Document:

SHARE REPURCHASE AGREEMENT

 

Exhibit 10.8

SHARE REPURCHASE AGREEMENT

     This is an Agreement, made October 25, 1994, between James V. Gorman,
residing at 81 Prescott Place, Freehold, New Jersey, 07728 (the “Shareholder”)
and National Atlantic Holdings Corp., (the “Corporation”), a New Jersey
corporation located at 225 Madison Avenue, Morristown, New Jersey 07963-1917.

STATEMENTS OF FACT:

     A. The authorized capital of the Corporation is 100,000 shares of common
stock.

     B. The Shareholder has purchased 36,000 shares of the issued and
outstanding capital of the Corporation, directly from the Corporation.

     C. Proformance Insurance Company (“Proformance”), a New Jersey insurance
company authorized to transact property and casualty insurance in the State of
New Jersey, is a wholly owned subsidiary of the Corporation.

     D. The parties hereto believe that their best interests will be served by
imposing certain restrictions and limitations on the future sale and purchase
of the Shares.

     NOW, THEREFORE, it is hereby agreed as follows:

     1. Definitions. For the purposes of this Agreement the following terms
shall have the meaning defined in this Article 1:

          1.1 “Transfer” shall mean any disposition (including, without limitation,
gifts, sales, assignments, pledges, encumbrances, bequests, and all other
intervivos or testamentary dispositions) whether voluntary or involuntary, or
pursuant to court order or by operation of law.

          1.2 “Shares” shall mean all shares of capital of the Corporation now or
hereafter acquired by the Shareholder.

          1.3 “Permitted Transferee”. shall mean a licensed New Jersey insurance
agent who (i) has been determined, in the sole discretion of the Corporation’s
Peer Review Committee and its Board of Directors, to be an acceptable insurance
agent of Proformance and (ii) who has entered into an Agency Agreement with
Proformance either individually, or on behalf of a New Jersey licensed
insurance agency employing such agent.

     2. Entire Agreement. This Agreement represents the sole and entire
understanding of the parties regarding the sale and purchase of the Shares, now
or hereafter
acquired by the Shareholder directly from the Corporation, and supersedes
any and all other oral or written agreements among them, which are hereby
rendered null and void.

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     3. Limitation On Transfer of Shares.

          3.1 Limitation. The Shareholder may not Transfer any of his Shares,
except as expressly permitted by this Agreement, including without limitation,
the provisions of Article 4.

          3.2 Reasonable Restraint. The Shareholder recognizes and acknowledges
that the restraints imposed in this Agreement on the disposition of his Shares
are fair and reasonable in consideration of their absolute necessity for the
proper conduct of the business of the Corporation and the provisions of this
Agreement providing a market for the Shares.

     4. Permitted Transfers Of Shares.

          4.1 Transfers to Permitted Transferees. The Shareholder may transfer not
more than an aggregate total of 10,000 of his Shares in private transactions to
Permitted Transferees selected by the Shareholder; provided, however, that (i)
no more than 1,000 Shares may be transferred by the Shareholder to any single
Permitted Transferee, and (ii) all Shares transferred to a Permitted Transferee
shall remain subject to the restrictions on transfers and other matters
contained in the Certificate of Incorporation of the Corporation, as amended
from time to time, and a Share Repurchase Agreement in the form of Exhibit A
attached hereto by and among the Corporation and its Shareholders.

          4.2 Shareholder’s Right of First Refusal. Except with respect to Shares
issued pursuant to the Corporation’s initial private placement offering, if the
Corporation contemplates issuing Shares to one or more Permitted Transferees,
the Corporation shall first provide the Shareholder with written notice of its
intention to do so. Such notice shall set forth the terms and conditions of
the proposed Transfer, including but not limited to, the issue price and the
number of Shares which the Corporation proposes to issue.

          (a) The Shareholder shall have the first right to sell Shares to such
Permitted Transferee(s), provided that (i) no more than 1,000 Shares may be
transferred by the Shareholder to any single Permitted Transferee and (ii) all
Shares transferred to such Permitted Transferee shall remain subject to the
restrictions on transfers and other matters contained in the Certificate of
Incorporation of the Corporation, as amended from time to time, and a Share
Repurchase Agreement by and among the Corporation and its shareholders in the
form of Exhibit A attached hereto.

          (b) If the Shareholder desires to exercise the option herein contained, he
shall give written notice of such exercise to the Corporation no later than
thirty (30) days from the date of the Corporation’s notice, setting forth the
number of Shares the Shareholder intends to Transfer to the Permitted
Transferee.

          (c) If the Shareholder declines to exercise this right of first refusal,
then the Corporation shall be free to issue Shares to the Permitted Transferee
for a period of six
(6) months after the Corporation’s notice, except that (A) the Corporation
can only issue shares on the same terms and conditions as set forth in its
notice pursuant to Section 4.2(a) and (B) all Shares so issued to a Permitted
Transferee shall remain subject to the restrictions on transfers

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and other
matters contained in the certificate of Incorporation of the corporation, as
amended from time to time, and a Share Repurchase Agreement by and among the
Corporation and its shareholders in the form of Exhibit A attached hereto.

          4.3 Limitations on Additional Transfers; Corporation’s Right of First
Refusal. Except as provided in Sections 4.1 and 4.2 hereof, the Shareholder
may not Transfer all or any of his Shares for a period of two (2) years from
and after the date of this Agreement (the “Holding Period”), except pursuant to
the following terms and conditions:

          (a) If, during the Holding Period the Shareholder receives a bona fide
offer to purchase all or any of his Shares from a third party (whether or not a
Permitted Transferee) and the Shareholder desires to transfer all or any of his
Shares, he shall give the Corporation written notice of his intention to do so.
Such written notice shall set forth the material terms and conditions of the
bona fide offer, including, but not limited to, the purchase price of the
Shares.

          (b) The Corporation shall have the first right to purchase all or any part
of the Shareholder’s Shares offered for sale.

          (c) If the Corporation desires to exercise the option herein contained, it
shall give written notice to the Shareholder no later than thirty (30) days
from the date of the Shareholder’s notice, setting forth the number of the
Shareholder’s shares it wishes to purchase. Any such purchase by the
Corporation shall be effectuated in the manner and upon the terms and
conditions set forth in Article 5 of this Agreement. The closing of any
transaction of purchase and sale by the Corporation pursuant to this Section
shall be held at the Corporation’s counsel’s business office at 10:00 a.m.,
seventy-five (75) days after the date of the Shareholder’s notice of his
intention to sell the Shares.

          (d) In making the determination of whether, and to what extent the
Corporation wishes to exercise the right granted herein to purchase the
Shareholder’s shares, the Shareholder (in his capacity as officer, director,
shareholder or otherwise) shall take any and all affirmative action necessary
to effectuate whatever course of action the Corporation’s other shareholders
desire to take on behalf of the Corporation.

          (e) If the Corporation does not purchase all of the Shares described in
the Shareholder’s notice, the Shareholder shall be free to transfer the
remaining Shares described in the notice free of the provisions of this
Agreement for a period of 6 months after the Shareholder’s notice, except that
(A) the Shareholder can only sell his Shares on the same terms and conditions
as set forth in his notice pursuant to Section 4.3(a) and (B) the transferee
shall remain subject to the restrictions on transfers and other matters
contained in the Certificate of Incorporation of the Corporation, as amended
from time to time, and a certain Share Repurchase Agreement by and among the
Corporation and its shareholders.

     5. Closing and Payment of Purchase Price.

          5.1 At the closing of any purchase and sale between the Corporation and
the Shareholder pursuant to this Agreement, the Shareholder shall deliver:

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          (a) Certificates representing the Shares which are being purchased and
sold pursuant to this Agreement, endorsed in blank;

          (b) All documents which counsel for the Corporation shall reasonably deem
necessary or advisable in order to accomplish a complete Transfer of the Shares
to the Corporation; and

          (c) If the Shareholder transfers all of his Shares, the written
resignation of the Shareholder as an officer, director and employee of the
Corporation and/or Proformance.

          5.2 Payment of the total purchase price due to the Shareholder, in any
purchase of Shares by the Corporation pursuant to Section 4.3 of this
Agreement, shall be made as follows:

          (a) If the Corporation has assigned its right to purchase the Shares to
any third party as permitted by this Agreement, said third party shall pay at
the closing, an amount equal to the total purchase price;

          (b) If the Corporation has not assigned its right to purchase the Shares
to a third party, then the Corporation shall pay at closing, and periodically
thereafter pursuant to a Note in the form of Exhibit B attached hereto, such
amounts as it is able to pay, subject to the following conditions precedent:

               (i) The Corporation must have cash on hand to enable it to make a payment
to the Shareholder without adversely impairing the Corporation’s and
Proformance’s ability to operate safely and efficiently pursuant to the
regulations of the New Jersey Department of Insurance;

               (ii) Any disbursements made by the Corporation or Proformance for the
purpose of making any payment to the Shareholder shall not cause the capital
and surplus of Proformance to become “impaired” as defined by N.J.S.A.
17B:32-1(a) as amended from time to time. The parties acknowledge that at the
present time, Proformance’s capital and surplus would be deemed “impaired” if
its capital and surplus were to fall below $3,200,000; and

               (iii) If required by law, the New Jersey Department of Insurance must
approve of the payment in writing.

          (c) Interest shall accrue on the outstanding balance of the total purchase
price, if any, due to the Shareholder from and after the closing, at the
minimum rate of interest necessary under the Internal Revenue Code of 1954, as
amended, to avoid an imputed rated of interest under the Code. Any payment of
principal and interest to the Shareholder after
closing shall be subject to the same conditions precedent set forth above
regarding the payment of the portion of the purchase price at closing;

          (d) If at any time during which there is an outstanding balance of the
total purchase due to the Shareholder, the Corporation commences a public or
private offering of

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Shares of any class of its capital, the Corporation shall
be obligated to allocate up to fifty (50%) percent of the net proceeds to the
Corporation of the offering for the exclusive purpose of making payments of the
outstanding balance of the purchase price of the Shares, plus accrued interest,
to the Shareholder and any other shareholders to whom deferred purchase price
is owed.

          5.3 The Corporation shall have the right to offset against the payment or
payments of the purchase price due from it to the Shareholder, the amount of
all sums due from the Shareholder to the Corporation and/or Proformance, and to
the extent so credited against the purchase price, such loan or other
indebtedness shall be deemed to be and shall be canceled and discharged. Such
credit against the purchase price shall be made regardless of the due date of
any such loan or other indebtedness.

     6. Insufficient Surplus. If, at the time of closing, the surplus of the
Corporation is less than the total purchase price, then the Corporation and the
Shareholder shall take such action which, in the opinion of counsel for the
Corporation, will be legally permissible to enable the Corporation to increase
its surplus, either by reducing its capital stock or by a reappraisal of its
assets, or otherwise, to an amount equal to the total purchase price.
Notwithstanding the foregoing, the Corporation shall not be required to take
any action which, in the opinion of counsel for the Corporation and its Board
of Directors, would cause the capital of Proformance to become “impaired” as
previously defined or adversely impact Proformance’s ability to operate safely
and efficiently. Any action taken by the corporation to increase its surplus
pursuant to this Article 6 shall be subject to the prior written approval of
the New Jersey Department of Insurance.

     7. Right to Consult Counsel. The Shareholder represents and warrants that
he has read and fully understands the section of the Corporation’s Private
Placement Memorandum entitled “Risk Factors”. The Corporation and the
Shareholder recognize that the law firm of Riker, Danzig, Scherer, Hyland &
Perretti (the “Law Firm”) represents the Corporation with respect to the
preparation and execution of this Agreement, the offering of the Shares by the
corporation and the transactions contemplated hereby and thereby. The
Shareholder represents that he has the opportunity to seek and obtain
independent legal counsel and he has not been represented by the Law Firm with
regard to the review and execution of this Agreement, the purchase of Shares
offered by the Corporation and the transactions contemplated hereby and
thereby. In addition, the Shareholder hereby agrees that the Law Firm may
represent the Corporation in any matter in the future. The Shareholder waives
any conflict of interest which has arisen or may arise by virtue of the Law
Firm’s representation of the Corporation or any of the Incorporators, unless
the Shareholder hereafter gives notice to the Law Firm to the contrary with
respect to any matter.

     8. Notice. Whenever under the provisions of this Agreement notice is
required to be given, it shall be in writing and shall be deemed given when
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to the Shareholder at
his address as set forth herein, or to such other address as may appear on
the record books of the Corporation, and addressed to the Corporation at its
principal business office.

     9. Miscellaneous.

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          9.1 Amendments. This Agreement may not be amended or supplemented at any
time unless by a writing executed by the parties hereto, and all such
amendments and supplements shall, except as otherwise provided hereinafter, be
binding upon all other persons interested herein.

          9.2 Impairment Of Rights. No amendment, supplement or termination of this
Agreement shall affect or impair any rights or obligations which have
theretofore matured hereunder.

          9.3 Further Assurances. All parties will take such further action and
execute such other documents as are reasonably necessary to effectuate the
purposes, terms and conditions of this Agreement.

          9.4 Partial Invalidity. The invalidity of any portion of this Agreement
shall not affect the validity of the remainder of this Agreement.

          9.5 Assignment. The corporation may assign any or all of its rights or
obligations under this Agreement to any other person or entity without the
prior consent of the Shareholder. The Shareholder may not assign any of his
rights or obligations under this Agreement without the prior consent of the
Corporation.

          9.6 Binding On Successors. This Agreement shall be binding upon and shall
inure to the benefit of all of the parties hereto, and to their respective
heirs, executors, administrators, successors and assigns, and shall be binding
upon any person to whom any Shares are Transferred in violation of the
provisions of this Agreement (whether voluntarily, pursuant to court order, by
operation of law or otherwise), and the heirs, executors, administrators,
successors or assigns of such person. Notwithstanding the foregoing, any
obligation of the Corporation to purchase Shares under this Agreement shall
apply only to Shares owned by the shareholder or the Shareholders estate.

          9.7 Termination. This Agreement shall terminate upon the written consent
of the parties or upon the occurrence of any of the following events:

          (a) The adjudication of the Corporation as a bankrupt, or the execution by
the Corporation of an assignment for the benefit of creditors.

          (b) The voluntary or involuntary complete liquidation or dissolution of
the Corporation.

          9.8 Governing Law. This Agreement shall be governed by the law of the
State of New Jersey.

          9.9 Captions. Any Paragraph title or caption contained in this Agreement
is for convenience only, and shall not in any way be construed to define,
describe or limit the terms hereof.

          9.10 Restrictive Legend. All certificates representing the Shares now or
hereafter issued shall be endorsed as follows:

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	 	 	The Shares represented by this certificate are issued
and held subject to the restrictions on transfers and
other matters contained in the certificate of
Incorporation of the Corporation, as such as amended
and may be amended from time to time, and a certain
Share Repurchase Agreement by and among the
corporation and its Shareholders, which are available
for inspection at the offices of the Corporation.
Transfer of the Shares represented by this certificate
cannot be made except upon compliance with such
provisions, of which notice is hereby given. The
Corporation will mail to any person affected by such
restrictions, a copy thereof, without charge, within
five (5) days after receipt of a written request
therefor.
	 
	 	 	The Shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or any state securities laws. They may not
be sold or offered for sale in the absence of an,
effective registration statement as to the securities
under said act and any applicable state securities law
or an opinion of counsel satisfactory to the
Corporation that such registration is not required.

     IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seal, or caused these presents to be duly executed by their proper corporate
officers, the day and year first above written.

	 	 	 
	WITNESS:
	 	 
	 
	 	 
	/s/
Donald E. Gossett

	 	/s/ James V. Gorman
	

	 	

	

	 	JAMES V. GORMAN, Shareholder
	 
	 	 
	ATTEST:

	 	National Atlantic Holdings Corp.
	 
	 	 
	/s/
John R. Prideaux Jr.

	 	BY: /s/ Frank P. Campion
	

	 	

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EXHIBIT “B”

PROMISSORY NOTE

	 	 	 
	PRINCIPAL AMOUNT:

	 	DATE:

     FOR
VALUE RECEIVED             
            
            
   (“Maker”), hereby promises to pay to
    
            
            
   (“Holder”) the principal sum of
            
            
            
          
($           ), together with interest on the unpaid balance accruing from and
together with interest on the unpaid balance accruing from and after the date
hereof at the rate of (        %) percent per annum, [such rate being the minimum
rate necessary under the Internal Revenue Code of 1986, as amended, to avoid an
imputed rate of interest under the Code] payable in twenty-four (24)
consecutive equal quarterly installments of principal and interest on the first
business day in January, April, July and October commencing with the first such
business day in           , subject to the conditions, limitations and
qualifications set forth in that certain Share Repurchase Agreement dated
           
            , 1984 between Holder and Maker.

     This Note may be prepaid in whole or in part at any time without premium
or penalty. Any such prepayment shall be credited against installments due in
the inverse order of maturity.

     The full amount of the principal balance owing, and the accrued but unpaid
interest thereon shall, at the election of the Holder, become immediately due
and payable upon the occurrence of any of the following:

     (a) A default of Maker in the payment of any quarterly installments due
pursuant to this Note, if such default shall continue for a period of thirty
(30) days after written notice of such default shall have been mailed to Maker.

     (b) The commencement of proceedings in bankruptcy, proceedings for an
arrangement, reorganization or re adjustment of debts under any law, whether
State or Federal, for the relief of debtors, now or hereafter existing, whether
instituted by or against Maker, provided that if an involuntary petition in
bankruptcy is filed against Maker, such shall only constitute a default if the
petition is not dismissed within sixty (60) days after being filed.

     (c) Application for the appointment of a receiver of the property of
Maker.

     (d) The making of an assignment for the benefit of creditors by Maker.

     (e) The voluntary or involuntary complete liquidation or dissolution of
Maker.

     The provisions of this Note are severable, and the invalidity or
unenforceability of any provision shall not alter or impair the remaining
provisions of this Note.

     Whenever used, “Maker” and “Holder” shall be deemed to include the
respective heirs, personal representatives, successor, and assigns or Maker and
Holder.

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     IN WITNESS WHEREOF, the Maker has set his hand and seal or caused this
Note to be properly executed by its proper corporate officers, and has affixed
its corporate seal as of the date and year first above written.

	 	 	 	 
	

	 	
	 .

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     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto as of this 22 day of August, 1994.

	 	 	 
	ATTEST:

	 	PROFORMANCE INSURANCE COMPANY
	 
	 	 
	/s/ Georgia Price

	 	BY:  /s/ John R. Prideaux Jr.
	

	 	

	 
	 	 
	ATTEST:

	 	FIRST MORRIS BANK
	 
	 	 
	/s/
Georgia Price

	 	BY:  /s/ Georgia Price
	

	 	

	 
	 	 
	WITNESS

	 	SUBSCRIBER
	 
	 	 
	/s/ John R. Prideaux Jr.

	 	BY:  /s/ James V. Gorman
	

	 	

- 10 -REPLACEMENT CARRIER AGREEMENT

 

Exhibit 10.9

REPLACEMENT CARRIER AGREEMENT

This Replacement Carrier Agreement (“Agreement”) is entered into this the
8th day of December, 2003, by Metropolitan Property and Casualty Insurance
Company (“Met P&C”), a Rhode Island domestic property and casualty insurance
company with offices at 700 Quaker Lane, Warwick, Rhode Island 02887 and
Proformance Insurance Company (“Proformance”), a New Jersey domestic property
and casualty insurance company with offices at 4 Paragon Way, Freehold, New
Jersey 07728, and Proformance’s parent, National Atlantic Holdings Corp.
(“NAHC”), a New Jersey insurance holding company corporation with offices at
the same address.

WITNESSETH

          WHEREAS, the parties desire to enter into a replacement carrier agreement
pursuant to which Met P&C will transfer to Proformance the obligations of Met
P&C to offer renewals for all of Met P&C’s New Jersey Personal Business (as
defined herein) as of the Nonrenewal Date (as defined herein) together with
consideration and fees set forth herein in return for which Proformance will
assume such obligations as of the Nonrenewal Date, and

          WHEREAS, Met P&C desires to purchase shares in NAHC;

          NOW, THEREFORE, the parties hereto agree as follows:

     I. Definitions. The following terms shall have the respective meanings
set forth below throughout this Agreement:

          A. “New Jersey Personal Business” shall mean:

               1. the independent agency-produced private passenger automobile insurance
policies issued by Met P&C; provided, however, the New Jersey Personal Business
shall not include the antique-classic automobile policies issued by Met P&C
under the Specialty Vehicle Automobile Program;

               2. the independent agency-produced homeowners insurance policies issued by
Met P&C;

               3. the independent agency-produced dwelling fire insurance policies issued
by Met P&C;

               4. the independent agency-produced boat insurance policies issued by Met
P&C;

               5. the independent agency-produced personal excess liability policies
issued by Metropolitan Group Property and Casualty Insurance Company; and

 

 

               6. all personal automobile, including personal automobile policies, if
any, written through producers assigned to Met P&C pursuant to N.J.S.A.
17:33B-9 (“MTF Business”).

          B. “Closing” shall mean the closing of the transaction contemplated by
this Agreement.

          C. “Closing Date” shall mean the latter of September 2, 2003 or the date
on which all conditions to the obligations of the parties to close the
transactions provided for in Articles VI and VII have been satisfied.

          D. “Nonrenewal Date” shall mean the effective date set forth in the
initial notices of nonrenewal of the New Jersey Personal Business, which shall
start on or about ninety (90) days after the Closing Date.

          E. “Nonrenewal Period” shall mean the one-year period commencing on the
Nonrenewal Date and ending on the first anniversary of the Nonrenewal Date.

          F. “Prior Business” shall mean the New Jersey Personal Business issued
prior to the Nonrenewal Date and all endorsements issued on such Business prior
to and during the Nonrenewal Period.

          G. “Renewed Business” shall mean: (1.) the New Jersey Personal Business
renewed or required to be renewed by Proformance under this Agreement; (2.) any
assignments to Met P&C from PAIP as set forth in Article II A. below after the
Nonrenewal Date; (3.) any Urban Enterprise Zone (“UEZ”) quota determined by the
Commissioner of the New Jersey Department of Banking and Insurance
(“Commissioner”) pursuant to N.J.S.A. 17:33C-1 et seq. and N.J.A.C. 11:3-46.1
et seq. with respect to the Prior Business after the Closing Date; and (4.) any
New Jersey Market Assistance Program (“NJ MAP”) applications distributed by
PAIP to Met P&C under Order No. A02-132 entered by the Commissioner on
September 13, 2002 in connection with nonrenewals by State Farm Indemnity
Company with respect to the Prior Business after the Closing Date.

     II. Renewal of the New Jersey Personal Business by Proformance. Upon the
terms and conditions of this Agreement:

          A. On the Closing Date, Met P&C shall cease issuing new independent agency
produced New Jersey Personal Business policies. However, after the Closing
Date and during the Nonrenewal Period, Met P&C shall continue to issue
endorsements in the ordinary course on the New Jersey Personal Business, which
has not yet been nonrenewed. Additionally, Met P&C shall continue to issue
assigned risk policies distributed to Met P&C by the Governing Committee of the
New Jersey Personal Automobile Insurance Plan (“PAIP”) pursuant to N.J.A.C.
11:3-2.11 and the PAIP Plan of Operation until the Nonrenewal Date, at which
time Proformance shall assume all further obligations for all Met P&C
assignments from the PAIP on or after the Nonrenewal Date.

2

 

          B. On behalf of Met P&C, Proformance shall mail to each New Jersey
Personal Business policyholder written notices of nonrenewal, along with
notices that offer a guaranteed option to renew their policies with
Proformance. The form of all of such notices shall be approved by the New
Jersey Department of Banking and Insurance (“NJ DOBI”) and both parties, prior
to mailing.

          C. Met P&C shall retain all rights, debts, liabilities, and obligations
related to the Prior Business, including, but not limited to, all premium,
unpaid claims (whether reported or unreported) and all unearned premium
reserves.

          D. Proformance shall be solely responsible for all rights, debts,
liabilities, and obligations related to the Renewed Business, including the
payment of renewal commissions to producers, if any, on the MTF Business,
except that Met P&C shall indemnify Proformance from and against any and all
losses, claims, demands, settlements, judgments and expenses (including
reasonable attorneys’ fees and disbursements), arising from an underground
storage tank, related to the Renewed Business and reported to Proformance
during the first eighteen (18) months subsequent to the Closing date, provided
however, Met P&C shall not indemnify Proformance from and against any and all
losses, claims, demands, settlements, judgments and expenses (including
reasonable attorneys’ fees and disbursements) incurred as a result of bad
faith, as determined by a judgment or court order, relating to the handling of
an underground storage tank claim or lawsuit pursuant to this Section of this
Agreement. Proformance shall promptly (in any event, within five (5) business
days after receiving such notice) notify Met P&C in writing of a notice of
claim or lawsuit relating to underground storage tanks, and Met P&C will have
the right at any time to assume and thereafter conduct the defense of such
claim or lawsuit with counsel of its choice.

     III. Consideration. If, and only if, the Closing occurs:

          A. Payments by Met P&C. Recognizing the NJ DOBI requirements that the
business be supported with adequate surplus, Met P&C shall pay to Proformance
and NAHC, respectively, via two separate wire transfers, on the Closing Date:
(1.) an amount sufficient to produce a net, after-tax addition to surplus of
$6,660,000 recorded by Proformance as additional paid in surplus, and paid from
Met P&C’s policyholder surplus; and (2.) $10,000,000 for the purchase of 10,000
shares of Class B, non-voting common stock of NAHC. Upon receipt of the
consideration for the sale of stock, NAHC shall immediately infuse $10,000,000
into the capital of Proformance as additional paid in surplus.

     IV. Closing. The Closing shall take place at the offices of Riker Danzig
Scherer Hyland & Perretti LLP, Headquarters Plaza, One Speedwell Avenue,
Morristown, New Jersey 07962-1981 (or at such other place as the parties may
mutually agree) on the Closing Date. The Closing Date may be changed by mutual
agreement of the parties.

3

 

     V. Met P&C’s Representations With Respect to the New Jersey Personal
Business.

          A. To the best of its knowledge and in its best estimate, Met P&C asserts
the following with respect to the New Jersey Personal Business:

               1. As of June 30, 2003, the private passenger automobile insurance portion
of the New Jersey Personal Business is comprised of approximately 40,057 motor
vehicles. The Accident Year 2002 loss ratio (excluding Allocated Loss
Adjustment Expenses) for the private passenger automobile insurance portion of
the New Jersey Personal Business, evaluated with development history through
March 31, 2003, is between 79.6% and 85.5%.

               2. As of June 30, 2003, the homeowner’s insurance portion of the New
Jersey Personal Business is comprised of approximately 7,093 homes. The
Accident Year 2002 loss ratio (excluding Allocated Loss Adjustment Expense) is
approximately 34.6%.

               3. As of June 30, 2003, the dwelling fire insurance portion of the New
Jersey Personal Business is comprised of approximately 486 homes. The Accident
Year 2002 loss ratio (excluding Allocated Loss Adjustment Expense) is
approximately 99.7%.

               4. As of June 30, 2003, there are approximately 471 personal excess
liability insurance polices in the New Jersey Personal Business. The Accident
Year 2002 loss ratio (excluding Allocated Loss Adjustment Expense) is
approximately 0.0%.

               5. As of June 30, 2003, there are approximately 75 boat polices in the New
Jersey Personal Business. The Accident Year loss ratio (excluding Allocated
Loss Adjustment Expense) is approximately 99.5%.

               6. Met P&C represents and warrants that to the best of its knowledge the
data set forth on Exhibits A, B, C, D and E, hereto are true, complete, and
accurate in all material respects and that, to its knowledge, there have been
no material adverse changes in the experience represented by such data since
the date of the evaluation on June 30, 2003, through the date of execution of
this Agreement.

               7. Met P&C further represents and warrants that it has disclosed to
Proformance all material risks and liabilities, whether actual or potential, of
which it is aware, relating to the New Jersey Personal Business and to the
transactions contemplated hereunder.

          B. Proformance’ s Obligations.

               1. Proformance will offer a full agency agreement, which agreement will
grant authority to write new personal lines business, to Met P&C’s active
independent agents, excluding those that are bank-owned or corporate-owned
agents,

4

 

agents with fewer than 25 policies with Met P&C, agents within a 3-mile
radius of any active Proformance agent, agents located outside the State of New
Jersey with 25 or more New Jersey personal lines polices with Met P&C, or any
agent previously cancelled by Proformance.

               2. Proformance will offer to the above-excepted agents and all other Met
P&C agents except agents located outside the state of New Jersey with 25 or
fewer New Jersey personal lines polices with Met P&C, a limited agency
agreement, which agreement will permit these Agents the continuation of
ownership of the policy renewals of the New Jersey Personal Business, by the
agent of record, as well as the basic rate of commission on the auto business.

          C. Further Warranties, Representation and Obligations of Met P&C.

          Met P&C represents and warrants to Proformance, knowing and intending that
Proformance is relying hereon in entering into the transactions contemplated
herein, that the following are true as of the date of this Agreement and will
be true as of the Closing date:

               1. Met P&C will make every effort not to renew the policy of any
ineligible driver who is in excess of the minimum automobile insurance
eligibility Points (9 or more in the past three years), as defined by N.J.S.A.
17:33-14, and has advised and will advise ineligible drivers to seek
replacement coverage.

               2. Met P&C shall provide to Proformance, by August 15, 2003: (a.) a list
of the policies in the New Jersey Personal Business which are to be in effect
on the Renewal Date with the renewal dates of such policies; (b.) a list of Met
P&C’s active independent agents, which list shall indicate the status of such
agent, the commission each agent is receiving and, to the best of its
knowledge, the street address of the agent; and (c.) a list of all other
independent agents that serve as agents for any New Jersey Personal Business,
the status of each such agent, the commission each agent is receiving and, to
the best of its knowledge, the street address of the agent.

               3. Due Organization; Good Standing. Met P&C is duly organized, validly
existing and in good standing under the laws of its state of domicile and New
Jersey; duly qualified and in good standing in all jurisdictions in which its
ownership of property and conduct of businesses requires such qualification
except where failure to so qualify and be in good standing would not have a
material adverse effect on Met P&C or Proformance. Met P&C has the corporate
power and authority and possesses all governmental and other permits, licenses
and other authorizations necessary to write the Policies and to carry on the
businesses and operations of Met P&C as now conducted, except such permits,
licenses and other authorizations the failure of which to possess would not
have a material adverse effect on Met P&C or Proformance.

               4. Corporate Authorization. Met P&C has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution,

5

 

delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate actions on the part of Met P&C.

               5. No Violations or Breach. To its knowledge, the execution and delivery
of this Agreement and the consummation of the transactions contemplated herein
will not conflict with or result in a breach of any of the terms and provisions
of any agreement, mortgage, lease, bond, note, debenture, guaranty, deed of
trust or other agreement, instrument or arrangement to which Met P&C is a party
or by which its property is bound, or its certificates of incorporation,
by-laws or other governing documents, or any law, administrative regulation, or
any order of any court or governmental agency or authority entered in any
proceeding to which Met P&C is a party or by which its property is bound,
except for those conflicts or breaches which may have been waived or which do
not result in a material adverse effect on Met P&C or Proformance.

               6. Consents. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein requires any governmental
consent, permit, authorization or approval, or registration, filing or
declaration with any governmental authority, except the approval of the
Commissioner of the New Jersey Department of Banking and Insurance.

               7. Good Title. Met P&C has, and on the Renewal Date will have, the right,
subject to the ownership rights of the independent agents in the policy
expirations, to consummate the transactions contemplated by this Agreement.

               8. Compliance with Law, Suits and Proceedings. No violations, citations,
fines, injunctions or penalties have been asserted against or imposed on Met
P&C, its properties or assets or with respect to the conduct of its businesses
under any federal, state or local law and none, to its knowledge, has been
threatened except for those violations, citations, fines, injunctions or
penalties which would not have a material adverse effect on Met P&C or
Proformance. There is no action, proceeding, investigation or inquiry pending
or, to its knowledge, threatened against or affecting Met P&C, its properties
or assets or the conduct of its businesses, except for those actions,
proceedings, investigations or inquiries which would not have a material
adverse effect on Met P&C or Proformance.

               9. Enforceability. This Agreement constitutes the legal, valid and
binding obligation of Met P&C enforceable against Met P&C in accordance with
its terms subject to the qualification that enforceability may be limited by
(a.) bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to the enforceability of creditors’ rights
generally and (b.) general principles of equity.

               10. Market Entry or Re-entry. Met P&C and any of its affiliates shall not
re-enter or enter the independent agent-produced New Jersey private passenger
automobile, homeowners, or other personal lines insurance market, except with

6

 

respect to Antique/Classic Auto insurance, within the five years following
the Nonrenewal Date.

          D. Representations and Warranties of Proformance and NAHC

          Proformance and NAHC each represents and warrants to Met P&C, knowing and
intending that Met P&C is relying hereon in entering into the transactions
contemplated herein, that the following are true as of the date of this
Agreement and will be true as of the Closing Date:

               1. Organization; Good Standing. Each of Proformance and NAHC is a
corporation duly organized and validly existing and in good standing under the
laws of New Jersey. Proformance has the power and authority and possesses all
governmental and other permits, licenses and other authorizations necessary to
transact private passenger automobile insurance in the State of New Jersey and
to carry on its business and operations as now conducted. Upon the approval of
this transaction by the Commissioner, Proformance and NAHC each will have all
requisite power and authority necessary to consummate the transactions as
contemplated hereunder.

               2. Corporate Authorization. Proformance and NAHC each has all requisite
power and authority to enter into this Agreement, the Share Repurchase
Agreement and the Subscription Agreement (known individually as the Agreement
and collectively as the Agreements) to perform its obligations hereunder or
thereunder and to consummate the transactions contemplated hereby or thereby.
The execution, delivery and performance of the Agreements and the consummation
of the transactions contemplated hereby or thereby have been authorized by all
necessary action on the part of Proformance and NAHC.

               3. No Violations or Breach. To its knowledge, the execution and delivery
of the Agreements and the consummation of the transactions contemplated herein
or therein will not conflict with or result in a breach of any of the terms and
provisions of any agreement, mortgage, lease, bond, note, debenture, guaranty,
deed of trust or other agreement, instrument or arrangement to which
Proformance or NAHC is a party or by which its property is bound, or any law,
administrative regulation, or any order of any court or governmental agency or
authority entered in any proceeding to which Proformance or NAHC is a party or
by which its property is bound, except for those conflicts or breaches which
may have been waived or which do not result in a material adverse effect on Met
P&C, Proformance, or NAHC.

               4. Consents. Neither the execution and delivery of the Agreements nor the
consummation of the transactions contemplated herein or therein requires any
governmental consent, permit, authorization or approval, or registration,
filing or declaration with any governmental authority, except the approval of
the Commissioner of the New Jersey Department of Banking and Insurance.

               5. Compliance with Law; Suits and Proceedings. No violations, citations,
fines, injunctions or penalties have been asserted against or imposed

7

 

on Proformance or NAHC, its properties or assets or with respect to the
conduct of its business under any federal, state or local law and none, to its
knowledge, have been threatened except for those violations, citations, fines,
injunctions or penalties which would not have a material adverse effect on
Proformance or NAHC. There is no action, proceeding, investigation or inquiry
pending or, to its knowledge, threatened against or affecting Proformance or
NAHC, its properties or assets or the conduct of its business, except for those
actions, proceedings, investigations or inquiries which would not have a
material adverse effect on Proformance or NAHC.

               6. Enforceability. The Agreements constitute legal, valid and binding
obligation of Proformance and NAHC enforceable against Proformance and NAHC in
accordance with its terms subject to the qualification that enforceability may
be limited by (a.) bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to the enforceability of creditors’
rights generally and (b.) general principles of equity.

               7. Authorization of Non-Voting Common Stock. The issuance, sale and
delivery of the 10,000 shares of Class B Non-Voting Common Stock (“Non-Voting
Common Stock”) at the Closing Date has been duly authorized by all requisite
corporate action of NAHC; and the Non-Voting Common Stock is duly authorized
and when issued, sold and delivered in accordance with the terms of the
Subscription Agreement, the Non-Voting Common Stock will be validly issued and
outstanding, fully paid and nonassessable and will not be subject to
pre-emptive or other similar rights of the stockholders of NAHC or others and
will be free and clear of all liens, charges, restrictions, claims and
encumbrances, in accordance with the consent and agreement of the Ohio Casualty
Insurance Company.

               8. Taxes. NAHC and Proformance have filed all Tax Returns and paid all
Taxes shown thereon to be due, if any, that are required to have been filed on
or before the Closing Date with appropriate federal, state, foreign, county and
local governmental agencies or instrumentalities, except where the failure to
do so would not have a material adverse effect. As of the date hereof, there
are not pending or, to the best knowledge of NAHC and Proformance, threatened
any audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters. As used in this Agreement (a.) the term “Tax”
(including, with correlative meaning, the term “Taxes”) includes all federal,
state and local income, profits, franchise, gross receipts, environmental,
custom duty, capital stock, severances, stamp, payroll, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts and any interest in respect of such
penalties and additions, and (b.) the term “Tax Return” includes all returns
and reports required to be supplied to a Tax authority relating to Taxes.

               9. Capitalization. The authorized capital stock of NAHC consists solely
of 100,000 shares of Class A voting common stock (the “Voting Common Stock”),
of which 62,651 shares are issued and outstanding, and 100,000 shares of Class
B non-voting common stock, no par value per share (the “Non-Voting Common
Stock”),

8

 

of which 38,529 shares were issued and outstanding as of March 31, 2003.
The Non-Voting Common Stock and the Voting Common Stock are referred to
collectively as the “Common Stock”.

     VI. Conditions Precedent to Obligations of Met P&C. The obligations of
Met P&C to close the transactions contemplated by this Agreement are subject to
the fulfillment prior to or at the Closing of the following conditions:

          A. Regulatory Consents and Approvals. Met P&C is not obligated to close
the transaction contemplated by this Agreement unless or until it obtains, to
its satisfaction, all consents, authorizations, and approvals under all
applicable statutes and regulations from any governmental agency, department,
or authority required to be obtained by Met P&C, including, but not limited to,
the NJ DOBI, in connection with the execution, delivery, and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
which approvals will permit Met P&C to cease issuing new independent
agent-produced private passenger automobile policies as of the Closing Date,
with the exception of antique-classic automobile policies issued by Met P&C
under the Specialty Vehicle Automobile Program and to commence issuance of
notices of nonrenewal as of the Nonrenewal Date on terms acceptable to Met P&C.
Met P&C shall use its best efforts to obtain prior to the Closing Date all
consents, authorizations, waivers, and approvals required to be obtained by Met
P&C.

          B. Withdrawal. The Commissioner shall have granted a waiver to Met P&C
pursuant to N.J.A.C. 11:2-29.3(a) obviating the requirement that Met P&C file a
formal plan of withdrawal from the business of private passenger automobile and
other personal lines insurance in New Jersey in accordance with N.J.A.C.
11:2-29.4.

          C. Performance by Proformance and NAHC. There shall not be any material
error, misstatement, or omission in the representations and warranties made by
Proformance and NAHC in this Agreement; and all such representations and
warranties shall be true in all material respects at and as of the Closing
Date.

          D. Subscription Agreement and Share Repurchase Agreement. Met P&C and
NAHC shall have executed and delivered the Subscription Agreement and Share
Repurchase Agreement in the form attached hereto as Exhibits F and G.

          E. Board of Directors. To the extent required, the Board of Directors of
Met P&C shall have approved the terms and conditions of this Agreement and the
transactions contemplated by this Agreement.

     VII. Conditions Precedent to Obligations of Proformance and NAHC. The
obligations of Proformance and NAHC to close the transactions contemplated by
this Agreement are subject to the fulfillment prior to or at the Closing of the
following conditions:

          A. Regulatory Consents and Approvals. Proformance and NAHC shall have
obtained all consents, authorizations, and approvals under all applicable
statutes and regulations from any governmental agency, department, or authority
required

9

 

to be obtained by Proformance and NAHC, including, but not limited to, the
NJ DOBI, in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby, which
approvals shall be on terms acceptable to Proformance and NAHC. Proformance
and NAHC shall use its best efforts to obtain prior to the Closing Date all
consents, authorizations, waivers, and approvals required to be obtained by
Proformance and NAHC.

          B. Requirements Imposed by Regulatory Authorities. Any terms and
conditions that may be imposed on the transactions contemplated by this
Agreement by the NJ DOBI shall be acceptable to Proformance and NAHC, in their
sole discretion.

          C. Performance by Met P&C. There shall not be any material error,
misstatement, or omission in the representations and warranties made by Met P&C
in this Agreement; and all such representations and warranties shall be true in
all material respects at and as of the Closing Date; and Met P&C shall have
materially performed and complied with all the terms, provisions and conditions
of this Agreement to be performed and complied with by Met P&C at or before
Closing.

          D. Subscription Agreement and Share Repurchase Agreement. MetLife P&C and
NAHC shall have executed and delivered the Subscription Agreement and Share
Repurchase Agreement in the form attached hereto as Exhibit A and    .

          E. Board of Directors. To the extent required, the Board of Directors of
Proformance and NAHC shall have approved of the terms and conditions of this
Agreement and the transactions contemplated by this Agreement.

     VIII. Termination.

          A. Termination Events. This Agreement may, by notice given prior to or at
the Closing, be terminated:

               1. By either Met P&C, Proformance or NAHC if a material inaccuracy in or
breach of, or any material failure to perform or comply with, any
representation, warranty, covenant, obligation or other provision of this
Agreement has been committed by the other party or parties and such breach or
failure has not been waived in writing and delivered to the other party;

               2. By mutual consent of the parties; or

               3. By any party if the Closing has not occurred (other than through the
failure of any party seeking to terminate this Agreement to comply fully with
its obligations under this Agreement) on or before December 31, 2003, or such
later date as the parties may agree upon.

          B. Effect of Termination. Each party’s right of termination under Article
VIII.A.1. above is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election

10

 

of remedies. If this Agreement is terminated pursuant to Article
VIII.A.1. above, all further obligations of the parties under this Agreement
shall terminate, except that the obligations under the Confidentiality as
outlined in Section X.E.; provided, however, that if this Agreement is
terminated by a party because of such breach or failure by the other party or
because one or more of the conditions to the terminating party’s obligations
under this Agreement is not satisfied as a result of the other party’s failure
to comply with its obligations under this Agreement, the terminating party’s
right to pursue all legal remedies will survive such termination unimpaired.

     IX. Survival of Representations and Warranties; Indemnification.

          A. Survival of Representations and Warranties. All representations and
warranties shall survive the Closing until the end of the third calendar year
following the calendar year in which the Nonrenewal Date occurs.

          B. Indemnification Obligations of Met P&C. Subject to the terms and
conditions of this Article IX, Met P&C agrees to indemnify and hold Proformance
and NAHC harmless against any and all losses, costs, and expenses (including,
without limitation, legal, and other expenses) resulting from or relating to:

               1. any material misrepresentation or breach of any warranty of Met P&C
contained in this Agreement or in any document delivered by Met P&C at or prior
to the Closing;

               2. any material breach of any covenant of Met P&C contained in this
Agreement, including but not limited to the covenants set forth in Article V.C.
hereof;

               3. the Prior Business (excluding any UEZ quotas and assignments from the
PAIP after the Nonrenewal Date); and

               4. and any and all actions, suits, demands, assessments, or judgments with
respect to any claim arising out of or relating to the subject matter of the
indemnification.

          C. Indemnification Obligations of Proformance and NAHC. Subject to the
terms and conditions of Article IX, Proformance and NAHC agree to indemnify and
hold Met P&C harmless against any and all losses, costs, and expenses
(including, without limitation, legal and other expenses) resulting from or
relating to:

               1. any material misrepresentation or breach of any warranty of Proformance
or NAHC contained in this Agreement or in any schedule of Proformance or NAHC
or any document delivered by Proformance or NAHC at or prior to the Closing;

               2. any material breach of any covenant of Proformance or NAHC contained in
the Agreement, including but not limited to the covenants set forth in Article
V.D. hereof;

11

 

               3. the Renewed Business (including any UEZ quotas and assignments from the
PAIP after the Nonrenewal Date); and

               4. any and all actions, suits, demands, assessments, or judgments with
respect to any claim arising out of or relating to the subject matter of the
indemnification.

     X. Miscellaneous.

          A. Assurance of Further Action. From time to time after Closing, each
party, at its own expense, shall execute and deliver, or cause to be executed
and delivered, to the other party such further documents and take such other
action as the other party may reasonably request in order to more effectively
consummate the transactions contemplated hereby.

          B. Access Information and Documents. At any time, and from time to time,
Proformance, NAHC and Met P&C will give to each other and their agents and
representatives (including, but not limited to, accountants, lawyers, and
appraisers) full and complete access during normal working hours to any and all
of the books, records, and other documents of Proformance, NAHC, Met P&C, and
their respective affiliates, for any and all purposes related to this Agreement
and the transactions contemplated hereunder. The covenants of Proformance,
NAHC and Met P&C contained in this Article shall survive the Closing.

          C. Waiver. The parties hereto may by written agreement: 1.) extend the
time for, or waive or modify the performance of any of the obligations or other
acts of the parties hereto; or 2.) waive any inaccuracies in the
representations and warranties contained in this Agreement.

          D. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed (corrected answerback received), sent by facsimile transmission (with
immediate confirmation thereafter) or sent by certified, registered or express
mail, postage prepaid, or by a nationally recognized overnight courier service,
marked for overnight delivery. Any such notice shall be deemed given when so
received and shall be addressed.

	 	 	 
	If to Met P&C:

	 	Metropolitan Property and Casualty Insurance Company

700 Quaker Lane

Warwick, Rhode Island 02886

Attention: Michael D. Davidson, Vice President

Independent Agency Organization

Fax No. 401-827-3703
	 
	 	 
	With a Copy to:

	 	MetLife Auto & Home Law Department

Fax No. 401-827-2674

12

 

	 	 	 
	If to Proformance:

	 	The Proformance Insurance Company

4 Paragon Way

Freehold, New Jersey 07728

Attention: James V. Gorman, CEO

Fax No. 732-761-0243
	 
	 	 
	With a Copy to:

	 	John M. Pellecchia, Esq.

Riker, Danzig, Scherer, Hyland & Perretti LLP

Headquarters Plaza

One Speedwell Avenue

Morristown, New Jersey 07962-1981

Fax No. 973-538-1984
	 
	 	 
	If to NAHC:

	 	National Atlantic Holdings Corporation

4 Paragon Way

Freehold, New Jersey 07728

Attention: James V. Gorman, CEO

Fax No. 732-761-0243
	 
	 	 
	With a Copy to:

	 	John M. Pellecchia, Esq.

Riker, Danzig, Scherer, Hyland & Perretti LLP

Headquarters Plaza

One Speedwell Avenue

Morristown, New Jersey 07962-1981

Fax No. 973-538-1984

          E. Confidentiality. The parties to this Agreement shall maintain in
strict confidence, using commercially reasonable efforts, at least as stringent
as those employed by them for the preservation and maintenance of its own
proprietary information and trade secrets, and shall not disclose to any third
party or use any such proprietary information or trade secrets for personal
advantage. These restrictions shall not be construed to apply to (1.)
information generally available to the public; (2.) information released by
either Party to the other Party without restriction; (3.) information
independently developed or acquired by either Party or its personnel; and (4.)
information approved for the use and disclosure by either Party.
Notwithstanding the foregoing restrictions, either Party may use and disclose
any information to the extent required by an order of any court of competent
jurisdiction or other governmental authority, but in each case only after that
Party has so notified the other Party in writing and that Party has had the
opportunity, if possible, to obtain reasonable protection for such information
in connection with such disclosure.

          The parties further agree that they will not at any time during or after
the termination of this Agreement reveal, divulge, or make known to any person,
firm or corporation any secret or confidential information, which includes
“Personal Information” which is defined as personal information provided to,
and maintained by

13

 

either party in confidence, including but not limited to: (1) personally
identifiable financial information as defined by Title V of the
Gramm-Leach-Bliley Act, 15 U.S.C. §§ 6801, et seq.

          F. Entire Agreement. This Agreement supersedes all prior agreements among
the parties with respect to its subject matter. This Agreement embodies the
entire agreement between the parties and there have been and are no agreements,
representations, or warranties, oral or written between the parties, other than
those set forth or provided for’ in this Agreement. This Agreement may not be
modified or changed, in whole or in part, except by a supplemental agreement
signed by each of the parties.

          G. Rights Under this Agreement: Nonassignability. This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, but it shall not be assignable by either party without
prior written consent of the other party, which may be withheld in that party’s
sole discretion. Nothing contained in this Agreement is intended to confer
upon any person, other than the parties to this Agreement and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement.

          H. Consulting Fees. Met P&C and NAHC agree that each party will pay fifty
percent (50%) of all consulting fees charged by Herman Shwide related to this
transaction contemplated herein.

          I. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to
conflicts-of-law principles. The parties agree that any dispute regarding this
Agreement shall be submitted to the state or federal courts located in Mercer
County, New Jersey.

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

14

 

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the 8th
day of December, 2003.

	 	 	 	 	 	 	 
	 	 	 	 	PROFORMANCE INSURANCE COMPANY
	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ James V. Gorman
	

	 	 	 	 	 	
 
	

	 	 	 	 	 	Name: James V. Gorman
	

	 	 	 	 	 	Title: Chairman and CEO
	 	 	 	 	 
	METROPOLITAN PROPERTY AND CASUALTY

INSURANCE COMPANY	 	NATIONAL ATLANTIC HOLDINGS CORP.
	 	 	 	 	 
	By:

	 	/s/ Catherine A. Rein
	 	By:
	 	/s/ James V. Gorman
	

	 	
 
	 	 	 	
 
	

	 	Name: Catherine A. Rein
	 	 	 	Name: James V. Gorman
	

	 	Title: President and CEO
	 	 	 	Title: Chairman and CEO

15

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