         Plan, Coastal Pool, Beach Plan or similar plan to meets its liability,
         or (b) any claim against such a FAIR Plan, Coastal Pool, Beach Plan or
         similar plan, or any participant therein, including the Company,
         whether by way of subrogation or otherwise, brought by or on behalf of
         any insolvency fund.

6.       All liability of the Company arising by contract, operation of law, or
         otherwise from its participation or membership, whether voluntary or
         involuntary, in any insolvency fund. "Insolvency fund" includes any
         guaranty fund, insolvency fund, plan, pool, association, fund or other
         arrangement, however denominated, established or governed, which
         provides for any assessment of or payments or assumption by the Company
         of part or all of any claim, debt, charge, fee or other obligation of
         an insurer, or its successors assigns, which has been declared by any
         competent authority to be insolvent, or which is otherwise deemed
         unable to meet any claim, debt, charge fee or other obligation in whole
         or in part.

7.       Automobile Liability Insurance relating to the ownership, maintenance
         or use of:
         a.       A Taxicab, public livery conveyance or bus;
         b.       An ambulance, fire department or law enforcement, private
                  emergency vehicle or other municipal equipment;
         c.       A racing or exhibition vehicle;
         d.       Rental and leasing of all motor vehicles;
         e.       Commercial automobiles, except service vehicles used by
                  Craftsmen and Artisans up to a maximum of one ton;
         f.       Risks engaged in the transportation or distribution of
                  munitions and explosives such as, but not limited to: liquid
                  hydrogen, nitrogen, chlorine, fireworks, fuses, dynamite,
                  nitroglycerine, ammonia nitrate, anhydrous ammonia, celluloid,
                  pryroxline, or their derivatives, LGP, butane, propane and
                  gasoline;
         g.       Recreational and high performance vehicles;
         h.       Policies sold to celebrity persons.

                                  Page 4 of 13
<PAGE>
8.       Any automobile not classified as private passenger automobile.

9.       Business written on a co-surety or co-indemnity basis not controlled by
         the Company.

10.      Business excluded by the following attached Nuclear Incident Exclusion
         Clauses:
         a.       Nuclear Incident Exclusion Clause- Physical Damage-
                  Reinsurance- U.S.A.
         b.       Nuclear Incident Exclusion Clause- Liability- Reinsurance-
                  U.S.A.

11.      Business excluded by the following attached Pollution and Seepage
         Exclusion Clauses:
         a.       Pollution Exclusion Clause- Auto Liability- Reinsurance.
         b.       Pollution and Seepage Exclusion Clause.

12.      Loss or damage resulting from any of the following lines of business;
         Ocean Marine, Accident and Health, Workers' Compensation, Aircraft (all
         perils), Fidelity, Surety, Glass, Boiler and Machinery, Credit, Title,
         and /or Life.

         If any business falling within the scope of one or more of the
         exclusions is assigned to the Company under an Assigned Risk Plan, such
         exclusion(s) shall not apply, it being understood and agreed that the
         limits of liability extended by the Company as respects such policies
         shall not exceed the minimum statutory limits of liability prescribed
         in such Assigned Risk Plan.

                       ARTICLE 8 - REPORTS AND REMITTANCES

A.       Within 45 days following the end of each month, the Company will render
         a net account to the Reinsurer for the current Agreement Year. Prior
         Agreement Years having activity during the month will be accounted for
         separately in a similar manner. Basic Limits (Section A) and Increased
         Limits (Section B) are to be reported separately. Such account will
         contain the following:

         1.       Gross Net written premium accounted for during the month; less
                  returns and cancellations;

         2.       Collected Net written premiums accounted for during the month;
                  less returns and cancellations;

         3.       The ceding commission due as provided for in this Agreement;

         4.       Losses and loss expense paid on losses occurring during the
                  month;

         5.       Outstanding loss and loss adjustment expense reserves at the
                  end of the period;

         6.       Subrogation, salvage, or other recoveries on losses occurring
                  during the month;

                                  Page 5 of 13
<PAGE>
         7.       Unearned premium reserve at the end of the period.

B.       Within 60 days following the end of the month the debtor party will
         remit to the creditor party any balance due including;

         1.       Ceded Net Written Premium collected during the month, less;

         2.       Ceding commission due the Company during the month, less;

         3.       Paid losses and loss adjustment expense paid, net of salvage
                  and recoveries, provided such loss and loss adjustment expense
                  have not been deducted on behalf of the Company in any
                  previous monthly report.

C.       Within 45 days following the end of each Agreement Year, the Company
         shall furnish the following information to the Reinsurer for the
         Agreement Year:

         1.       A summary of written premium ceded;

         2.       A summary of premiums earned;

         3.       A summary of loss and loss adjustment expense paid and
                  outstanding, segregated by the Agreement Year in which the
                  loss occurred;

         4.       Any other information, which the Reinsurer may require for its
                  Annual Convention Statement, which may be reasonably available
                  to the Company.

                          ARTICLE 9 - CEDING COMMISSION

A.       The Reinsurer will allow the Company a provisional ceding commission of
         30.0% of the Written premium for Agency Bill policies and Collected
         premium on Direct Bill policies ceded hereunder. Return commission
         shall be allowed on return premiums at the same rate.

B.       The final ceding commission shall be determined by the loss experience
         under this Agreement Year. There shall be provisional adjustments and a
         final adjustment all in accordance with the other paragraphs of this
         Article.

C.       Within 45 days following 24 months from the inception of the Agreement
         Year, the Company will calculate an adjusted ceding commission based on
         premiums earned and losses incurred. The ceding commission paid to that
         date shall be adjusted between the parties as appropriate. Adjustments
         will continually be made annually until all losses have been paid,
         closed or commuted, at which time the ceding commission shall become
         final.

D.       Premiums earned for the Agreement Year shall mean all written premium
         ceded to this Agreement Year (less cancellations and returns) plus the
         unearned premium reserve at the beginning of the Agreement Year and
         less the unearned premium reserve at the end of the Agreement Year.

E.       Losses incurred for the Agreement Year shall mean the loss and loss
         expense paid by the reinsurer (less salvages and recoveries received)
         on loss occurring during the Agreement Year, plus loss and loss expense
         reserves outstanding on losses occurring during the Agreement Year and
         an IBNR factor of 6.5% for the first adjustment period.

F.       Should the ratio of losses incurred to premiums earned be 66.0% or
         higher, then the adjusted ceding commission shall be 30.0%.

G.       Should the ratio of losses incurred to premiums earned be less than
         66.0%, but not less than 63.0%, the adjusted commission rate for the
         Agreement Year will remain at 30.0%.

H.       Should the ratio of losses incurred to premiums earned be less than
         63.0%, but not less than 43.0%, the adjusted commission rate for the
         Agreement Year under consideration shall be 30.0%, plus the difference
         in percentage points between 63.0% and the actual ratio of losses
         incurred to premiums earned to a maximum commission of 50.0%.

I.       Notwithstanding the above, the Company shall retain 50% of incurred
         losses otherwise recoverable from the Reinsurer under this Agreement
         above a ratio of losses incurred to premiums earned to the Reinsurer of
         70.0% up to a ratio of losses incurred to premiums earned to the
         Reinsurer of 75.0%. In addition the Company shall retain 100% of
         incurred losses otherwise recoverable from the Reinsurer under this
         Agreement above a ratio of losses incurred to premiums earned to the
         Reinsurer of 75.0% up to a ratio of losses incurred to premiums earned
         to the Reinsurer of 80.0%.

J.       Upon termination, any period of less than 12 months from inception
         shall be considered as an Agreement Year for purposes of this Article;
         any period of less than 12 months from anniversary will be considered
         as part of the preceding Agreement Year.

K.       Should this Agreement be terminated on a run-off basis wherein the
         reinsurer is liable for losses occurring after the date of termination,
         then such run-off period shall be considered as part of the last
         Agreement Year.

L.       Notwithstanding anything above, if the Reinsurer elects to modify this
         Agreement at July 15, 2002, per Article 4- Non-Traditional Quota Share
         Option, the commissions payable hereunder will be as outlined in
         Article 4 and not as above.

                            ARTICLE 10 - DEFINITIONS

A.       The term "Policy" as used in this Agreement shall mean any binder,
         policy, or contract of insurance or reinsurance issued, accepted or
         held covered provisionally or otherwise, by or on behalf of the
         Company.

B.       The term "Agreement Year" as used in this Agreement shall mean each 12
         consecutive month period commencing with December 31, 1999. Any period
         following termination of this Agreement in which the Reinsurer remains
         liable for losses arising out of Policies in force at the date of
         termination will be considered as part of the concluding Agreement
         Year.

C.       The term "Loss Occurrence" as used in this Agreement shall mean any one
         disaster or casualty or accident or loss or series of disasters or
         casualties or accidents or losses arising out of or caused by one
         event.

                                  Page 6 of 13
<PAGE>
D.       The term "Commercial and/or Non-Standard Private Passenger Automobile
         Liability and/or Physical Damage Business" as used in this Agreement
         shall mean all insurances and reinsurances written by the Company and
         classified as Commercial and/or Non-Standard Private Passenger
         Automobile Liability and/or Physical Damage including bodily injury and
         property damage, personal injury protection, medical payments,
         comprehensive, collision and uninsured motorists coverage.

E.       Written Premium: Gross Written Premium on Policies written hereunder,
         less cancellations and returned premium.

F.       Collected Premium: Down payments plus installment received by the
         Company on Policies written hereunder.

G.       Recreational Vehicle: road buggies, dune buggies, caravans, motor
         coaches and motor homes.

H.       Celebrity Persons: actors (guild and/or association membership),
         professional athletes (with league membership), Olympic athletes,
         college athletes, radio personalities, news broadcasters, musicians,
         authors/writers (of published works), and models.

I.       An act of terrorism is defined as activities against persons,
         organizations or property of any nature that involve the following or
         preparation for the following:
         a.       Use or threat of force or violence;
         b.       Commission or threat of a dangerous act; or
         c.       Commission or threat of an act that interferes with or
                  disrupts an electronic, communication, information or
                  mechanical system; and
         When one or both of the following applies:
         a.       The effect is to intimidate or coerce a government, or to
                  cause chaos among the civilian population or any segment
                  thereof, or to disrupt any segment of the economy; or
         b.       It is reasonable to believe the intent is to intimidate or
                  coerce a government, or to seek revenge or retaliate, or to
                  further political, ideological, religious, social or economic
                  objectives or to express (or express opposition to) a
                  philosophy or ideology.

                        ARTICLE 11 - ORIGINAL CONDITIONS

All insurances falling under this Agreement shall be subject to the same terms,
rates conditions and waivers, and to the same modifications, alterations and
cancellations as the respective Policies of the Company (except that in the
event of the Insolvency of the Company the provisions of the Insolvency Clause
shall apply) and the Reinsurer shall be credited with its exact proportion of
the original gross premiums received by the Company.

Nothing herein shall in any manner create any obligations or establish any
rights against the Reinsurer in favor of any third parties or any persons not
parties to this Agreement.

                                  Page 7 of 13
<PAGE>
                              ARTICLE 12- CURRENCY

The currency to be used for all purposes of this Agreement shall be United
States of America currency.

                               ARTICLE 13 - TAXES

The Company will be liable for taxes on premiums reported to the Reinsurer
hereunder.

                       ARTICLE 14 - LOSS AND LOSS EXPENSE

Any loss settlement made by the Company, whether under strict Policy conditions
or by way of compromise, shall be unconditionally binding upon the Reinsurer in
proportion to its participation, and the Reinsurer shall benefit proportionally
in all salvages and recoveries.

The Reinsurer shall bear its proportionate share of all expenses incurred by the
Company in the investigation, adjustment, appraisal or defense of all claims
under Policies reinsured hereunder (excluding, however, office expenses and
salaries of claims staff and officials of the Company) and shall receive its
proportionate share of any recoveries of such expenses. Notwithstanding the
above, expenses hereunder shall be limited to Actual Paid Loss Adjustment
Expense or 8.0% of earned premiums (which ever is less), inclusive of legal,
court and all other costs.

Payment of Loss Adjustment Expense to Superior Adjusting Inc. will be through
the monthly accounting statements at a rate of 7.5% of Earned Premium. An
adjustment to Actual Loss Adjustment Expense or 8% of Earned Premium (which ever
is less) will be made at the time of the Commission Adjustment

                      ARTICLE 15 - EXCESS OF POLICY LIMITS

In the event the loss includes an amount in excess of the Company's Policy
limit, 100% of such amount, in excess of the Company's Policy limit shall be
added to the amount of the Company's Policy limit, and the sum thereof shall be
covered hereunder, subject to the Reinsurer's limit of liability appearing in
the COVER ARTICLE of this Agreement.

However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or of a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original policy.

                   ARTICLE 16 - EXTRA CONTRACTUAL OBLIGATIONS

This Agreement shall protect the Company, subject to the reinsurer's limit of
liability appearing in the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations for 100% of such Extra Contractual
Obligations. "Extra Contractual Obligations" are defined as those liabilities
not covered under any provision of this Agreement and which arise from handling
of any claim on business covered hereunder, such liabilities arising because of,
but not limited to, the following: failure by the Company to settle within the
Policy limit, or by reason of alleged or actual negligence, fraud or bad faith
in rejecting an offer of settlement or in the preparation of the defense or in
the trial of any action against its insured or in the preparation or prosecution
of an appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.

However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or of a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

                      ARTICLE 17 - DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not relieve either party hereto
from any liability that would attach to it hereunder if such delay, omission or
error had not been made, provided that such delay, omission or error is
rectified upon discovery.

                             ARTICLE 18 - INSPECTION

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.

                               ARTICLE 19 - OFFSET

The Company or the Reinsurer shall have, and may exercise at any time the right
to offset any balance or balances, whether on account of premiums, losses, or
otherwise, due from one party to the other under the terms of this Agreement.

                      ARTICLE 20 - SALVAGE AND SUBROGATION

The Reinsurer shall be credited with its proportionate share of salvage or
subrogation recoveries (i.e., reimbursement obtained or recovery made by the
Company, less the actual cost, excluding salaries of officials and employees of
the Company, of obtaining such reimbursement or making such recovery) on account
of claims and settlements involving reinsurance hereunder.

                                  Page 8 of 13
<PAGE>
                              ARTICLE 21- WARRANTY

A.       It is hereby warranted that the Reinsurer must approve all changes to
         the underwriting guidelines and rates.

B.       It is hereby warranted that the maximum amount of Gross Written Premium
         to be written under in any one underwriting year under this Agreement
         is $12,000,000.

                             ARTICLE 22- ARBITRATION

As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Agreement will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire.

Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen.

The members of the board of arbitration shall be active or retired disinterested
officials of insurance or reinsurance companies, or underwriters at Lloyd's,
London, not under the control or management of either party to this agreement.
Each party shall appoint its arbitrator and the two arbitrators shall choose an
umpire before instituting the hearing. If the respondent fails to appoint its
arbitrator within four weeks after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator. If the two arbitrators fail to
agree upon the appointment of an umpire within four weeks after their
nominations, each of them shall name three, of whom the other shall decline two,
and the decision shall be made by drawing lots.

The claimant shall submit its initial brief within 45 days from the appointment
of the umpire. The respondent shall submit its brief within 45 days thereafter
and the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following the
termination of the hearings unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any court
having jurisdiction.

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining costs
of the arbitration proceedings shall be allocated by the board.

Any arbitration proceeding shall be conducted in Plantation, Florida unless the
parties agree on a mutually agreeable site.

                                  Page 9 of 13
<PAGE>
                             ARTICLE 23- INSOLVENCY

In the event of the insolvency of the Company, reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of the Company under Policy or
Policies reinsured without diminution because of the insolvency of the Company,
to the Company or to its liquidator, receiver, or statutory successor except as
provided by Section 4118(a) of the New York Insurance Law or except when the
Agreement specifically provides another payee of such reinsurance in the event
of the insolvency of the Company, or when the Reinsurer with the consent of the
direct insured or insureds has assumed such Policy obligations of the Company as
direct obligations of the Reinsurer to the payees under such Policies and in
substitution for the obligations of the Company to such payees.

It is agreed, however, that the liquidator, receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator, receiver, or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.

Where two or more reinsurers are involved in the same claim and a majority in
interest elects to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the insolvent Company.

Should the Company go into liquidation or should a receiver be appointed, the
Reinsurer shall be entitled to deduct from any sums which may be due or may
become due to the Company under this reinsurance Agreement any sums which are
due to the Reinsurer by the Company under this reinsurance Agreement and which
are payable at a fixed or stated date as well as any other sums due the
Reinsurer which are permitted to be offset under applicable law.

                             ARTICLE 24 - EXECUTION

This Agreement is executed by the Company and the Reinsurer by the signing, in
duplicate, of the Interests and Liabilities Contract attached to this Agreement.

                                 Page 10 of 13
<PAGE>
                       INTERESTS AND LIABILITIES CONTRACT
                   (hereinafter referred to as the "Contract")

                                     between

                      FEDERATED NATIONAL INSURANCE COMPANY
                               Plantation, Florida
                   (hereinafter referred to as the "Company")

                                       and

                        TRANSATLANTIC REINSURANCE COMPANY
            (hereinafter referred to as the "Subscribing Reinsurer")

                                in respect of the

                   COMMERCIAL AND PRIVATE PASSENGER AUTOMOBILE
                        QUOTA SHARE REINSURANCE AGREEMENT
                  (hereinafter referred to as the "Agreement")

IT IS AGREED that, effective 12:01 a.m., Eastern Standard Time, December 31,
2002, the SUBSCRIBING REINSURER shall have a 100% share in the Interests and
Liabilities of the Reinsurer as set forth in the above Agreement to which this
Contract is attached. This Contract shall continue in force until terminated in
accordance with the provisions contained in the above Agreement.

The share of the SUBSCRIBING REINSURER in the Interests and Liabilities of the
Reinsurer under the above Agreement shall be several and not joint with the
shares of any other subscribing reinsurer, and in no event shall the SUBSCRIBING
REINSURER participate in the Interests and Liabilities of any other subscribing
reinsurer.

                                 Page 11 of 13
<PAGE>
IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Contract, in duplicate, as of the dates
undermentioned.

Signed in Plantation, Florida, this        day of                        , 2003.

FEDERATED NATIONAL INSURANCE COMPANY

BY:               /s/   Richard A. Widdicombe
                  -----------------------------------

TITLE:   President
         --------------------------------------------

Signed in New York, New York, this   18     day of       July            , 2003.

TRANSATLANTIC REINSURANCE COMPANY

BY:               /s/    Suzanne A. Spantidos
                  --------------------------------------------

TITLE:   Vice President
         -----------------------------------

                      300300302

                                 Page 12 of 13
<PAGE>
                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 24% of the Company's property loss under the
applicable original policy.

                                 Page 13 of 13
<PAGE>

            POLLUTION EXCLUSION CLAUSE - AUTO LIABILITY - REINSURANCE

A. This reinsurance excludes all loss and/or liability accruing to the Company
as a result of:

         1.       bodily injury or property damage arising out of the actual,
                  alleged or threatened discharge, dispersal, release or escape
                  of pollutants:

                  a)       that are (or that are contained in any property that
                           is):

                           i. being transported or towed by, or handled for
                           movement into, onto or from the insured auto, or
                           otherwise in the course of transit;

                           ii. being stored, disposed of, treated or processed
                           in or upon the insured auto;

                  b)       before the pollutants (or any property in which the
                           pollutants are contained) are moved from the place
                           where they are accepted by the insured for movement
                           into or onto the insured auto; or

                  c)       after the pollutants (or any property in which the
                           pollutants are contained) are moved from the insured
                           auto to the place where they are finally delivered,
                           disposed of or abandoned by the insured;

         2.       any governmental direction or request that the insured test
                  for, monitor, clean up, remove, contain, treat, detoxify or
                  neutralize pollutants.

B. Paragraph A above does not apply to environmental restoration coverage
required by the Motor Carrier Act of 1980, or similar mandatory laws.

C. Subparagraph A(1)(a)(ii) above does not apply to fuels, lubricants, fluids,
exhaust gases or other similar pollutants that are needed for or result from the
normal electrical, hydraulic or mechanical functioning of the insured auto or
its parts, if:

         1.       the pollutants escape or are discharged, dispersed or released
                  directly from an auto part designed by its manufacturer to
                  hold, store, receive or dispose of such pollutants; and

<PAGE>
         2.       the bodily injury or property damage does not arise out of the
                  operation of a cherry picker or similar device mounted on an
                  automobile or truck chassis and used to raise or lower
                  workers, air compressors, pumps and/or generators, including
                  spraying, welding, building cleaning, geophysical exploration,
                  lighting and well servicing equipment.

D. Paragraphs A(1)(b) and A(1)(c) above do not apply if:

         1.       the pollutants (or any property in which the pollutants are
                  contained) are upset, overturned or damaged as a result of the
                  maintenance or use of an insured auto; and

         2.       the discharge, dispersal, release or escape of the pollutants
                  is caused directly by such upset, overturn or damage.

E. "Pollutants" mean any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes material to be recycled, reconditioned or reclaimed.

<PAGE>
   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.

1)     This Agreement does not cover any loss or liability accruing to the
       Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
       from any Pool of Insurers or Reinsurers formed for the purpose of
       covering Atomic or Nuclear Energy risks.

2)     Without in any way restricting the operation of paragraph (1) of this
       Clause, this Agreement does not cover any loss or liability accruing to
       the Reinsured, directly or indirectly and whether as Insurer or
       Reinsurer, from any Insurance against Physical Damage (including business
       interruption or consequential loss arising out of such Physical Damage)
       to:

         I.       Nuclear reactor power plants including all auxiliary property
                  on the site, or

         II.      Any other nuclear reactor installation, including laboratories
                  handling radioactive materials in connection with reactor
                  installations, and "critical facilities" as such, or

         III.     Installations for fabricating complete fuel elements or for
                  processing substantial quantities of "special nuclear
                  material," and for reprocessing, salvaging, chemically
                  separating, storing or disposing of "spent" nuclear fuel or
                  waste materials, or

         IV.      Installations other than those listed in paragraph 2) III
                  above using substantial quantities of radioactive isotopes or
                  other products of nuclear fission.

3)     Without in any way restricting the operations of paragraphs 1) and 2)
       hereof, this Agreement does not cover any loss or liability by
       radioactive contamination accruing to the Reinsured, directly or
       indirectly, and whether as Insurer or Reinsurer, from any insurance on
       property which is on the same site as a nuclear reactor power plant or
       other nuclear installation and which normally would be insured therewith
       except that this paragraph 3) shall not operate

                  a)       where the Reinsured does not have knowledge of such
                           nuclear reactor power plant or nuclear installation,
                           or
                  b)       where said insurance contains a provision excluding
                           coverage for damage to property caused by or
                           resulting from radioactive contamination, however
                           caused. However, on and after 1st, January 1960, this
                           sub-paragraph b) shall only apply provided the said
                           radioactive contamination exclusion provision has
                           been approved by the Government Authority having
                           jurisdiction thereof.

4)       Without in any way restricting the operations of paragraphs 1), 2) and
         3) hereof, this Agreement does not cover any loss or liability by
         radioactive contamination accruing to the Reinsured, directly or
         indirectly, and whether as Insurer or Reinsurer, when such radioactive
         contamination is a named hazard specifically insured against.

5)       It is understood and agreed that this Clause shall not extend to risks
         using radioactive isotopes in any form where the nuclear exposure is
         not considered by the Reinsured to be the primary hazard.

6)       The term "special nuclear material" shall have the meaning given it in
         the Atomic Energy Act of 1954, or by any law amendatory thereof.

7)       Reinsured to be sole judge of what constitutes:

         a) substantial quantities, and

         b) the extent of installation, plant or site.

<PAGE>
       NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE U.S.A.
           (Approved by Lloyd's Underwriters' Non-Marine Association)

(1)      This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.

(2)      Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this reinsurance all
the original policies of the Reassured (new, renewal and replacement) of the
classes specified in Clause II of this paragraph (2) from the time specified in
Clause III in this paragraph (2) shall be deemed to include the following
provision (specified as the Limited Exclusion Provision):

LIMITED EXCLUSION PROVISION.*

I.       It is agreed that the policy does not apply under any liability
         coverage, to (injury, sickness, disease, death or destruction, (bodily
         injury or property damage with respect to which an insured under the
         policy is also an insured under a nuclear energy liability policy
         issued by Nuclear Energy Liability Insurance Association, Mutual Atomic
         Energy Liability Underwriters or Nuclear Insurance Association of
         Canada, or would be an insured under any such policy but for its
         termination upon exhaustion of its limit of liability.

II.      Family Automobile Policies (liability only), Special Automobile
         Policies (private passenger automobiles, liability only), Farmers
         Comprehensive Personal Liability Policies (liability only),
         Comprehensive Personal Liability Policies (liability only) or policies
         of a similar nature; and the liability portion of combination forms
         related to the four classes of policies stated above, such as the
         Comprehensive Dwelling Policy and the applicable types of Homeowners
         Policies.

III.     The inception dates and thereafter of all original policies as
         described in II above, whether new, renewal or replacement, being
         policies which either

                  (a)      become effective on or after 1st May, 1960, or

                  (b)      become effective before that date and contain the
                           Limited Exclusion Provision set out above; provided
                           this paragraph (2) shall not be applicable to Family
                           Automobile Policies, Special Automobile Policies, or
                           policies or combination policies of a similar nature,
                           issued by the Reassured on New York risks, until 90
                           days following approval of the Limited Exclusion
                           Provision by the Governmental Authority having
                           jurisdiction thereof.

(3)      Except for those classes of policies specified in Clause II of
paragraph (2) and without in any way restricting the operation of paragraph (1)
of this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the Reassured (new, renewal and
replacement) affording the following coverage's:

     Owners, Landlords and Tenants Liability, Contractual Liability, Elevator
     Liability, Owners or Contractors (including railroad)
     Protective Liability, Manufacturers and Contractors Liability, Product
     Liability, Professional and Malpractice Liability, Storekeepers Liability,
     Garage Liability, Automobile Liability (including Massachusetts Motor
     Vehicle or Garage Liability)

shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):

BROAD EXCLUSION PROVISION.*

It is agreed that the policy does not apply:

I.       Under any Liability Coverage, to (injury, sickness, disease, death or
         destruction (bodily injury or property damage

     (a) with respect to which an insured under the policy is also an insured
     under a nuclear energy liability policy issued by Nuclear Energy Liability
     Insurance Association, Mutual Atomic Energy Liability Underwriters or
     Nuclear Insurance Association of Canada, or would be an insured under any
     such policy but for its termination upon exhaustion of its limit of
     liability; or
     (b) resulting from the hazardous properties of nuclear material and with
     respect to which (1) any person or organization is required to maintain
     financial protection pursuant to the Atomic Energy Act of 1954, or any law
     amendatory thereof, or (2) the insured is, or had this policy not been
     issued would be, entitled to indemnity from the United States of America,
     or any agency thereof, under any agreement entered into by the United
     States of America, or any agency thereof, with any person or organization.

II.      Under any Medical Payments Coverage, or under any Supplementary
         Payments Provision relating to (immediate medical or surgical relief,
         (first aid, to expenses incurred with respect to (bodily injury,
         sickness, disease or death (bodily injury resulting from the hazardous
         properties of nuclear material and arising out of the operation of a
         nuclear facility by any person or organization.

<PAGE>
III.     Under any Liability Coverage to (injury, sickness, disease, death or
         destruction (bodily injury or property damage resulting from the
         hazardous properties of nuclear material, if

         (a)      the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed therefrom;
         (b)      the nuclear material is contained in spent fuel or waste at
                  any time possessed, handled, used, processed, stored,
                  transported or disposed of by or on behalf of an insured; or
         (c)      the (injury, sickness, disease, death or destruction (bodily
                  injury or property damages arises out of the furnishing by an
                  insured of services, materials, parts or equipment in
                  connection with the planning, construction, maintenance,
                  operation or use of any nuclear facility, but if such facility
                  is located within the United States of America, its
                  territories, or possessions or Canada, this exclusion (c)
                  applies only to (injury to or destruction of property at such
                  nuclear facility (property damage to such nuclear facility and
                  any property threat.

IV.      As used in this endorsement:
         "HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
         properties; "NUCLEAR MATERIAL" means source material, special nuclear
         material or byproduct material; "SOURCE MATERIAL," "SPECIAL NUCLEAR
         MATERIAL," and "BYPRODUCT MATERIAL" have the meanings given them in the
         Atomic Energy Act of 1954 or in any law amendatory thereof; "SPENT
         FUEL" means any fuel element or fuel component, solid or liquid, which
         has been used or exposed to radiation in a nuclear reactor; "WASTE"
         means any waste material (1) containing byproduct material and
         (2)resulting from the operation by any person or organization of any
         nuclear facility included within the definition of nuclear facility
         under paragraph (a) or (b) thereof; "NUCLEAR FACILITY" means
         (a)      any nuclear reactor,
         (b)      any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling, processing or packaging
                  waste,
         (c)      any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,
         (d)      any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste, and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for such
                  operations; "NUCLEAR REACTOR" means any apparatus designed or
                  used to sustain nuclear fission in a self-supporting chain
                  reaction or to contain a critical mass of fissionable
                  material; (With respect to injury to or destruction of
                  property, the word "injury" or "destruction" ("property
                  damage" includes all forms of radioactive contamination of
                  property (includes all forms of radioactive contamination of
                  property.

V.       The inception dates and thereafter of all original policies affording
         coverage's specified in this paragraph (3), whether new, renewal or
         replacement, being policies which become effective on or after 1st May,
         1960, provided this paragraph (3) shall not be applicable to

         (i) Garage and Automobile Policies issued by the Reassured on New York
risks, or
         (ii) statutory liability insurance required under Chapter 90, General
Laws of Massachusetts, until 90 days following approval of the Broad Exclusion
Provision by the Governmental Authority having jurisdiction thereof.

(4)      Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the Reassured in Canada and that
with respect to such policies this Clause shall be deemed to include the Nuclear
Energy Liability Exclusion Provisions adopted by the Canadian Underwriters'
Association of the Independent Insurance Conference of Canada.

*NOTE: The words printed in italics in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion
Provision containing those words.

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