Document:

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                                                                    EXHIBIT 10.1

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                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                         COUNTRY LIFE INSURANCE COMPANY,

                           COUNTRY MEDICAL PLANS, INC.

                                       AND

                      COTTON STATES LIFE INSURANCE COMPANY

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                   <C>
ARTICLE 1 THE MERGER............................................................       4
   1.01     The Merger..........................................................       4
   1.02     Effective Time......................................................       5
ARTICLE 2 CONSIDERATION.........................................................       5
   2.01     Effect on Capital Stock.............................................       5
   2.02     Rights as Shareholders; Stock Transfers.............................       5
   2.03     Payment for Shares..................................................       5
   2.04     Dissenting Shareholders.............................................       6
   2.05     Company Stock Awards................................................       6
ARTICLE 3 COMPANY REPRESENTATIONS AND WARRANTIES................................       7
   3.01     Organization, Standing and Authority................................       7
   3.02     Company Common Stock................................................       7
   3.03     Subsidiaries........................................................       8
   3.04     Corporate Power.....................................................       8
   3.05     Corporate Authority and Action......................................       8
   3.06     Regulatory Filings; No Defaults.....................................       9
   3.07     SEC Documents; Financial Statements.................................      10
   3.08     Absence of Undisclosed Liabilities and Changes......................      11
   3.09     Litigation..........................................................      11
   3.10     Compliance with Laws................................................      11
   3.11     Material Contracts; Defaults........................................      13
   3.12     Non-Competition/Non-Solicitation....................................      14
   3.13     Properties..........................................................      14
   3.14     Employee Benefit Plans..............................................      14
   3.15     Labor Matters.......................................................      16
   3.16     Environmental Matters...............................................      17
   3.17     Tax Matters.........................................................      17
   3.18     Books and Records...................................................      18
   3.19     Accounting Controls.................................................      18
   3.20     Insurance...........................................................      18
   3.21     No Brokers..........................................................      18
   3.22     Intellectual Property...............................................      19
   3.23     Reserves............................................................      20
   3.24     Privacy Laws and Policies...........................................      21
   3.25     Investments.........................................................      21
   3.26     Disclosure..........................................................      21
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ACQUIROR............................      21
   4.01     Organization, Standing and Authority................................      21
   4.02     Corporate Power.....................................................      22
   4.03     Corporate Authority and Action......................................      22
   4.04     Regulatory Approvals; No Defaults...................................      22
   4.05     Financing...........................................................      22
ARTICLE 5 COVENANTS.............................................................      23
   5.01     Forbearances of the Company.........................................      23
   5.02     Reasonable Best Efforts.............................................      26
   5.03     Shareholder Approvals...............................................      26
   5.04     Proxy Statement.....................................................      26
   5.05     Press Releases......................................................      28
   5.06     Access to Information...............................................      28
   5.07     No Solicitation.....................................................      28
   5.08     Takeover Laws.......................................................      29
</TABLE>

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<TABLE>
<S>                                                                                   <C>
   5.09     No Rights Triggered.................................................      30
   5.10     Regulatory Applications.............................................      30
   5.11     Indemnification.....................................................      31
   5.12     Notification of Certain Matters.....................................      31
   5.13     Employee Benefits...................................................      31
   5.14     Certain Contracts...................................................      32
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER..............................      32
   6.01     Conditions to Each Party's Obligation to Effect the Merger..........      32
   6.02     Conditions to Obligation of the Company.............................      33
   6.03     Conditions to Obligation of the Acquiror............................      33
ARTICLE 7 TERMINATION...........................................................      34
   7.01     Termination Events..................................................      34
   7.02     Effect of Termination and Abandonment...............................      35
   7.03     Termination Fee.....................................................      35
ARTICLE 8 MISCELLANEOUS.........................................................      36
   8.01     Survival............................................................      36
   8.02     Waiver; Amendment...................................................      36
   8.03     Counterparts........................................................      36
   8.04     Governing Law.......................................................      36
   8.05     Waiver of Jury Trial................................................      36
   8.06     Specific Performance................................................      36
   8.07     Expenses............................................................      36
   8.08     Notices.............................................................      37
   8.09     Entire Understanding, No Third-Party Beneficiaries..................      37
   8.10     Assignment..........................................................      37
   8.11     Interpretation......................................................      38
   8.12     Certain Definitions.................................................      38
   8.13     Tax Disclosure Authorization........................................      44
</TABLE>

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                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER, dated as of December 29, 2003 (this
"Agreement"), among COUNTRY Life Insurance Company, an Illinois corporation (the
"Acquiror"), COUNTRY Medical Plans, Inc., a stock insurance company (the
"Acquiror Sub") and Cotton States Life Insurance Company, a Georgia domestic
stock insurance company (the "Company").

                               W I T N E S S E T H

         WHEREAS, on the terms and subject to the conditions contained in this
Agreement, the parties to this Agreement intend to effect the merger of Acquiror
Sub with and into the Company, with the Company as the surviving corporation;

         WHEREAS, the respective boards of directors of each of the Company,
Acquiror and Acquiror Sub have adopted resolutions approving this Agreement and
the transactions contemplated by this Agreement and, in the case of the board of
directors of the Company, recommending that the shareholders of the Company
approve of this Agreement and the Merger in accordance with the Georgia Business
Corporation Code, as amended (the "GBCC");

         WHEREAS, as a condition to and inducement to Acquiror's and Acquiror
Sub's willingness to enter into the Agreement, certain holders and beneficial
owners of Company Common Stock are entering into Shareholder Agreements with the
Acquiror (each a "Shareholder Agreement"); and

         WHEREAS, capitalized terms not defined in the context of the section in
which they first appear shall have the meanings set forth in Section 8.12.

         NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:

                                   ARTICLE 1

                                   THE MERGER

         1.01     The Merger. At the Effective Time, on the terms and subject to
the conditions set forth in this Agreement, the following shall occur:

         (a)      Acquiror Sub shall merge with and into the Company, and the
separate corporate existence of Acquiror Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Georgia, and the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger;

         (b)      the Merger shall have the effects specified in the GBCC and
the IBCA;

         (c)      the Company Articles shall be the articles of incorporation of
the Surviving Corporation;

         (d)      the by-laws of Acquiror Sub shall be the by-laws of the
Surviving Corporation; and

         (e)      the directors and officers of the Surviving Corporation shall
be the directors and officers of Acquiror Sub immediately prior to the Effective
Time; such directors shall hold office until such time as their successors shall
be duly elected (or appointed) and qualified.

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         1.02     Effective Time. The Merger shall become effective upon the
time specified in the articles of merger in accordance with Section 14-2-1105 of
the GBCC and Section 5/11.40 of the IBCA. Subject to the terms of this
Agreement, the parties shall cause the Merger to become effective (a) on a day
within ten Business Days after the last of the conditions set forth in Article 6
(other than conditions relating solely to the delivery of documents dated the
Closing Date) shall have been satisfied or waived in accordance with the terms
of this Agreement (or, at the election of the Acquiror, on the last Business Day
of the month in which such day occurs), or (b) on such date as the parties may
agree in writing (the "Closing Date").

                                   ARTICLE 2

                                  CONSIDERATION

         2.01     Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any shares of the Acquiror Sub's common
stock:

         (a)      each share of Company Common Stock outstanding immediately
prior to the Effective Time (other than Treasury Shares and Dissenters' Shares)
shall be converted into the right to receive consideration comprising $20.25 in
cash (the "Consideration"), and, at the Effective Time, the shares of Company
Common Stock shall no longer be outstanding and shall automatically be cancelled
and cease to exist, and from and after the Effective Time, certificates
representing Company Common Stock immediately prior to the Effective Time shall
be deemed for all purposes to represent the Consideration pursuant to this
Section 2.01(a);

         (b)      each share of Acquiror Sub common stock issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock, par value $1.00 per share, of the Surviving Corporation; and

         (c)      each Company Stock Award issued and outstanding immediately
prior the Effective Time shall, as applicable, be converted into the right to
receive the payment specified in Section 2.05 or terminated as described in
Section 2.05.

         (d)      each share of Company Common Stock held as Treasury Shares or
Dissenters' Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and, except as set forth in Section 2.04 with
respect to Dissenters' Shares, no consideration shall be issued in exchange
therefor.

         2.02     Rights as Shareholders; Stock Transfers. At the Effective
Time, holders of Company Common Stock (other than holders of Dissenters' Shares,
if applicable) shall cease to be, and shall have no rights as, shareholders of
the Company, other than to receive any dividend or other distribution with
respect to such Company Common Stock with a record date occurring prior to the
Effective Time and the right to receive Consideration provided under this
Article 2. After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of shares of Company Common Stock.

         2.03     Payment for Shares. Acquiror shall make available or cause to
be made available to such bank as the Acquiror shall appoint (and shall be
reasonably acceptable to the Company), as paying agent (the "Paying Agent"),
amounts sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments of Consideration to holders of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
Promptly after the Effective Time, the Surviving Corporation shall cause the
Paying Agent to mail to each Person who was, at the Effective Time, a holder of
record of outstanding shares of Company Common Stock a form (mutually agreed to
by the Acquiror and the Company) of letter of transmittal and instructions for
use in effecting the surrender of the certificates which, immediately prior to
the Effective Time, represented any of such shares in exchange for payment
therefor. Upon surrender to the Paying Agent of such certificates, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the Surviving Corporation shall promptly cause the Paying
Agent

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to pay to each Person entitled thereto a check in the amount of the
Consideration to which such Person is entitled, after giving effect to any
required tax withholdings. No interest will be paid or will accrue on any amount
payable upon the surrender of any such certificate. If payment is to be made to
a Person other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment pay any transfer or other taxes required by reason of
the payment to a Person other than the registered holder of the certificate
surrendered or establish to the satisfaction of the Surviving Corporation or the
Paying Agent that such tax has been paid or is not applicable. One hundred and
eighty days following the Effective Time, the Surviving Corporation shall be
entitled to cause the Paying Agent to deliver to it any funds (including any
interest or other amounts received with respect thereto) made available to the
Paying Agent that have not been disbursed to holders of certificates formerly
representing shares of Company Common Stock outstanding on the Effective Time,
and thereafter such holders shall be entitled to look to the Surviving
Corporation only as general creditors thereof with respect to the cash payable
upon due surrender of their certificates. Notwithstanding the foregoing, neither
the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing shares of Company Common Stock for any amount
paid to a public official pursuant to any applicable abandoned property, escheat
or similar laws.

         2.04     Dissenting Shareholders. Dissenters' Shares shall be purchased
and paid for in accordance with Sections 14-2-1301 to 14-2-1332 of the GBCC. The
Company shall give Acquiror (a) prompt notice of any written demands for fair
value received by the Company, withdrawals of such demands and any other related
instruments served pursuant to the GBCC and received by the Company, and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for fair value under the GBCC. The Company shall not, except with prior written
consent of Acquiror, voluntarily make any payment with respect to any demands
for fair value for Dissenters' Shares or offer to settle, or settle, any such
demands.

         2.05     Company Stock Awards.

         (a)      Immediately prior to the Effective Time, each Company Stock
Option, then outstanding, vested and exercisable, without any action on the part
of the holder shall be converted into the right to receive payment of an amount
in cash equal to the product of (a) the excess of the Consideration Per Share
over the exercise price per share, if any, subject to such Company Stock Option
and (b) the number of shares subject to such Company Stock Option immediately
prior to the Effective Time, provided that the Company shall be entitled to
withhold from such cash payment any amounts required to be withheld by
applicable law. Each Company Stock Option to which the foregoing applies will be
cancelled and shall cease to exist by virtue of such payment. Each unvested, or
otherwise unexercisable Company Sock Option shall be cancelled and terminated
without any payment to the holder thereof as to the unvested portion.

         (b)      As soon as practicable following execution of this Agreement
but in no event later than the date the shareholders of the Company vote to
adopt the plan of merger contained in this Agreement and approve the Merger, the
Company will enter into agreements with each holder of restricted stock granted
under the Company's Performance Share Award Plan to provide that the shareholder
approval of the plan of merger contained in this Agreement will not constitute a
"change of control" of the Company for purposes of the Performance Share Award
Plan. The agreements with each holder of restricted stock granted under the
Performance Share Award Plan shall also provide that immediately prior to the
Effective Time, each share of restricted stock of the Company then outstanding,
without any action on the part of the holder shall be converted into the right
to receive payment of an amount in cash equal to the Consideration Per Share,
provided that the Company shall be entitled to withhold from such cash payment
any amounts required to be withheld by applicable law. Each share of restricted
stock to which the foregoing applies will be cancelled and shall cease to exist
by virtue of such payment.

         (c)      Prior to the Effective Time the Company shall take all
necessary actions, including obtaining (i) consents of each holder of a Company
Stock Option or restricted stock of the Company (collectively a "Company Stock
Award") including employees of the Company and of its Subsidiaries and each of
the

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directors on the Company Board and each of the directors on the board of
directors of any of the Company's Subsidiaries, in each case, in their
individual capacities and (ii) resolutions of the Company Board, of the board of
directors of the Company's Subsidiaries or of a committee established under the
applicable Company Common Stock Plan, if applicable, to effect the foregoing.
The parties hereto acknowledge that the Company may be required to sell
Investment Securities to fund its obligations pursuant to this Section 2.05.

                                   ARTICLE 3

                     COMPANY REPRESENTATIONS AND WARRANTIES

         On or prior to the date hereof, the Company has delivered to the
Acquiror a letter (the "Company's Disclosure Letter") setting forth items the
disclosure of which is necessary or appropriate either (i) in response to an
express disclosure requirement contained in a provision hereof or (ii) as an
exception to one or more representations or warranties contained in this Article
3; provided that the inclusion of an item in the Company's Disclosure Letter as
an exception to a representation or warranty shall not be deemed an admission by
the disclosing party that such item (or any undisclosed item or information of
comparable or greater significance) represents a material exception or fact,
event or circumstance with respect to the Company. Except as Previously
Disclosed in a paragraph of the Company's Disclosure Letter corresponding to the
relevant section below, the Company represents and warrants to the Acquiror and
Acquiror Sub as set forth in its Disclosure Letters and as follows:

         3.01     Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Georgia; and except where, individually or in the aggregate, the
failure to be qualified is not reasonably likely to have a Material Adverse
Effect, is duly qualified to do business and is in good standing in all the
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. The Company has
heretofore furnished to Acquiror a complete and correct copy of the Company
Articles and Company By-Laws as currently in effect, including all amendments.

         3.02     Company Common Stock. As of the date hereof, the authorized
capital stock of the Company consists solely of 20,000,000 shares of Company
Common Stock, of which, as of the date hereof, not more than 6,322,737 shares
are outstanding, 431,767 shares are held in the treasury of the Company and
617,179 shares are reserved for issuance upon exercise of Company Stock Options.
The outstanding shares of Company Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable, and are not subject to preemptive
rights (and were not issued in violation of any preemptive rights). As of the
date hereof, no other shares of Company Common Stock are reserved for issuance,
the Company does not have any Rights issued or outstanding with respect to
Company Common Stock (other than with respect to 121,822 shares issuable upon
exercises of Company Stock Options outstanding as of the date hereof), and the
Company does not have any commitment to authorize, issue or sell any Company
Common Stock or Rights, except pursuant to this Agreement. Section 3.02 of the
Company's Disclosure Letter lists each Compensation Plan under which any shares
of capital stock of the Company or any Rights with respect thereto have been or
may be awarded or issued ("Company Stock Plans"). As of the date hereof, the
Company has no phantom stock units or other stock appreciation rights
outstanding. Except as described in this Section 3.02, the Company has no
Company Common Stock authorized for issuance pursuant to any Company Stock
Plans. The Company has 242,543 shares outstanding under the Performance Share
Awards Plan and, except as set forth in Section 3.02 of the Company's Disclosure
Letter, will not be required to grant any shares or units or make any payments
under such plan, either based on performance prior to the date hereof or as a
result of the consummation of the transactions contemplated herein. The Company
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the shareholders of
the Company on any matter. Except as set forth in Section 3.02 of the Company's
Disclosure Letter, there are no shareholders agreements, voting trusts or other
agreements or understandings to which the Company, any of its Subsidiaries or
any of its Affiliates is a party or by which any of them is bound relating to
the issued or unissued capital stock of the

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Company or any of its Subsidiaries (including any such agreements or
understandings that may limit in any way the solicitation of proxies by or on
behalf of the Company from, or the casting of votes by, the shareholders of the
Company with respect to the Merger) or granting to any Person or group of
Persons the right to elect, or to designate or nominate for election, a director
to the Company Board. There are no programs in place or outstanding obligations
of the Company or any of its Subsidiaries (i) to repurchase, redeem or otherwise
acquire any securities or (ii) to vote or to dispose of any shares of the
capital stock of any of the Subsidiaries. Other than the $.04 per share dividend
declared by the Company Board on December 03, 2003, the Company Board has
declared no dividends which have not, prior the date hereof been paid in full.

         3.03     Subsidiaries.

         (a)      Section 3.03(a) of the Company's Disclosure Letter lists all
its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary; and (i) the Company owns, directly or indirectly, all the
outstanding equity securities of each of its Subsidiaries, (ii) no securities of
any of the Company's Subsidiaries are or may become required to be issued (other
than to the Company or the Company's Subsidiaries), (iii) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any securities of
any such Subsidiaries (other than to the Company or its Subsidiaries), (iv)
there are no contracts, commitments, understandings, or arrangements relating to
its rights to vote or to dispose of such securities, and (v) all the equity
securities of each such Subsidiary held by the Company or its Subsidiaries are
fully paid and nonassessable and are owned by the Company or its Subsidiaries
free and clear of any Liens.

         (b)      As of the date hereof, neither the Company nor any of the
Company's Subsidiaries holds securities involving, in the aggregate, Beneficial
Ownership or control by the Company or any such Subsidiary of 5% or more of any
class of the issuer's voting securities or 25% or more of any class of the
issuer's securities, including a description of any such issuer and the
percentage of the issuer's voting and/or non-voting securities.

         (c)      Section 3.03(c) of the Company's Disclosure Letter lists, as
of the date hereof, all partnerships, limited liability companies, joint
ventures or similar entities, in which it owns or controls, or any of its
Subsidiaries own or control, an equity, partnership or membership interest,
directly or indirectly, and the nature and amount of each such interest.

         (d)      Each of the Company's Subsidiaries has been duly organized and
is validly existing and in good standing under the laws of the jurisdiction of
its organization; and except where, individually or in the aggregate, the
failure to be qualified is not reasonably likely to have a Material Adverse
Effect, is duly qualified to do business and in good standing in all the
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.

         3.04     Corporate Power. The Company and each of its Subsidiaries has
the requisite power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.

         3.05     Corporate Authority and Action.

         (a)      The Company and its Subsidiaries have taken all corporate
action necessary in order (i) to authorize the execution and delivery of, and
performance of its obligations under, this Agreement and (ii) subject only to
receipt of the approval of the plan of merger contained in this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock, to
consummate the Merger. This Agreement is a valid and legally binding obligation
of the Company, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).

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         (b)      The Company has taken all action required to be taken by it in
order to exempt this Agreement, the Shareholder Agreements and the transactions
contemplated hereby and thereby from, and this Agreement, the Shareholder
Agreements and the transactions contemplated hereby and thereby each is exempt
from, the requirements of any applicable "moratorium," "control share," "fair
price," or other antitakeover laws and regulation of any state, including
Sections 14-2-1110 to 14-2-1113 and Sections 14-2-1131 to 14-2-1133 of the GBCC
(collectively, "Takeover Laws"). As of the date hereof, the Company Board has
adopted a resolution which approves and adopts this Agreement and the Merger and
resolves to recommend that the Company's shareholders approve this Agreement and
the Merger.

         (c)      The Company Financial Advisor has delivered to the Company
Board its written opinion, dated prior to or as of the date of this Agreement,
to the effect that, based upon and subject to the matters set forth therein and
as of the date thereof, the Consideration to be received by holders of Company
Common Stock pursuant to the Merger is fair to such holders from a financial
point of view. The Company has been authorized by the Company Financial Advisor
to permit inclusion of such opinion (and/or a reference thereto) in the Proxy
Statement.

         (d)      The only vote of the shareholders the Company required to
adopt the plan of merger contained in this Agreement and approve the Merger is
the affirmative vote of the holders of not less than a majority of the
outstanding Shares (the "Company Requisite Vote"). No other vote of the
shareholders of the Company is required by law, the Company Articles or Company
By-Laws.

         3.06     Regulatory Filings; No Defaults.

         (a)      No consents or approvals of, filings or registrations with or
notices to any Governmental Authority are required to be made or obtained by the
Company or any of its Subsidiaries in connection with the execution, delivery or
performance by the Company of this Agreement, or to consummate the Merger or the
other transactions contemplated hereby, except for (i) filing the Proxy
Statement in definitive form with the Commissioner of Insurance of the State of
Georgia, (ii) the filing of applications and notices with respect to the Merger,
as applicable, with the Georgia Insurance, Safety and Fire Commissioner,
Illinois Insurance Commissioner, Connecticut Insurance Commissioner, and any
other insurance regulatory authorities as may be necessary or appropriate, (iii)
the filing of a notification, if required, and expiration of the related waiting
period under the HSR Act, and (iv) the filing of articles of merger with the
Secretary of State of the State of Georgia pursuant to the GBCC and the
Secretary of State of the State of Illinois pursuant to the IBCA. As of the date
hereof, the Company is not aware of any reason why the approvals of all
Governmental Authorities necessary to permit consummation of the transactions
contemplated by this Agreement will not be received without the imposition of a
Burdensome Condition.

         (b)      Subject to receipt of the regulatory approvals, and expiration
of the waiting periods, referred to in Section 3.06(a) and the making of
required filings under federal and state securities laws and except as set forth
in Section 3.06(b) of the Company's Disclosure Letter, the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) conflict with, constitute a breach
or violation of, result in a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any Contract to
which the Company or of any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, including the Company
Contracts, (ii) constitute a breach or violation of, or a default under, the
Company Articles or the Company By-Laws, or (iii) violate any law, rule, or
regulation or any judgment, decree, order or Company Permit; except, in the case
of clause (i) or (iii) for such breaches, defaults, terminations, accelerations,
Liens or violations which, individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect.

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         3.07     SEC Documents; Financial Statements.

         (a)      The Company's (i) Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000, 2001 and 2002, and all other reports and
registration statements filed or to be filed by the Company or any of its
Subsidiaries subsequent to January 1, 2001 under the Securities Act, or under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or to
be filed (collectively, the "Company's SEC Documents") with the SEC and (ii)
proxy statements, information statements and annual reports to securities
holders filed with the Commissioner of Insurance of the State of Georgia
relating to any Company shareholder meeting after January 1, 2001 under Chapter
120-2-7 of the Rules and Regulations of the State of Georgia Rules of the
Comptroller General Insurance Department (collectively "Stockholder Reports"),
as of the date filed, (A) complied or will comply in all material respects as to
form with the applicable requirements under the Securities Act, the Exchange Act
or Chapter 120-2-7 of the Rules and Regulations of the State of Georgia Rules of
the Comptroller General Insurance Department, as the case may be and (B) did not
(or if amended or superseded by a filing prior to the date of this Agreement,
then did not as of the date of such filing) and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company has
heretofore furnished the Acquiror with complete and correct copies of all
registration statements, reports, proxy statements and information statements
filed with the SEC and the Commissioner of Insurance of the State of Georgia
since December 31, 1998. The Company has heretofore furnished to Acquiror a
complete and correct copy of (i) any material agreements, documents or other
instruments that will be required to be filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act, which have not yet been
filed with the SEC, and (ii) any material amendments or modifications which have
not yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by the Company with the SEC pursuant to the
Securities Act or the Exchange Act.

         (b)      Each of the Company Financial Statements contained in any of
the Company's SEC Documents or Stockholder Reports (including the related notes
and schedules thereto) fairly presents, or will fairly present, in all material
respects, the financial position, the results of operations, changes in
shareholders' equity and changes in cash flows of the Company and its
Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.

         (c)      The Company Statutory Financial Statements have been prepared
in accordance with the applicable accounting practices prescribed or permitted
by the Georgia Department of Insurance (which is the department of insurance of
the Company's domiciliary jurisdiction) for purposes of financial reporting
("Statutory Accounting Practices"), and such accounting practices have been
applied on a basis consistent with such Statutory Accounting Practices
throughout the periods involved, except as expressly set forth in the notes,
exhibits or schedules thereto, and the Company Statutory Financial Statements
present fairly in all material respects the financial position and the results
of operations for the Company as of the dates and for the periods therein in
accordance with applicable Statutory Accounting Practices. The financial
statements contained in the Company Annual Statutory Statements have been
audited by the independent auditors of the Company, and the Company has
furnished to Acquiror true and complete copies of all audit opinions related
thereto. The Company has furnished to Acquiror true and complete copies of all
examination reports of insurance departments and any insurance regulatory
agencies since January 1, 2000 relating to the Company and the Company's
Subsidiaries. The Company has furnished Acquiror true and complete copies of the
Company Statutory Financial Statements.

         (d)      The Company qualifies for the exemption from registration
under the Exchange Act provided by Section 12(g)(2)(G) of the Exchange Act.

         (e)      All actuarial reports with respect to the Company or any of
its Subsidiaries relied upon by the Company or any Subsidiary or Governmental
Authority since December 31, 2000, and all attachments, addenda, supplements and
modifications thereto (the "Company Actuarial Analyses"), including those

                                       10
<PAGE>

provided to Acquiror, were based upon an accurate inventory of policies in force
for the Company and its Subsidiaries, as the case may be, at the relevant time
of preparation, were prepared using appropriate modeling procedures accurately
applied, if relevant, and in conformity with generally accepted actuarial
standards consistently applied, and the projections contained therein were
properly prepared in accordance with the assumptions stated therein; the
information and data furnished by the Company or any Subsidiary to its
independent actuaries in connection with the preparation of the Company
Actuarial Analyses were accurate in all material respects, and the Company and
each of its Subsidiaries is in compliance in all material respects with the
underwriting guidelines applicable thereto.

         3.08     Absence of Undisclosed Liabilities and Changes. Except as
disclosed in the Company's SEC Documents filed prior to the date hereof
(including, by way of accrual or reserve against the Company's assets contained
in its consolidated balance sheet contained therein) or set forth in Section
3.08 of the Company's Disclosure Letter, as of September 30, 2003, none of the
Company or its Subsidiaries has any Liability, that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. Except as set
forth in Section 3.08 of the Company's Disclosure Letter, since September 30,
2003, on a consolidated basis the Company and its Subsidiaries have not incurred
any Liability other than those incurred (i) in the ordinary course of business
that are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect or (ii) in connection with the transactions contemplated
by this Agreement. Since December 31, 2002, except for execution of this
Agreement and performance of its obligations hereunder, (i) the Company and its
Subsidiaries have conducted their respective businesses in the ordinary and
usual course consistent with past practice, (ii) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
events and circumstances (described in any paragraph of Article 3 or otherwise),
is reasonably likely to have a Material Adverse Effect, and (iii) neither the
Company nor any of its Subsidiaries have engaged in any material transaction or
entered into any material agreement or commitment outside the ordinary course of
business. Since December 31, 2002, neither the Company nor any of its
Subsidiaries have suffered any Material Adverse Effect and there has not
occurred, and there is not currently existing, any circumstance or event that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.

         3.09     Litigation. Except as disclosed in Section 3.09 of the
Company's Disclosure Letter, no litigation, claim, charge, grievance or other
proceeding before any court, arbitrator or Governmental Authority is pending
against the Company or any of its Subsidiaries and, to the Company's knowledge,
no such litigation, claim or other proceeding has been threatened that (i) in
each case, seeks or should result in damages of more than $100,000 or (ii) are,
individually or in the aggregate, reasonably likely to have, a Material Adverse
Effect. Except as disclosed in Section 3.09 of the Company's Disclosure Letter,
neither the Company nor any of its Subsidiaries nor any of their property is
subject to any order, judgment, injunction or decree, which, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect.

         3.10     Compliance with Laws. The Company and each of its Subsidiaries
and, to the knowledge of the Company, their respective officers and employees:

         (a)      conducts its business in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses (including laws relating to insurance company
regulation, discriminatory business practices, the Sarbanes-Oxley Act of 2002
and the USA PATRIOT Act of 2001) except where the failure to so comply,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect;

         (b)      has all permits, licenses, variances, exemptions, franchises,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Governmental Authorities required in order to permit
it to own or lease its properties and to conduct its businesses as presently
conducted ("Company Permits") except where the failure to so have or to so file,
apply or register, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect; all such Company Permits are in full force and
effect and, to the Company's knowledge, no suspension or cancellation of any of
them is threatened;

                                       11
<PAGE>

the Company and each of its Subsidiaries are in compliance in all material
respects with the terms of the Company Permits;

         (c)      has received no notification or communication from any
Governmental Authority (i) asserting that the Company or any of its Subsidiaries
is not in compliance with any of the statutes, regulations, or ordinances that
such Governmental Authority enforces or (ii) threatening to revoke any Company
Permit (nor, to the Company's knowledge, do grounds for the foregoing exist) or
(iii) restricting or disqualifying their activities (except for restrictions
generally imposed by rule, regulation or administrative policy on insurance
companies generally), except where such noncompliance, revocation, restriction
or disqualification is not reasonably likely to have a Material Adverse Effect;

         (d)      is not subject to any pending, or to the Company's knowledge
threatened, investigation, review or disciplinary proceedings by any
Governmental Authority against the Company, any of its Subsidiaries or any
officer, director or employee thereof, except (i) as set forth in Section
3.10(d) of the Company's Disclosure Letter or (ii) where such investigation,
review or disciplinary proceeding is not reasonably likely to have a Material
Adverse Effect;

         (e)      is not subject to any order or decree issued by, or a party to
any agreement or memorandum of understanding with, or a party to any commitment
letter or similar undertaking to, or subject to any order or directive by, or a
recipient of any supervisory letter from any Governmental Authority and has not
adopted any board resolutions at the request of any Governmental Authority or
been advised by any Governmental Authority that it is considering issuing or
requesting any such agreement or other action, which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect;

         (f)      has timely filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed under any applicable law, regulation or rule, with any
applicable Governmental Authority (collectively, the "Company Reports"), except
(i) as set forth in Section 3.10(f) of the Company's Disclosure Letter or (ii)
where the failure to so timely file, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect; as of their respective
dates, the Company Reports complied in all material respects with the applicable
statutes, rules, regulations and orders enforced or promulgated by the
regulatory Governmental Authority with which they were filed;

         (g)      all policies, binders, slips, certificates, annuity contracts
and participation agreements and other agreements of insurance, whether
individual or group, in effect as of the date hereof (including all
applications, supplements, endorsements, riders and ancillary agreements in
connection therewith) that are issued by the Company and its Subsidiaries and
any and all marketing materials (the "Company Forms"), are, to the extent
required under applicable law, on forms approved by applicable insurance
regulatory authorities which have been filed and not objected to by such
authorities within the period provided for objection, except where the failure
to so comply, individually or in the aggregate, is not reasonably likely to have
a Material Adverse Effect;

         (h)      the Company Forms comply with the insurance statutes,
regulations and rules applicable thereto and, as to premium rates established by
the Company or any Subsidiary that are required to be filed with or approved by
insurance regulatory authorities, the rates have been so filed or approved, the
premiums charged conform thereto and such premiums comply with the insurance
statutes, regulations and rules applicable thereto, except where the failure to
so comply or conform, individually or in the aggregate is not reasonably likely
to have a Material Adverse Effect;

         (i)      the Company and its Subsidiaries have marketed, sold and
issued insurance products in compliance with all applicable laws, all applicable
orders and directives of all insurance and securities regulatory authorities,
and all market conduct recommendations resulting from market conduct or other
examinations of insurance or securities regulatory authorities in the respective
jurisdictions in which such

                                       12
<PAGE>

products have been sold, including compliance with all applicable laws relating
to (i) the disclosure of the nature of insurance products as policies of
insurance, (ii) insurance product projections, (iii) the underwriting,
marketing, sale and issuance of, or refusal to sell, any insurance product to
insureds or potential insureds of any race, color, creed or national origin and
(iv) "replacement" or anti-churning restrictions, except where the failure to be
in compliance or so market, sell or issue within such standards, individually or
in the aggregate, is not reasonably likely to have a Material Adverse Effect;
and

         (j)      does not, and is not obligated to, maintain separate accounts.

         3.11     Material Contracts; Defaults. Section 3.11 of the Company's
Disclosure Letter sets forth a complete and accurate list of all material
Contracts to which the Company or any of its Subsidiaries is a party
(collectively, together with all contracts and other documents listed on the
exhibit index to the Company's Form 10-K for the period ended December 31, 2002,
the "Company Contracts"), including the following:

         (a)      any Contract which contains obligations in excess of $100,000
or is otherwise material to the current business of the Company or any of its
Subsidiaries taken as a whole;

         (b)      any Contract which is a reinsurance or retrocession contract
which requires the payment of premiums by the Company or its Subsidiaries of
amounts in excess of $100,000 per year or relating to business as to which the
Company or any of its Subsidiaries are holding gross reserves in excess of
$100,000;

         (c)      any Contract which is an employment, severance, retention,
consulting, loan or indemnification contract with any current or, to the extent
obligations remain to be performed by the Company, former employee of the
Company or its Subsidiaries, including contracts to employ executive officers
and other contracts with officers or directors of the Company or any of its
Subsidiaries, other than any agent contract with insurance agents that by its
terms is terminable by the Company or any of its Subsidiaries before and after
the Effective Time on not more than sixty days' notice without any penalty or
cost to the Company or any of its Subsidiaries;

         (d)      any Contract under which the Company or any of its
Subsidiaries created, incurred, assumed, or guaranteed (or may create, incur,
assume, or guarantee) indebtedness for borrowed money (including capitalized
lease obligations) in excess of $100,000;

         (e)      any Contract to which the Company or any of its Subsidiaries
is a party, on the one hand, and under which any Affiliate, officer, director,
employee or equity holder or other Related Person of the Company or any of its
Subsidiaries, on the other hand, is a party or beneficiary;

         (f)      any Contract involving the purchase or sale of assets with a
book value greater than $100,000 entered into since December 31, 1998; and

         (g)      any Contract involving a capital expenditure in excess of
$100,000 in a twelve-month period or $250,000 in the aggregate.

The Company Contracts referenced in Section 3.11(e) to which a Related Party is
a party (other than employment contracts and option and restricted stock
agreements) are on arm's-length terms or terms more favorable to the Company and
its Subsidiaries. Except with respect to Company Contracts which terminate as a
result of the expiration of their stated duration prior to the Closing Date and
disregarding the effect of the execution of this Agreement and consummation of
the transactions contemplated hereby, with respect to each of the Company
Contracts, such Company Contract is (assuming due power and authority of, and
due execution and delivery by, the other party or parties thereto) valid and
binding upon the Company or the Subsidiary party thereto and, to the knowledge
of the Company, each other party thereto, except as may be limited by
bankruptcy, insolvency, moratorium, or other similar laws effecting or relating
to enforcement of creditors' rights generally, or by general principles of
equity, and is in full force and effect; and there is no

                                       13
<PAGE>
default or claim of default thereunder by the Company or the Company Subsidiary
party thereto, or to the knowledge of the Company, by any other party thereto,
and no event has occurred (disregarding the effect of the execution of this
Agreement and consummation of the transactions contemplated hereby) which, with
the passage of time or the giving of notice (or both), would constitute a
default thereunder by the Company or the Company Subsidiary party thereto, or to
the knowledge of the Company, by any other party thereto, or would permit
material modification, acceleration or termination thereof, except where such
defaults, modifications, accelerations or terminations, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect. The
Company has previously made available to Acquiror true and complete copies of
each Company Contract, including true and complete descriptions of any oral
Company Contracts, in all cases as amended and currently in effect.

         3.12     Non-Competition/Non-Solicitation. Except as set forth in
Section 3.12 of the Company's Disclosure Letter, neither the Company nor any of
its Subsidiaries is a party to or bound by any non-competition or
non-solicitation or any other agreement or obligation (i) which limits, purports
to limit, or would limit in any respect the manner in which, or the localities
in which, any business of the Company or its Affiliates is or could be conducted
or the types of business that the Company or its Affiliates conducts or may
conduct or (ii) which limits, purports to limit or would limit in any way the
ability of the Company and its Subsidiaries to solicit prospective employees.

         3.13     Properties. The Company and its Subsidiaries have good and
marketable title, free and clear of all Liens to the properties and assets,
tangible or intangible, reflected in the Company Financial Statements as being
owned by the Company and its Subsidiaries except (i) those reflected or reserved
against in the balance sheet contained in its Form 10-Q for the period ended
September 30, 2003, (ii) Taxes not in default and payable without penalty and
interest, (iii) other Liens which do not materially interfere with the Company's
or its Subsidiary's use or enjoyment of such property or materially detract from
the value or such property and (iv) as set forth in Section 3.13 of the
Company's Disclosure Letter. All buildings and all fixtures, equipment, and
other property (other than Company IP Rights) and assets which are material to
its business and are held under leases or subleases by any of the Company and
its Subsidiaries are held under valid leases or subleases enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and to general equity principles).

         3.14     Employee Benefit Plans.

         (a)      The Company has Previously Disclosed a complete list of all
bonus, vacation, deferred compensation, commission-based, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock appreciation and stock option plans, all
employment or severance contracts, all medical, dental, disability, severance,
health and life plans, all other employee benefit and fringe benefit plans,
contracts or arrangements and any "change of control" or similar provisions in
any plan, contract or arrangement, currently or within the six year period ended
on the date of this Agreement, maintained or contributed to by the Company or
any of its Subsidiaries for the benefit of current or former officers,
employees, Multi-Line Exclusive Agents or directors or the beneficiaries or
dependents of any of the foregoing (collectively, the "Compensation Plans").

         (b)      With respect to each Compensation Plan, if applicable, the
Company has made available to the Acquiror, true and complete copies of the
existing: (i) Compensation Plan documents and amendments thereto; (ii) trust
instruments and insurance contracts; and (iii) two most recent Forms 5500 filed
with the IRS. All required reports and descriptions of the Compensation Plans
(including but not limited to Form 5500 annual reports, summary annual reports
and summary plan descriptions) have been timely filed and distributed, except
where the failure to so file or distribute, individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect.

         (c)      Each of the Compensation Plans has been administered and
operated in accordance with the terms thereof and with applicable law, including
ERISA, the Code and the Securities Act, except where the

                                       14
<PAGE>

failure to so operate is not likely to have a Material Adverse Effect. Each of
the Compensation Plans which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Company Pension Plan") and which is intended
to be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the Company is not aware of any
circumstances that would likely result in the revocation or denial of any such
favorable determination letter. None of the Company, any of its Subsidiaries or,
or to the Company's knowledge, an Indemnified Party has engaged in any
transaction with respect to any Compensation Plan that has subjected, or
(assuming the taxable period with respect to the transaction expired as of the
date hereof) could subject the Company or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of ERISA in an
amount which is reasonably likely to have a Material Adverse Effect. There is no
pending or, to the Company's knowledge, threatened litigation or governmental
audit, examination or investigation relating to the Company's Compensation
Plans, except litigation, audits, examinations and investigations that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect. Section 3.14(c) of the Company's Disclosure Letter sets forth
all outstanding Loans made to and of the Compensation Plans. None of the
Company, any Subsidiary, nor any of their current of former directors, officers,
employees or any other "fiduciary," within the meaning of Section 3(21) of
ERISA, has committed any breach of fiduciary responsibility imposed by ERISA or
any other applicable law, or has any Liability for failure to comply with ERISA
or the Code for any action or failure to act in connection with the
administration or investment of the assets of any Compensation Plans, except
breaches or Liabilities that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.

         (d)      No Liability under Subtitle C or D of Title IV of ERISA has
been or is expected by the Company to be incurred by the Company or any of its
Subsidiaries with respect to any "single-employer plan" (within the meaning of
Section 4001(a)(15) of ERISA) or Multiemployer Plan currently or formerly
maintained or contributed to by any of them, or the single-employer plan or
Multiemployer Plan of any entity (an "ERISA Affiliate") which is considered one
employer with the Company under Section 4001(a)(14) of ERISA or Section 414(b),
(c), (m) or (o) of the Code (an "ERISA Affiliate Plan"). Other than as specified
by the terms of this Agreement, no notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived or extended, other than pursuant to PBGC Reg. Section 4043.66,
has been required to be filed for any Pension Plan or any ERISA Affiliate Plan
within the 12-month period ending on the date hereof. The PBGC has not
instituted proceedings to terminate any Company Pension Plan or ERISA Affiliate
Plan and, to the Company's knowledge, no condition exists that presents a
material risk that such proceedings will be instituted. The Company and its
Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a Multiemployer Plan under Subtitle E of Title IV of
ERISA (including, without limitation, withdrawal liability based on the
contributions of any ERISA Affiliate).

         (e)      All contributions, premiums and payments required to have been
made under the terms of any of the Compensation Plans law have been timely made
or reflected in the Company's SEC Documents. Neither any of the Company Pension
Plans nor ERISA Affiliate Plans has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA. None of the Company, any of its Subsidiaries or any ERISA Affiliate has
provided, or is required to provide, security to any Company Pension Plan or any
ERISA Affiliate Plan pursuant to Section 401(a)(29) or Section 412(n) of the
Code.

         (f)      Except as set forth in Section 3.14(f) of the Company's
Disclosure Letter, under each Company Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit liabilities,"
within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis
of the actuarial assumptions contained in the plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Company
Pension Plan. Except as set forth in Section 3.14(f) of the Company's Disclosure
Letter, under each of the Company Pension Plans, there has been no adverse
change in the financial condition of any Company Pension Plan (with respect to
either assets or benefits) since the last day of the most recent plan year.

                                       15
<PAGE>

         (g)      There is no material pending or, to the knowledge of the
Company threatened or anticipated, action, suit, grievance, arbitration or other
manner of litigation or claim relating to any Compensation Plan or with respect
to the assets thereof, by or on behalf of any current or former director,
officer or employee, or dependent or beneficiary thereof, or otherwise (other
than routine claims for benefits where the Compensation Plan's administrative
claims procedure has not yet been exhausted), including but not limited to any
action, suit, grievance, arbitration or other manner of litigation or claim
regarding conduct with allegedly interferes with the attainment of rights under
any Compensation Plan.

         (h)      Since September 30, 2003, there has been no amendment to,
announcement by the Company or any of its Subsidiaries relating to, or change in
employee participation or coverage under, any Compensation Plan which would
increase the expense of maintaining such Compensation Plan above the level of
the expense incurred therefor for the most recent fiscal year (other than as a
result of normal increase and decrease in the number and compensation of the
Compensation Plan participants through attrition and hiring in the ordinary
course of business of the Company). Except as set for in Section 3.14(h) of the
Company's Disclosure Letter, neither the execution of this Agreement,
shareholder approval of this Agreement nor the consummation of the transactions
contemplated hereby will (i) entitle any employees of the Company or any of its
Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment after the date hereof, (ii) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Compensation
Plans, (iii) limit or restrict the right of the Company to merge, amend or
terminate any of the Compensation Plans (except as provided in Sections
401(k)(10) and 411(d)(6) of the Code and Section 204(g) of ERISA), (iv) cause
the Company or any of its Subsidiaries to record additional compensation expense
on its income statement with respect to any outstanding stock option or other
equity-based award or (v) result in payments under any of the Compensation Plans
which would not be deductible under Section 162(m) or Section 280G of the Code.

         (i)      Each Compensation Plan that is a "group health plan," within
the meaning of Section 5000 of the Code has been operated in compliance with the
continuation coverage requirements of Section 4980B of the Code and Sections 601
through 608 of ERISA, with the health insurance portability, access and
renewability requirements of Sections 9801 through 9833 of the Code and Sections
701 through 734 of ERISA, and the secondary payor requirements of Section
1862(b) of the Social Security Act.

         (j)      The Company has made available to the Acquiror a complete list
stating the current base salary, 2001, 2002 and 2003 earned incentive
compensation for all current officers, employees and directors of the Company or
any of its Subsidiaries.

         3.15     Labor Matters. Each of the Company and its Subsidiaries is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including the
Immigration Reform and Control Act, any such laws respecting employment
discrimination, disability rights or benefits, equal opportunity, affirmative
action, workers' compensation, employee benefits, severance payments, labor
relations, employee leave issues, wage and hour standards, occupational safety
and health requirements and unemployment insurance and related matters, except
(i) as set forth in Section 3.15 of the Company's Disclosure Letter or (ii) for
non-compliances which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to or is bound by any collective bargaining Contract or
understanding with a labor union or labor organization, nor is the Company or
any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel the Company or any such
Subsidiary to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries pending or, to the Company's knowledge, threatened, nor is
the Company aware of any activity involving it or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.

                                       16
<PAGE>

         3.16     Environmental Matters. (i) The Company and each of its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii) no
property (including soils, groundwater, buildings and any other structures)
currently or formerly owned or operated by the Company or any of its
Subsidiaries, contains, has been contaminated with, or has had any release of,
any Hazardous Substance in violation of any Environmental Laws or in amounts
which pose a risk to public health, welfare or the environment; (iii) neither
the Company nor any of its Subsidiaries has participated in the management of a
third-party company in connection with any Loans or Liens in such manner that it
could be deemed the "owner or operator" (as these terms are defined), under any
Environmental Law of any property in connection with any Loans or in which it
has currently or formerly held a Lien or security interest; (iv) neither the
Company nor any of its Subsidiaries is subject to Liability for the release,
disposal, management of, or contamination by, Hazardous Substance on any
property owned by a third party requiring corrective action under applicable
Environmental Laws or payment for corrective action; (v) neither the Company nor
any of its Subsidiaries has received any notice, demand letter, claim or request
for information relating to any violation of, or Liability under, any
Environmental Law; (vi) neither the Company nor any of its Subsidiaries is
subject to any order, decree, injunction or other agreement with any
Governmental Authority or any third party relating to any Environmental Law;
(vii) there are no other circumstances or conditions involving or attributable
to the Company or any of its Subsidiaries, any currently or formerly owned or
operated property, or any Lien held by the Company or any of its Subsidiaries
(including the presence of asbestos, underground storage tanks, contamination,
polychlorinated biphenyls or gas station sites) that could be expected to result
in any claims, Liability or investigations or result in any restrictions on the
ownership, use, or transfer of any property pursuant to any Environmental Law;
and (viii) the Company has made available to the Acquiror copies of all
environmental reports, studies, sampling data, correspondence, filings and other
environmental information in its possession relating to the Company, any of its
Subsidiaries, any currently or formerly owned or operated property, or any
property in which the Company or any of its Subsidiaries has held a Lien and
could be deemed an owner or operator of such property pursuant to any
Environmental Law and such reports, studies, data, correspondence, filings and
other information are listed in Section 3.16 of the Company's Disclosure Letter,
except, in the case of clause (i), (ii), (iv), or (vii) as is not reasonably
likely to have a Material Adverse Effect.

         3.17     Tax Matters. Except as set forth in Section 3.17 of the
Company's Disclosure Letter or to the extent that the failure of any of the
following is not reasonably likely to have a Material Adverse Effect, (i) all
Tax Returns that are required to be filed with respect to the Company or any of
its Subsidiaries, have been or will be timely filed, or requests for extensions
have been timely filed and have not expired; (ii) all Tax Returns filed by the
Company and its Subsidiaries are complete and accurate; (iii) all Taxes shown to
be due and payable (without regard to whether such Taxes have been assessed) on
such Tax Returns (or, with respect to Tax Returns for which an extension has
been timely filed, will be required to be shown as due and payable when such Tax
Returns are filed) have been paid or adequate reserves have been established for
the payment of such Taxes; (iv) all state and federal income Tax Returns
referred to in clause (i) have been examined by the Internal Revenue Service or
the appropriate state taxing authority or the period for assessment of the Taxes
for which such return has been filed has expired; (v) no audit or examination or
refund litigation with respect to any such Tax Return is pending or, to the
Company's knowledge, has been threatened; (vi) all deficiencies asserted or
assessments made as a result of any examination of a Tax Return of the Company
or any of its Subsidiaries, have been paid in full or are being contested in
good faith; (vii) no waivers of statute of limitations have been given by or
requested with respect to any Taxes of the Company or its Subsidiaries for any
currently open taxable period; (viii) the Company and each of its Subsidiaries
has in its respective files all Tax Returns that it is required to retain in
respect of information reporting requirements imposed by the Code or any similar
foreign, state or local law; (ix) the Company and its Subsidiaries have never
been a member of an affiliated, combined, consolidated or unitary Tax group for
purposes of filing any Tax Return (other than a consolidated group of which the
Company was the common parent); (x) no closing agreements, private letter
rulings, technical advice memoranda or similar agreement or rulings have been
entered into or issued by any taxing authority with respect to the Company or
any of its Subsidiaries; (xi) no Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfer contemplated by this
Agreement; (xii) the Company and its Subsidiaries are not bound by any tax
indemnity, tax sharing or tax allocation agreement or arrangement; (xiii) no
insurance or annuity contracts or insurance policies issued by the Company or
any of its

                                       17
<PAGE>

Subsidiaries fail to comply with the applicable provisions of Sections 72 or
7702 of the Code; (xiv) neither the Company nor any of its Subsidiaries has
entered into any agreement with, or requested relief from, the IRS concerning
the qualification of any life insurance or annuity policy under or compliance
with Sections 72, 101(f), 401(a), 403(b), 408, 457, 817, 7702 or 7702A of the
Code, and the IRS has not asserted in writing that any such policy fails to so
qualify; (xv) the assets of any Separate Account maintained by the Company or
any Subsidiary that is required to be diversified pursuant to Section 817(h) of
the Code are monitored in the interest of assuring that they are, and to the
knowledge of the Company are, adequately diversified within the meaning of
Section 817(h) of the Code and the Treasury Regulations promulgated thereunder;
(xvi) the Company and each Subsidiary is treated for federal tax purposes as the
owner of the assets underlying the respective life insurance policies and
annuity contracts issued, entered into or sold by it; and (xvii) all Taxes that
the Company or any Subsidiary is or was required by law to withhold or collect
have been duly withheld or collected and, to the extent required by applicable
law, have been paid to the proper Governmental Authority or other Person.

         3.18     Books and Records. The books and records of the Company and
its Subsidiaries have been properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies contained or
reflected therein.

         3.19     Accounting Controls. Each of the Company and its Subsidiaries
has devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances, in the judgment of the Board of Directors of the
Company, that (i) all material transactions are executed in accordance with
management's general or specific authorization; (ii) all material transactions
are recorded as necessary to permit the preparation of financial statements in
conformity with GAAP consistently applied with respect to any criteria
applicable to such statements, (iii) access to the material property and assets
of the Company and its Subsidiaries is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has designed and established, and is maintaining (a) Disclosure Controls
and Procedures adequate to ensure that material information relating to the
Company is made known to the Company's principal executive officer and principal
financial officer by others within those entities, and (b) Internal Controls and
Procedures for Financial Reporting which provide reasonable assurance that the
Company's financial statements are fairly presented in conformity with GAAP.

         3.20     Insurance. The Company has made available to the Acquiror all
of the insurance policies, binders, or bonds maintained by or for the benefit of
the Company or its Subsidiaries, officers, directors, employees, agents or their
representatives ("Insurance Policies"). For the avoidance of doubt, "Insurance
Policies" shall not include life insurance policies issued by the Company or its
Subsidiaries, reinsurance agreements or the Company's employee benefit plans.
The Company and its Subsidiaries are insured with reputable insurers against
such risks and in such amounts as the management of the Company reasonably has
determined to be prudent in accordance with industry practices. All of the
Insurance Policies are in full force and effect; the Company and its
Subsidiaries are not in default thereunder; and all claims thereunder have been
filed in due and timely fashion, except (i) as set forth in Section 3.20 of the
Company's Disclosure Letter or (ii) where such default or failure to so file,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.

         3.21     No Brokers. No action has been taken by the Company that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, except that the Company has engaged the Company
Financial Advisor in connection with this transaction and has furnished the
Acquiror a complete and correct copy of the engagement letter entered into in
connection therewith; and Acquiror acknowledges the payment to be made
thereunder will not constitute a Material Adverse Effect.

                                       18
<PAGE>

         3.22     Intellectual Property.

         (a)      With respect to each of the Company IP Rights, except as is,
individually or in the aggregate, not reasonably likely to have a Material
Adverse Effect, (i) the Company and its Subsidiaries either (A) own the entire
right, title and interest in and to the Company IP Rights free and clear of any
royalty or other payment obligation, lien, encumbrance or charge or (B) have all
necessary and sufficient rights to use such Company IP Rights under a valid and
enforceable license agreement (including in each instance, without limitation,
the exclusive and valid right to use the same), (ii) there are no agreements
which restrict or limit the use by the Company or its Subsidiaries of the owned
Company IP Rights and (iii) to the extent that the Company IP Rights owned or
held by the Company or its Subsidiaries are registered with the applicable
authorities, record title to such Company IP Rights is registered or (applied
for) in the name of the Company or any of its Subsidiaries. The Company IP
Rights are sufficient in all material respects for the operation of the Company
as currently being conducted. Section 3.22(a) of the Company Disclosure Letter
contains a true, correct and complete list, as of the date hereof, of all (i)
registered Company IP Rights and all applications to register Company IP Rights,
(ii) all material unregistered trademarks, service marks and logos, and (iii)
all Company IP Rights granted to or from a third party by license, sub-license,
permission or agreement.

         (b)      Except, in each case, where the failure of such, individually
or in the aggregate, is not reasonably likely to have a Material Adverse Effect,
(i) to the Company's knowledge, the Company IP Rights are valid, enforceable
against third parties and in effect, (ii) to the Company's knowledge, the
Company IP Rights and the Company IP Rights as embodied in the products and
services of the Company and its Subsidiaries do not infringe on the Intellectual
Property Rights of any Person or entity in any country, and (iii) except where
reasonable business decisions to allow rights to lapse have been made, all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain the Company IP Rights have been taken through the
date hereof and will continue to be paid or taken by the Company or its
Subsidiaries through the Effective Time.

         (c)      The Company and its Subsidiaries have taken all reasonable and
appropriate steps to protect the Company IP Rights and, where applicable, to
preserve the confidentiality of the Company IP Rights except where the failure
to do so, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect.

         (d)      Neither the Company nor any of its Subsidiaries has received
any notice of claim that any of the Company IP Rights has expired, is not valid
or enforceable against third parties in any country or that it infringes upon
the Intellectual Property Rights of any third party. No claim that the Company
IP Rights infringes upon the rights of any third party, whenever filed or
threatened, is currently pending and neither the Company nor any of its
Subsidiaries are aware of any basis for such claim, except such as, individually
or in the aggregate, is not reasonably likely to have a Material Adverse Effect.
There are no pending, or to the knowledge of the Company or any of its
Subsidiaries, threatened proceedings or litigation or other claims affecting the
Company IP Rights which, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect and, to the knowledge of the Company and its
Subsidiaries, there is no basis for any such proceedings, litigation or claim.
All claims and threatened claims of infringement received by or known to the
Company or any of its Subsidiaries prior to January 1, 2002 (collectively,
"Prior Claims") have been fully settled and resolved between all parties and
neither the Company nor any of its Subsidiaries have entered into any agreements
regarding such Prior Claims which impair or restrict the use of the Company IP
Rights as it is currently being used.

         (e)      Since January 1, 2002, neither the Company nor any of its
Subsidiaries has given any notice of infringement to any third party with
respect to any of the Company IP Rights. Neither the Company nor any of its
Subsidiaries is aware of or has become aware of facts or circumstances
evidencing the infringement by any third party of any of the Company IP Rights,
and no claim or controversy with respect to any such alleged infringement
exists, except such as, individually or in the aggregate, is not reasonably be
likely to have a Material Adverse Effect.

                                       19
<PAGE>

         (f)      Certificates of registration and renewal, letter patents and
copyright registration certificates and all other instruments evidencing
ownership of the Company IP Rights Property currently in use by the Company or
any of its Subsidiaries are in the possession of the Company, its Subsidiaries,
their agents or authorized Representatives.

         (g)      Neither the Company nor any of its Subsidiaries is in breach
or default that could be the basis of termination under any agreements,
licenses, sub-licenses, authorizations and other rights included in the Company
IP Rights which, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect. To the knowledge of the Company, no other party is in
breach or default that could be the basis of termination under any agreements,
licenses, sub-licenses, authorizations and other rights included in the Company
IP Rights which, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect.

         (h)      Neither the Company nor any of its Subsidiaries is subject to
any agreement, judgment, order, writ, injunction or decree, which restricts or
impairs the use of the Company IP Rights, except (i) as set forth in Section
3.22(h) of the Company's Disclosure Letter or (ii) where such restriction or
impairment, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect.

         (i)      All of the owned Company IP Rights have been (i) created by
employees of the Company or its Subsidiaries working within the scope of their
employment at the time of such created, (ii) developed by agents, consultants,
contractors or others who have executed appropriate instruments of assignment in
favor of the Company or relevant Subsidiary as assignee that have conveyed to
the Company or relevant Subsidiary ownership of all of its Intellectual Property
Rights in such owned Company IP Rights, or (iii) acquired by the Company or one
of its Subsidiaries in connection with acquisitions in which the Company or
relevant Subsidiary obtained appropriate representations, warranties and
indemnities from the transferring party relating to the title of such owned
Company IP Rights. To the extent that any Company IP Rights has been developed
or created by a third party for the Company or any of its Subsidiaries, the
Company or the relevant Subsidiary has a written agreement with such third party
with respect thereto and the Company and the relevant Subsidiary thereby has
obtained ownership of and is the exclusive owner of to all of such third party's
Intellectual Property Rights in such work, material or invention by operation of
law or by valid assignment.

         (j)      All rights of the Company and each of its Subsidiaries in and
to the Company IP Rights as of the date hereof will be unaffected by the
transactions contemplated by this Agreement, except (i) as set forth in Section
3.22(j) of the Company's Disclosure Letter or (ii) as, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect.

         3.23     Reserves. The aggregate insurance and annuity reserves of the
Company and its Subsidiaries as set forth in the Company Financial Statements
have been determined in all material respects in accordance with GAAP
consistently applied (except as set forth therein). The insurance and annuity
reserving practices and policies of the Company and its Subsidiaries have not
changed, in any material respect, since January 1, 2003 and the results of the
application of such practices and policies are reflected in the Company
Financial Statements. All reserves of the Company and its Subsidiaries set forth
in the Company Financial Statements are fairly stated in accordance with sound
actuarial principles, except where the failure to so state such reserves or meet
such requirements, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect. The aggregate insurance and annuity reserves of
the Company and its Subsidiaries as set forth in the Company Statutory Financial
Statements have been determined in all material respects in accordance with
applicable law and statutory accounting practices consistently applied (except
as set forth therein). Except as required by applicable law or statutory
accounting practices and policies, the insurance and annuity reserving practices
and policies of the Company and its Subsidiaries with respect to the Company
Statutory Financial Statements have not changed, in any material respect, since
January 1, 2003 and the results of the application of such practices and
policies are reflected in the Company Statutory Financial Statements. All
reserves of the Company and its Subsidiaries set forth in the Company Statutory
Financial Statements are fairly stated in accordance with sound actuarial
principles and meet the requirements of the insurance laws of the applicable

                                       20
<PAGE>

insurance authority, except where the failure to so state such reserves or meet
such requirements is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect.

         3.24     Privacy Laws and Policies. The Company and each Subsidiary is
in compliance with (i) the terms of its own privacy policy as it exists on the
date of this Agreement, a true and correct copy of each of which has been made
available to the Acquiror and (ii) any applicable laws concerning the protection
of confidential personal information received from customers and consumers,
including without limitation, the Gramm-Leach-Bliley Act of 1999 and the Health
Insurance Portability and Accountability Act of 1996 and any rules and
regulations adopted thereunder, except where the failure to so comply,
individually or in the aggregate, is not reasonably likely to have, a Material
Adverse Effect.

         3.25     Investments.

         (a)      The Company financial statements as filed with National
Association of Insurance Commissioners and the State of Georgia set forth a
list, in the case of annual periods, or a summary, in the case of quarterly
periods, which list or summary, as applicable, is accurate and complete in all
material respects, of all securities and other investments owned, directly or
indirectly, by the Company or any of its Subsidiaries (collectively, the
"Company Investments") as of December 31, 2002 and September 30, 2003, together
with the cost basis, book or amortized value, as the case may be, as of December
31, 2002 and September 30, 2003, and the changes in the Company Investments for
the twelve months ended December 31, 2002 and the nine months ended September
30, 2003.

         (b)      A complete list of all Company Investments as of September 30,
2003 which are in default, in bankruptcy, nonperforming, restructured, or
foreclosed, or which are included on any "watch list" is set forth in Section
3.25(b) of the Company's Disclosure Letter and there have been no changes since
that date that, individually or in the aggregate, are reasonably likely to have
a Material Adverse Effect.

         3.26     Disclosure. The information Previously Disclosed or otherwise
provided to the Acquiror in connection with this Agreement, when taken together
with the representations and warranties contained herein, does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein, in the light of the
circumstances in which they are being made, not misleading. The copies of all
documents furnished or made available to the Acquiror hereunder or in connection
with the Acquiror's due diligence related hereto are true and complete.

                                   ARTICLE 4

                   REPRESENTATIONS AND WARRANTIES OF ACQUIROR

         On or prior to the date hereof, the Acquiror has delivered to the
Company a letter (the "Acquiror Disclosure Letter") setting forth items the
disclosure of which is necessary or appropriate either (i) in response to an
express disclosure requirement contained in a provision hereof or (ii) as an
exception to one or more representations or warranties contained in this Article
4; provided that the inclusion of an item in the Acquiror Disclosure Letter as
an exception to a representation or warranty shall not be deemed an admission by
the disclosing party that such item (or any undisclosed item or information of
comparable or greater significance) represents a material exception or fact,
event or circumstance with respect to the Acquiror. Except as Previously
Disclosed in a paragraph of the Acquiror's Disclosure Letter corresponding to
the relevant section below, the Acquiror represents and warrants to the Company
as set forth in its Disclosure Letters and as follows:

         4.01     Organization, Standing and Authority. The Acquiror is duly
organized, validly existing and in good standing under the laws of Illinois.
Acquiror Sub is duly organized, validly existing and in good standing under the
laws of Illinois. The Acquiror and Acquiror Sub are duly qualified to do
business and in

                                       21
<PAGE>

good standing in the jurisdictions where the ownership or leasing of property or
assets or the conduct of business requires such qualification.

         4.02     Corporate Power. Each of Acquiror and Acquiror Sub has the
requisite power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; the Acquiror and Acquiror
Sub have the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and, in the case of Acquiror Sub, to adopt the
plan of merger contained in this Agreement and, in accordance therewith, to
consummate the transactions contemplated hereby.

         4.03     Corporate Authority and Action. Acquiror and Acquiror Sub have
taken all corporate action necessary in order to authorize the execution and
delivery of, and performance of its obligations under, this Agreement and to
consummate the Merger. This Agreement is a valid and legally binding agreement
of the Acquiror and Acquiror Sub, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).

         4.04     Regulatory Approvals; No Defaults.

         (a)      No consents or approvals of, filings or registrations with or
  notices to any Governmental Authority are required to be made or obtained by
Acquiror, Acquiror Sub or any of their Subsidiaries in connection with the
execution, delivery or performance by the Acquiror or Acquiror Sub of this
Agreement, or to consummate the Merger or the other transactions contemplated
hereby, except for (i) filing the Proxy Statement in definitive form with the
Commissioner of Insurance of the State of Georgia, (ii) the filing of
applications and notices with respect to the Merger, as applicable, with the
Georgia Insurance, Safety and Fire Commissioner, Illinois Insurance
Commissioner, Connecticut Insurance Commissioner, and any other insurance
regulatory authorities as may be necessary or appropriate, (iii) the filing of a
notification, if required, and expiration of the related waiting period under
the HSR Act, and (iv) the filing of articles of merger with the Secretary of
State of the State of Georgia pursuant to the GBCC and the Secretary of State of
the State of Illinois pursuant to the IBCA. As of the date hereof, the Company
is not aware of any reason why the approvals of all Governmental Authorities
necessary to permit consummation of the transactions contemplated by this
Agreement will not be received without the imposition of a Burdensome Condition.

         (b)      Subject to receipt of the regulatory approvals, and expiration
of the waiting periods, referred to in Section 4.04(a) and the making of
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with,
constitute a breach or violation of, result in a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or give
rise to any Lien, any acceleration of remedies or any right of termination
under, any Contract to which the Acquiror or Acquiror Sub is a party, (ii)
constitute a breach or violation of, or a default under, the Acquiror's or the
Acquiror Sub's articles of incorporation or the by-laws or (iii) violate any
law, rule, or regulation or any judgment, decree, order, permit or license;
except, in the case of clause (i) and (iii) for such breaches, defaults,
terminations, accelerations, Liens or violations which, individually or in the
aggregate, would not result in the Acquiror or the Acquiror Sub being unable to
consummate the Merger or perform its obligations under this Agreement.

         4.05     Financing. Acquiror has or has available to it cash or cash
equivalents or lines of credit for use in connection with the acquisition of the
Company in an aggregate amount necessary to consummate the Merger.

                                       22
<PAGE>

                                    ARTICLE 5

                                    COVENANTS

         5.01     Forbearances of the Company. Until the Effective Time (or, if
earlier, the termination of this Agreement), except as expressly provided in
this Agreement, without the prior written consent of the Acquiror, the Company
will not, and will cause each of its Subsidiaries not to:

         (a)      Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course or, to the extent
consistent therewith, fail to use reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and business associates.

         (b)      New Activities. Engage in any material new activities or lines
of business or make any material changes to its existing activities or lines of
business.

         (c)      Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Company Common Stock or any Rights, (ii) permit any additional shares
of Company Common Stock to become subject to new grants of employee or director
stock options, or stock-based employee rights or arrangements, (iii) repurchase,
redeem or otherwise acquire, directly or indirectly, any shares of Company
Common Stock, (iv) effect any recapitalization, reclassification, stock split or
like change in capitalization or (v) enter into, or take any action to cause any
holders of Company Common Stock to enter into, any agreement, understanding or
commitment relating to the right of holders of Company Common Stock to vote any
shares of Company Common Stock, or cooperate in any formation of any voting
trust relating to such shares.

         (d)      Grant or issue options (or other rights) to purchase Company
Common Stock to members of the Company Board in lieu of director fees with
respect to meetings of the Company Board subsequent to December 31, 2003; it
being understood that the Company will pay such directors fees in cash with
respect to meetings after such date.

         (e)      Subsidiaries. Issue, sell or otherwise permit to become
outstanding, transfer, mortgage, encumber or otherwise dispose of or permit the
creation of any Lien in respect of, or amend or modify the terms of, any equity
interests held in a Subsidiary of the Company.

         (f)      Governing Documents. Amend (or suffer to be amended) the
Company Articles, the Company By-Laws or the articles of incorporation, by-laws,
partnership agreements or limited liability company agreements (or other
governing documents) of any of the Company's Subsidiaries.

         (g)      Dividends, Etc. Make, declare, pay or set aside for payment
any dividend, other than dividends from wholly owned Subsidiaries to the Company
or to another wholly owned Subsidiary of the Company or declare or make any
distribution on any shares of its capital stock or split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock;
provided, however, the Company may pay the $.04 per share dividend declared by
the Company Board on December 03, 2003 and, in addition, if the Company Board so
determines, the Company Board may on or prior to March 31, 2004 declare and the
Company may pay a single $.04 per share dividend with respect to shares of
Company Common Stock.

         (h)      Compensation, Employment Contracts, Etc. Enter into, amend,
modify, renew (other than renewals that are automatic and in the ordinary course
of business consistent with past practice) or terminate any employment,
consulting, severance or similar Contracts with any directors, officers,
employees of, or independent contractors with respect to, the Company or its
Subsidiaries, or grant any salary, wage or other increase or increase any
employee benefit (including incentive or bonus payments), except (i) for changes
that

                                       23
<PAGE>

are required by applicable law, (ii) to satisfy Previously Disclosed Contracts
existing on the date hereof, (iii) to the extent consistent with, and in amounts
and terms similar to, the practices and guidelines in effect on September 30,
2003, for merit-based, incentive, or annual salary increases in the ordinary
course of business and in accordance with past practice or (iv) for employment
arrangements or independent contractor agreements for newly hired non-executive
employees or independent contractors in the ordinary and usual course of
business consistent with past practice, provided that total annual guaranteed
compensation for any such newly hired non-executive employee or independent
contractor shall not exceed $50,000.

         (i)      Benefit Plans. Other than as specified by the terms of this
Agreement, enter into, establish, adopt, amend, modify or terminate any pension,
retirement, stock option, stock purchase, savings, profit sharing, employee
stock ownership, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare Contract, plan or arrangement, or
any trust agreement (or similar arrangement) related thereto, in respect of any
current or former directors, officers, employees, former employees of, or
independent contractors with respect to, the Company or its Subsidiaries (or any
dependent or beneficiary of any of the foregoing Persons), including taking any
action that accelerates the vesting or exercisability of or the payment or
distribution with respect to, stock options, restricted stock or other
compensation or benefits payable thereunder, except, in each such case, (i) as
may be required by applicable law, (ii) to satisfy Previously Disclosed
Contracts existing on the date hereof, or (iii) as provided herein.

         (j)      Dispositions. Sell, transfer, mortgage, lease, encumber or
otherwise dispose of or permit the creation of any Lien (except for a Lien for
Taxes not yet due and payable) in respect of, or discontinue any material
portion of, its assets, business or properties, except, in each case in the
ordinary and usual course of business consistent with past practice, (i)
pursuant to Previously Disclosed Contracts existing on the date hereof or (ii)
sales, transfers or dispositions of Investment Securities.

         (k)      Acquisitions. Acquire any material amount, taken individually
and in the aggregate, of assets, properties or deposits of another Person in any
one transaction or a series of related transactions, except, in each case in the
ordinary and usual course of business consistent with past practice, (i)
pursuant to Previously Disclosed Contracts existing on the date hereof, (ii) by
way of foreclosures in satisfaction of debts previously contracted in good faith
or (iii) acquisitions of Investment Securities; provided, however, that neither
the Company or any of its Subsidiaries shall acquire any securities or any of
its Subsidiaries holding securities involving, in the aggregate, Beneficial
Ownership or control by the Company or any such Subsidiary of 5% or more of any
class of the issuer's voting securities or 25% or more of any class of the
issuer's securities.

         (l)      Accounting Methods. Implement or adopt any change in the
accounting principles, practices or methods used by the Company and its
Subsidiaries, other than as may be required by GAAP, in which case the Company
will promptly notify Acquiror of such change.

         (m)      Contracts. Except in the ordinary course of business
consistent with past practice or pursuant to Section 5.14, (i) enter into,
amend, renew or terminate any material Contract or any agreement that provides
for aggregate payments of $100,000 or more (provided this clause (i) shall not
prevent the Company or its Subsidiaries from entering into contracts with
respect to Investment Securities to the extent in the ordinary course of
business consistent with past practice) or (ii) amend or modify in any material
respect any of its existing Company Contracts.

         (n)      Claims. Settle any claim, action or proceeding, except for (i)
any claim, action or proceeding involving solely money damages in an individual
amount of not more than $100,000 and in the aggregate amount of not more than
$250,000 for all such settlements, which would not reasonably be expected to
establish an adverse precedent or reasonable basis for subsequent settlements or
require material changes in business practices or (ii) in accordance with the
forms of an insurance policy underwritten by the Company.

                                       24
<PAGE>

         (o)      Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its credit risk and
interest rate risk management and hedging policies, procedures or practices,
(ii) fail to follow, in all material respects, its existing policies or
practices with respect to managing its exposure to credit and interest rate risk
or (iii) fail to use commercially reasonable means in accordance with past
practices to avoid any material increase in its aggregate exposure to interest
rate risk.

         (p)      Indebtedness. Other than in the ordinary course of business
consistent with past practice, (i) incur any indebtedness for borrowed money
(including by issuance of debt securities or warrants, options or other rights
to acquire debt securities), provided, however, the Company and its Subsidiaries
will not incur indebtedness in excess of $100,000 regardless of whether or not
it is in the ordinary course of business consistent with past practice, (ii)
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person or (iii) cancel, release, assign or
modify any material amount of indebtedness of any other Person.

         (q)      Loans. (i) Make any Loan or advance in excess of $50,000 other
than in the ordinary course of business consistent with lending policies as in
effect on the date hereof; provided that the Company or any of its Subsidiaries
may make any such Loan or advance in the event (A) the Company or any of its
Subsidiaries has delivered to the Acquiror or its designated representative a
notice of its intention to make such Loan or advance and such additional
information as the Acquiror or its designated representative may reasonably
require and (B) the Acquiror or its designated representative shall not have
reasonably objected to such Loan or advance by giving notice of such objection
within five Business Days following the actual receipt by the Acquiror of the
applicable notice of intention; or (ii) sell, transfer, mortgage, encumber or
otherwise dispose of, or permit the creation of, any Lien in respect of
mezzanine loans made by the Company or any Subsidiary of the Company.

         (r)      Adverse Actions. (i) Except as permitted by Section 5.07, take
any action or commit to take action that (or fail to take any action where such
failure) is intended or is reasonably likely to result in (A) any of its (1)
representations and warranties set forth in this Agreement which contain
materiality standards or are qualified by "Material Adverse Effect" or are set
forth in Sections 3.01, 3.02, 3.03, 3.04 and 3.05 being or becoming untrue in
any respect at any time at or prior to the Effective Time or (2) representations
and warranties set forth in this Agreement which do not otherwise contain
materiality standards or qualifications of "Material Adverse Effect" or
specified in clause (i)(A)(I) of this Section 5.01(q) being or becoming untrue
in any material respect at any time at or prior to the Effective Time, (B) any
of the conditions to the Merger set forth in Article 6 not being satisfied or
(C) a material breach of any covenant, obligation or agreement of the Company of
this Agreement, (ii) take any action or make any acquisition that would subject
the Acquiror or Acquiror Sub, the Company or any Subsidiary of either to
material regulation by a Governmental Authority that does not presently regulate
such company or to regulation by a Governmental Authority that is materially
different from current regulation or (iii) except as provided by Section 5.07,
take any action that (or fail to take any action where such failure) is intended
or is reasonably likely to result in the impairment of the ability of any party
to this Agreement to consummate the Merger or materially delay the Merger.

         (s)      Tax Elections. Make any election with respect to Taxes.

         (t)      Related Person Transactions. (i) Except pursuant to Previously
Disclosed legally binding Contracts entered into in the ordinary course of
business before the date of this Agreement and Previously Disclosed, make any
payment of cash or other consideration to, or make any Loan to or on behalf of,
or (ii) enter into, amend or grant a consent or waiver under, or fail to
enforce, any Contract with, any Related Person.

         (u)      Capital Expenditures. Make any capital expenditures in excess
of $50,000 in any one case or $125,000 in the aggregate or enter into any
agreement contemplating capital expenditures in excess of $50,000 for any
twelve-month period.

                                       25
<PAGE>

         (v)      Insurance Licenses. Voluntarily forfeit, abandon, modify,
waive, terminate or otherwise change any insurance license held by the Company
or any Subsidiary, except (i) as may be required in order to comply with
applicable law or (ii) where such forfeitures, abandonments, terminations,
changes, modifications or waivers of insurance licenses, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect.

         (w)      Insurance Practices. Except in the ordinary course of business
consistent with past practice, make any material change in the (i) underwriting
or claims management, (ii) pricing or (iii) reserving practices, except as
required by applicable law, of the Company or any Subsidiary.

         (x)      Subsidiaries. Take any action or fail to take any action which
would cause the information set forth in Section 3.03(b) or Section 3.03(c) of
the Company's Disclosure Letter to be materially inaccurate.

         (y)      Commitments. Agree or commit to do, or enter into any Contract
regarding, anything that would be precluded by clauses (a) through (x) without
first obtaining the Acquiror's consent.

         5.02     Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each of the Company, the Acquiror and Acquiror Sub agrees to
use its reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall reasonably cooperate with the
other party hereto to that end. Without limiting the generality of the preceding
sentence, the Company agrees to use its reasonable best efforts to obtain the
consent or approval of all Persons party to a Contract with the Company or any
of its Subsidiaries, to the extent such consent or approval is required in order
to consummate the Merger or for the Surviving Corporation to receive the
benefits of such Contract. Notwithstanding the foregoing, nothing in this
Agreement shall obligate Acquiror, Acquiror Sub or any of their respective
Subsidiaries or Affiliates to agree (a) to limit in any manner or not to
exercise any rights of ownership of any securities (including the shares of
Company Common Stock), or to divest, dispose of or hold separate any securities
or all or any portion of their respective businesses, assets or properties or of
the businesses, assets or properties of the Company or any of its Subsidiaries
or (b) to limit in any material manner the ability of such entities (i) to
conduct their respective businesses or own such assets or properties or to
conduct the businesses or own the properties or assets of the Company and its
Subsidiaries or (ii) to control their respective businesses or operations or the
businesses or operations of the Company and its Subsidiaries (each of the
foregoing being referred to herein as a "Burdensome Condition").

         5.03     Shareholder Approvals. The Company agrees to take, in
accordance with applicable law, applicable stock exchange rules, the Company
Articles and the Company By-Laws, all action necessary to convene an appropriate
meeting of shareholders of the Company to consider and vote upon the approval of
this Agreement and any other matters required to be approved by the Company's
shareholders for consummation of the Merger and the transactions contemplated
hereby (including any adjournment or postponement, the "Company Meeting"), and
to solicit shareholder approval, as promptly as practicable after the date
hereof. The Company Board has adopted a resolution contemplated by GBCC Section
14-2-1103, recommending that the shareholders approve this Agreement (and will,
subject to the provisions of Section 5.07, keep such resolution in effect) and
take any other action required to permit consummation of the transactions
contemplated hereby. The obligation of the Company to hold the Company Meeting
shall not be affected by any Acquisition Proposal or other event or
circumstance. Subject to the provisions of Section 5.07, the Company shall use
its reasonable best efforts to solicit from shareholders of the Company proxies
in favor of the Merger and shall take all other action reasonably necessary or,
in the reasonable opinion of Acquiror, advisable to secure any vote of
shareholders required by the GBCC to effect the Merger.

         5.04     Proxy Statement. As promptly as practicable after execution of
this Agreement, the Acquiror and the Company will cooperate in the preparation
of a proxy statement and other proxy solicitation materials of the Company,
including amendments and supplements thereto (the "Proxy Statement") regarding
the

                                       26
<PAGE>

solicitation of proxies to be voted in favor of the Merger. The Company agrees,
subject to the review and approval of Acquiror and Acquiror Sub, to file the
Proxy Statement in preliminary form with the Commissioner of Insurance of the
State of Georgia as promptly as reasonably practicable. The Company shall obtain
and furnish the information required to be included in the Proxy Statement,
shall provide Acquiror and Acquiror Sub with, and consult with Acquiror and
Acquiror Sub regarding, any comments that may be received from the Commissioner
of Insurance of the State of Georgia or its staff (and/or the SEC or its staff,
if applicable) with respect thereto, shall, subject to the prior review and
approval of Acquiror and Acquiror Sub, respond promptly to any such comments
with respect to the Proxy Statement, file the Proxy Statement in definitive form
and cause the Proxy Statement to be mailed to the Company's shareholders at the
earliest practicable date. The Proxy Statement shall contain subject to the
provisions of Section 5.07, (i) the recommendation of the Company Board that the
Company's shareholders approve and adopt this Agreement and the Merger and any
other matters determined to be appropriate for submission to shareholders for
approval to effectuate the transactions contemplated hereby and (ii) the written
opinion of the Company Financial Advisor, dated prior to or as of the date of
this Agreement, to the effect that, based upon and subject to the matters set
forth therein and as of the date thereof, the Consideration to be received by
holders of Company Common Stock pursuant to the Merger is fair to such holders
from a financial point of view. The Company will advise Acquiror promptly of the
time when the Proxy Statement and any amendment or supplement to the Proxy
Statement has been filed, and of any request by the Commissioner of Insurance of
the State of Georgia or its staff (and/or the SEC or its staff, if applicable)
for amendment of the Proxy Statement or comments thereon and responses thereto
or requests by the Commissioner of Insurance of the State of Georgia or its
staff (and/or the SEC or its staff, if applicable) for additional information.

         (a)      The Company hereby represents, warrants, agrees and covenants
that: (i) the Proxy Statement and any amendments or supplements thereto will
comply in all material respects with the applicable requirements of the Exchange
Act (if applicable), the GBCC and Georgia Insurance Securities Laws; (ii) the
Proxy Statement and any other communications by the Company with respect this
Agreement, the Merger or the transactions contemplated hereby will not, (A) in
the case of the Proxy Statement, (1) at the time the Proxy Statement is filed
with the Commissioner of Insurance of the State of Georgia (and/or the SEC, if
applicable) or first sent to holders of the Company Common Stock, (2) at the
time of the Company Meeting (if any) or (3) at the Effective Time or (B) in the
case of other communications by the Company with respect to this Agreement, the
Merger or the transactions contemplated hereby, at the time such communication
is made, contain any untrue statement of a material fact or omit to state any
material fact (y) required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or (z) necessary to correct any statement in any earlier
filing by the Company with the Commissioner of Insurance of the State of Georgia
or the SEC or communication from the Company to the holders of Common Stock with
respect to this Agreement, the Merger, the transactions contemplated hereby or
the Company Meeting that has become false or misleading. Notwithstanding the
foregoing, the Company makes no representation, warranty, covenant or agreement
with respect to any information that has been supplied by Acquiror, Acquiror Sub
or any of their accountants, counsel or other authorized Representatives in
writing specifically for use in any of the foregoing documents.

         (b)      The Acquiror herby represents, warrants, agrees and covenants
that the information supplied in writing by Acquiror, Acquiror Sub or any of
their accountants, counsel or other authorized Representatives in writing
specifically for use in any of the Proxy Statement (the "Acquiror Information")
will not, (i) in the case of the Proxy Statement (A) at the time the Proxy
Statement is filed with the Commissioner of Insurance of the State of Georgia
(and/or the SEC, if applicable) or first sent to shareholders, (B) at the time
of the Company Meeting or (C) at the Effective Time, or (ii) in the case of
other communications by the Company to the holders of Company Common Stock, at
the time such communication is made, contain any untrue statement of a material
fact or omit to state any material fact (y) required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (z) necessary to correct any
statement in any earlier filing by the Company with the Commissioner of
Insurance of the State of Georgia or the SEC or communication from the Company
to the holders of Company Common Stock with respect to this Agreement, the
Merger, the transactions contemplated

                                       27
<PAGE>

hereby or the Company Meeting that has become false or misleading.
Notwithstanding the foregoing, the Acquiror makes no representation, warranty,
covenant or agreement with respect to any information that has not been supplied
by Acquiror, Acquiror Sub or any of their accountants, counsel or other
authorized Representatives in writing specifically for use in any of the
foregoing documents.

         5.05     Press Releases. The initial press release concerning the
Merger and the other transactions contemplated by this Agreement shall be a
joint press release in such form agreed to in advance by the parties, and
thereafter each of the Company and the Acquiror agrees that it will not, without
the prior approval of the other party, issue any press release or written
statement for general circulation relating to the transactions contemplated
hereby (except for any release or statement that, in the written opinion of
outside counsel to the Company or the Acquiror, as the case may be, is required
by law or regulation and as to which the Company or the Acquiror, as the case
may be, has used its reasonable best efforts to discuss with the other in
advance, provided that such release or statement has not been caused by, or is
not the result of, a previous disclosure by or at the direction of the Company
or the Acquiror, as the case may be, or any of its Representatives that was not
permitted by this Agreement).

         5.06     Access to Information. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party hereto shall
afford the other party and its officers, employees, counsel, accountants and
other authorized Representatives, such access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including credit files, Tax Returns and work papers of independent auditors),
properties, personnel and such other information as such party may reasonably
request and, during such period, each party hereto shall furnish promptly to the
other party (i) a copy of each material report, schedule and other document
filed by it pursuant to the requirements of federal or state securities or
insurance regulatory laws, and (ii) all other information concerning its
business, properties and personnel as the other may reasonably request. Each of
the Acquiror and the Company will use its reasonable best efforts to ensure that
the consummation of the Merger, the transactions contemplated by this Agreement,
and the performance by the parties of their obligations under this Agreement
will not result in any breach of (i) any applicable law concerning the
protection of confidential personal information received from individual
policyholders or other customers or (ii) the privacy policy of the Company or
the privacy policy of the Acquiror. No investigation by Acquiror or Acquiror Sub
of the business and affairs of the Company or its subsidiaries shall affect or
be deemed to modify or waive any representation, warranty, covenant or agreement
in this Agreement, or the conditions to Acquiror's or Acquiror Sub's obligation
to consummate the transactions contemplated by this Agreement.

         5.07     No Solicitation.

         (a)      Until this Agreement has been terminated in accordance with
Section 7.01 (and the payments, if any, required to be made in connection with
such termination pursuant to Section 7.03 have been made), the Company shall not
and shall cause its Subsidiaries and its and their officers, directors,
employees, consultants, Representatives, Affiliates and other agents, including,
but not limited to, investment bankers, attorneys and accountants (collectively,
the "Company Representatives"), not to, directly or indirectly, (i) encourage,
solicit, initiate or facilitate the making of, or take any other action to
facilitate any inquiries regarding the making of, any proposal that constitutes
or may reasonably be expected to lead to, any Acquisition Proposal (including,
without limitation, by taking any action that would make any Takeover Laws
inapplicable to an Acquisition Proposal), (ii) participate in any way in
discussions or negotiations with, or furnish or disclose any information or
afford any access to the properties, books or records of the Company or any of
its Subsidiaries to, any Person (other than Acquiror or Acquiror Sub or any of
their Affiliates or associates) in connection with any Acquisition Proposal,
(iii) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Acquiror or Acquiror Sub the approval and recommendation of the Merger or
this Agreement (a "Change in Recommendation"), (iv) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal (unless
contemporaneously with such approval or recommendation the Company terminates
this Agreement in accordance with Section 7.01(d)), (v) release any third party
from any confidentiality or standstill agreement to which the Company is a party
or fail to enforce to the fullest extent

                                       28
<PAGE>

possible, or grant any waiver, request or consent to any Acquisition Proposal
under, any such agreement, or (vi) enter into any agreement, letter of intent or
similar document contemplating or otherwise relating to any Acquisition
Proposal; provided, however, that this Section 5.07 shall not prohibit the
Company or the Company Representatives from:

                  (A) (i) subject to the conditions of Section 5.05, issuing a
press release or otherwise publicly disclosing the terms of this Agreement
(including the provisions of this Section 5.07), the Merger or any Acquisition
Proposal, (ii) proceeding with the transactions contemplated by this Agreement,
(iii) communicating to the holders of the Company's securities a position with
respect to an Acquisition Proposal by a third party contemplated by Rule 14d-9
and Rule 14e-2 promulgated under the Exchange Act, or (iv) making any disclosure
to the holders of the Company's securities which, in the judgment of the Board
of Directors (after receiving the advice of legal counsel) is necessary to be
made under applicable law (including laws relating to the fiduciary duties of
directors); or

                  (B)      participating in discussions or negotiations with, or
furnishing or disclosing nonpublic information to or entering into any
confidentiality or standstill or similar agreements with, any Person in response
to an unsolicited, bona fide and written Acquisition Proposal that is submitted
to the Company by such Person after the date of this Agreement if (i) such
Acquisition Proposal does not result from a violation of any of the provisions
of this Section 5.07, (ii) a majority of the members of the Company Board
determines in good faith, after having received the advice of its financial
advisor and outside legal counsel, that (x) such Person is reasonably capable,
financially and otherwise, of consummating such Acquisition Proposal, (y) such
Acquisition Proposal is reasonably likely to lead to a Superior Proposal and (z)
failure to do so would result in a breach of the fiduciary duty of the Company
Board to the shareholders of the Company under applicable law, and (iii) prior
to participating in discussions or negotiations with, or furnishing or
disclosing any nonpublic information to, such Person, the Company gives Acquiror
written notice of the identity of such Person and of the Company's intention to
participate in discussions or negotiations with, or furnish or disclose
nonpublic information to, such Person, and the Company receives from such Person
an executed confidentiality agreement containing terms no less restrictive than
the terms of the Confidentiality Agreement.

         (b)      The Company shall, and shall cause its Subsidiaries and the
Company Representatives to, immediately cease and cause to be terminated any
discussions or negotiations, if any, with any other parties that may be ongoing
as of the date hereof with respect to any Acquisition Proposal.

         (c)      Nothing contained in this Section 5.07 shall prohibit Acquiror
or Acquiror Sub from purchasing the shares of Company Common Stock or
consummating the Merger. Without limiting any other rights of Acquiror or
Acquiror Sub under this Agreement in respect of any such action, neither any
withdrawal or modification by the Company Board of the approval or
recommendation of the Merger nor the termination of this Agreement shall have
any effect on the approvals of, and other actions referred to herein for the
purpose of causing the Takeover Laws to be inapplicable to, this Agreement and
the Shareholder Agreements and the transactions contemplated hereby and thereby,
which approvals and actions are irrevocable.

         (d)      Nothing contained in this Section 5.07 or any other provision
of this Agreement will prohibit the Company or the Company Board from notifying
any third party that contacts the Company on an unsolicited basis after the date
hereof concerning an Acquisition Proposal of the Company's obligations under
this Section 5.07.

         5.08     Takeover Laws. No party shall knowingly take any action that
would cause the transactions contemplated by this Agreement or the Shareholder
Agreements to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.

                                       29
<PAGE>

         5.09     No Rights Triggered. The Company shall take all reasonable
steps necessary to ensure that (a) the entering into of this Agreement and the
consummation of the Merger and the transactions contemplated hereby and any
other action or combination of actions contemplated hereby, do not and will not
result in the grant of any rights to any Person under the Company Articles or
the Company By-Laws and (b) appropriate waivers, consents, amendments or
modifications, as applicable, in a form reasonably acceptable to Acquiror, have
been obtained prior to the Closing Date with respect to those Contracts set
forth in Section 5.09 of the Company's Disclosure Letter necessary to ensure
that (i) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with, constitute a breach or violation of, result in a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or give rise to any Lien, any acceleration of remedies or any right of
termination under, such Contract and (ii) such Contracts will, after
consummation of the Merger, (assuming due power and authority of, and due
execution and delivery by, the other party or parties thereto), be valid and
binding upon the Surviving Corporation or the Company's Subsidiary party thereto
and, to the knowledge of the Company, each other party thereto, except as may be
limited by bankruptcy, insolvency, moratorium, or other similar laws effecting
or relating to enforcement of creditors' rights generally, or by general
principles of equity, in full force and effect or where the failure to obtain
such consent, individually or in the aggregate, is not reasonably likely to have
a Material Adverse Effect.

         5.10     Regulatory Applications.

         (a)      Subject to the terms and conditions provided herein, the
Acquiror and the Company and their respective Subsidiaries shall cooperate and
use their respective reasonable best efforts to prepare all documentation, to
effect, as promptly as practicable, all filings and to obtain all permits,
consents, approvals and authorizations of all Governmental Authorities, and all
waivers and consents of third parties, necessary to consummate the transactions
contemplated by this Agreement, including all (i) filings and submissions under
the HSR Act, (ii) filings required by Georgia Insurance, Safety and Fire
Commissioner, the Illinois Insurance Commissioner, the Connecticut Insurance
Commissioner and any other insurance regulatory authorities as may be necessary
or appropriate and any other relevant jurisdiction and delivery of notices and
consents to jurisdiction to state insurance departments and (iii) filings with
A.M. Best and similar rating agencies and the procurement of satisfactory
ratings from such rating agencies with respect to the Surviving Corporation
after the Effective Time, each as may be reasonably be required to be made in
connection with this Agreement and the transactions contemplated hereby. Each
party hereto shall have the right to review in advance, and to the extent
practicable to consult with the other party, subject to applicable laws relating
to the exchange of information, with respect to, all material written
information submitted to any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each party agrees to act reasonably and as promptly as
practicable. Each of the Acquiror and the Company agrees that it will consult
with the other party hereto with respect to the obtaining of all material
consents, registrations, approvals, permits and authorizations of all third
parties and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions contemplated hereby. In connection with the foregoing, the Company
will provide Acquiror, and Acquiror will provide Company, with copies of all
material correspondence, filings, communications (summarized in a memorandum in
the case of oral communications) between such party or any of their
Representatives, on the one hand, and any Governmental Authority or members of
their respective staffs, on the other hand, with respect to this Agreement or
the transactions contemplated hereby.

         (b)      Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.

                                       30
<PAGE>

         5.11     Indemnification.

         (a)      The articles of incorporation and the by-laws of the Surviving
Corporation shall contain the provisions in favor of the directors, officers,
employees or agents of the Company, or of any other corporation, partnership,
joint venture, trust or other enterprise with which he or she is or was serving
in such capacity at the request of the Company (each an "Indemnified Party"),
with respect to indemnification and exculpation from liability set forth in the
Company Articles and Company By-Laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
five years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who on or prior to the Effective Time were
directors, officers or employees of the Company, or any of its subsidiaries
unless such modification is required by law.

         (b)      For five years after the Effective Time, the Surviving
Corporation shall maintain in effect, in respect of acts or omissions occurring
prior to the Effective Time, policies of directors' and officers' liability
insurance covering each Person currently covered by such policies on terms with
respect to coverage and amount no less favorable in any material respect than
those of such policy in effect on the date hereof; provided, however, that in
satisfying its obligation under this Section 5.11(b) the Surviving Corporation
shall not be obligated to pay annual premiums in excess of 150% of the amount
per annum the Company is currently paying for such coverage; provided further
that if the annual premiums of such insurance coverage exceeds such amount, the
Surviving Corporation shall be obligated to obtain policies with as much
coverage as is available for a cost not exceeding such amount.

         (c)      The provisions of this Section 5.11 are intended for the
benefit of, and shall be enforceable by, the respective indemnified parties. The
obligations of Acquiror and Acquiror Sub under this Section 5.11 shall not be
terminated or modified in such a manner as to adversely affect any indemnified
party to whom this Section 5.11 applies without the consent of such party.

         5.12     Notification of Certain Matters. Each of the Company and the
Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.

         5.13     Employee Benefits.

         (a)      The Acquiror and the Company agree that all employees of the
Company immediately prior to the Effective Time shall be employed by the
Surviving Corporation immediately after the Effective Time; it being understood
that (i) except for employees of the Company with employment agreements as set
for in Section 5.13 of the Company's Disclosure Letter ("Specific Employment
Agreements"), neither the Surviving Corporation, the Acquiror or the Acquiror
Sub shall have any obligation to continue employing such employees for any
length of time thereafter, and (ii) with respect to those employees of the
Company with employment agreements, neither the Surviving Corporation, the
Acquiror or Acquiror Sub shall have any obligation to continue the employment of
such employees except as specified in the applicable employment agreement and
such employee's employment may be terminated, provided the Surviving Corporation
complies with the terms of such employment agreement.

         (b)      Subject, in the case of an employee with a Specific Employment
Agreement, to the terms of the applicable Specific Employment Agreement, the
Acquirer and the Company agree that for the period commencing on the Closing
Date and ending December 31, 2004, (i) the Surviving Corporation shall continue
to pay and provide to each employee of the Company base salary, vacation, bonus
and other incentive opportunities that are equal to or greater than the base
salary, vacation, bonus and other incentive opportunities currently provided to
such employee, and (ii) all employees and Multi-Line Exclusive Agents of the
Surviving Corporation shall continue to be entitled to and shall receive the
same benefits currently provided the

                                       31
<PAGE>

employees or Multi-Line Exclusive agents, as applicable, of the Company under
its existing Compensation Plans so long as the continued provision of benefits
to such employees under the Company's Compensation Plans does not cause any
Acquirer Compensation Plan (as defined in Section 5.13(d) below) to be in
violation of any law or regulation governing such plans.

         (c)      Subject, in the case of an employee with a Specific Employment
Agreement, to the terms of the applicable Specific Employment Agreement, the
Acquirer Compensation Plans shall provide all employees and Multi-Line Exclusive
Agents of the Company and its Subsidiaries who become participants in such
Acquirer Compensation Plans after the Closing Date credit for all seniority and
service with the Company and its Subsidiaries, or their respective predecessors
(or any other party for which seniority or service has been recognized under the
Company's Compensation Plans) prior to the Closing Date for all purposes (other
than benefit accrual under a retirement plan) for which such seniority or
service was recognized by the Company's Compensation Plans prior to the Closing
Date, including but not limited to eligibility to participate, vesting in
benefits accrued while participating in such Acquirer Compensation Plans, and
the rate at which benefits accrue while participating in such Acquirer
Compensation Plans.

         (d)      The term "Acquirer Compensation Plan" means any bonus,
vacation, deferred compensation, commission-based, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock appreciation and stock option plans, all
employment or severance contracts, all medical, dental, disability, severance,
health and life plans, all employee benefit and fringe benefit plans, contracts
or arrangements and any "change of control" or similar provision in any plan,
contract or arrangement maintained or contributed to by the Acquirer or any
ERISA Affiliate of the Acquirer, as applicable, for the benefit of current or
former officers, employees, directors or agents or the beneficiaries or
dependents of the foregoing.

         (e)      The Acquirer and the Company agree that paragraphs (a), (b),
(c), (d) and (e) of this Section 5.13 do not create any rights with respect to
any third party, but is merely an expression of the current understanding with
respect to these matters.

         (f)      Except with respect to employees with a Specific Employment
Agreement, Acquiror agrees that, on or after the Closing Date, with respect to
the termination of employment of any employee currently employed by the Company
prior to December 31, 2004, the Surviving Corporation will provide an employee
whose employment is to be terminated (other than for cause) thirty days notice
prior to the date of such termination.

         5.14     Certain Contracts. Prior to the Effective Time, the Company
will use its reasonable best efforts to cause the Contracts with third parties
that are identified by Acquiror to be terminated or not renewed (effective prior
to or as of the Effective Time) without any penalty or other adverse
consequences to the Company or to be amended in the manner reasonably requested
by Acquiror.

                                   ARTICLE 6

                    CONDITIONS TO CONSUMMATION OF THE MERGER

         6.01     Conditions to Each Party's Obligation to Effect the Merger.
The obligation of each of the Acquiror, Acquiror Sub and the Company to
consummate the Merger is subject to the fulfillment or written waiver by the
Acquiror and the Company prior to the Effective Time of each of the following
conditions:

         (a)      This Agreement shall have been duly approved and adopted, and
a plan of merger shall have been duly approved by the Company Requisite Vote.

         (b)      The waiting periods applicable to the consummation of the
Merger under (A) the HSR Act shall have expired or been terminated; the
transactions contemplated hereby shall have been approved by the

                                       32
<PAGE>

Georgia Insurance, Safety and Fire Commissioner, the Illinois Insurance
Commissioner, the Connecticut Insurance Commissioner and any other insurance
regulatory authorities as may be necessary or appropriate; and other than the
filing of articles of merger with the Secretary of State of the State of Georgia
pursuant to the GBCC and the Secretary of State of the State of Illinois
pursuant to the IBCA, all notices, reports and other filings required to be made
prior to the Effective Time by the Company or Acquiror or any of their
respective Subsidiaries or Affiliates to, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior to the
Effective Time by the Company or Acquiror or any of their respective
Subsidiaries or Affiliates from, any Governmental Authority; provided, however,
that none of the preceding shall be deemed obtained or made if it is subject to
any condition or restriction the effect the or which, together with all other
conditions or restrictions, that imposes Burdensome Condition on the Acquiror,
the Surviving Corporation, any of their Subsidiaries or any of their Affiliates.

         (c)      No statute, rule, regulation, judgment, writ, decree, order or
injunction shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken or pending, by any Governmental Authority
that in any of the foregoing cases has the effect of making illegal or directly
or indirectly restraining, prohibiting or restricting the consummation of the
Merger (provided that each party hereto shall use its reasonable best efforts to
have vacated or reversed, in accordance with Section 5.02, any applicable
judgment, writ, decree, order or injunction).

         (d)      The conditions to closing set forth in Section III(B) of the
Alliance Agreement dated as of the date hereof by and among COUNTRY Mutual
Insurance Company, CSMIC and Shield (the "Alliance Agreement") shall have been
satisfied, the documents specified in Section III(D) of the Alliance Agreement
shall have been delivered and the Alliance Agreement shall not have been
terminated.

         6.02     Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company, prior to the Effective Time, of each of the following
conditions:

         (a)      The representations and warranties of each of the Acquiror and
Acquiror Sub set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct only as of such date).

         (b)      Each of the Acquiror and Acquiror Sub shall have performed in
all material respects (disregarding for these purposes references to materially
in specific agreements and covenants) all obligations required to be performed
by it under this Agreement at or prior to the Effective Time.

         (c)      The Company shall have received a certificate, dated the
Closing Date, signed on behalf of the Acquiror and Acquiror Sub by a senior
officer of the Acquiror and Acquiror Sub verifying satisfaction of the
conditions set forth in Sections 6.02(a) and 6.02(b).

         6.03     Conditions to Obligation of the Acquiror. The obligations of
the Acquiror and Acquiror Sub to consummate the Merger are also subject to the
fulfillment or written waiver by the Acquiror prior to the Effective Time of
each of the following conditions:

         (a)      The representations and warranties of the Company and its
Subsidiaries set forth in this Agreement shall be true and correct (disregarding
for these purposes references to materiality standards and qualifications of
"Material Adverse Effect" in specific representations and warranties) as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date except (i) that representations and warranties that by their
terms speak as of the date of this Agreement or some other date shall be true
and correct only as of such date, (ii) for changes specified by this Agreement
or (iii) where the failure of such representations to be true and correct in all
respects are not, in the aggregate, reasonably likely to have a Material Adverse
Effect.

                                       33
<PAGE>

         (b)      The Company and its Subsidiaries shall have performed in all
material respects (disregarding for these purposes references to materially in
specific agreements and covenants) all obligations required to be performed by
them under this Agreement at or prior to the Effective Time.

         (c)      The Acquiror shall have received a certificate, dated the
Closing Date, signed on behalf of the Company by the Chief Executive Officer and
the Vice President of Finance of the Company verifying satisfaction of the
conditions set forth in Sections 6.03(a) and 6.03(b).

         (d)      Dissenters' rights shall not have been perfected pursuant to
Section 14-2-1321 of the GBCC by shareholders of the Company with respect to
more than 10% of the issued and outstanding shares of Company Common Stock
immediately prior to the Effective Time.

         (e)      No Burdensome Condition shall have been imposed upon Acquiror,
Acquiror Sub, the Surviving Corporation or any of their Affiliates.

         (f)      Since the date hereof, there shall not have occurred any
event, circumstance or development that has had or is reasonably likely to have
a Material Adverse Effect with respect to the Company.

         (g)      The waivers, consents, amendments and modifications set forth
in Section 5.09 of the Company's Disclosure Letter shall have been obtained
without the imposition of costs, expenses or fees payable by the Company or the
Surviving Corporation to the other party to the applicable Company Contract.

                                   ARTICLE 7

                                   TERMINATION

         7.01     Termination Events. Notwithstanding anything herein or
elsewhere to the contrary, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned as follows:

         (a)      At any time prior to the Effective Time, by the mutual consent
of the Acquiror and the Company.

         (b)      By either Acquiror or the Company, at any time prior to the
Effective Time, by action of the board of directors of either Acquiror or the
Company if (i) the Merger shall not have been consummated by December 31, 2004,
whether such date is before or after the date of approval by the shareholders of
the Company (the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 7.01 shall not be available to
any party whose failure to perform any of its obligations under this Agreement
primarily contributes to the failure of the Merger to be consummated by such
time; provided, further, that the Termination Date may be extended not more than
sixty days by either party by written notice to the other party if the Merger
shall not have been consummated as a direct result of the condition set forth in
Section 6.01(b) failing to have been satisfied and the extending party
reasonably believes that the relevant approvals will be obtained during such
extension period, or its board of directors determines by majority vote that,
any statute, law, rule or regulation shall have been promulgated that prohibits
the consummation of the Merger or if any Governmental Authority of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling or other action each party hereto shall
use its reasonable best efforts to have vacated or reversed in accordance with
Section 5.02), in each case restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable or (iii) in the case of
the Company, an event or circumstance exists that results in any representation
or warranty of Acquiror or Acquiror Sub contained in this Agreement being untrue
which would result in a failure of a condition set forth in Sections 6.02(a),
6.02(b) or 6.02(c) and which cannot be cured or has not been cured by the
earlier of (A) twenty Business Days after the giving of written notice to
Acquiror of such event, circumstance or breach and (B) the Termination Date or,
in the case of the Acquiror, an event or circumstance exists that results in any
representation or warranty of the

                                       34
<PAGE>

Company or any of its Subsidiaries contained in this Agreement being untrue
which would result in a failure of a condition set forth in Sections 6.03(a),
6.03(b) or 6.03(c) and which cannot be cured or has not been cured by the
earlier of (A) twenty Business Days after the giving of written notice to the
Company of such event, circumstance or breach and (B) the Termination Date.

         (c)      By the Acquiror if the Company, in accordance with applicable
law, applicable stock exchange rules, the Company Articles and the Company
By-Laws, has not taken all action reasonably necessary to convene the Company
Meeting at least ten Business Days prior to the Termination Date; provided,
however, that the Acquiror may not utilize the provision of this Section 7.01(c)
if the Georgia Insurance, Safety and Fire Commissioner has issued an order
restricting distribution of the Proxy Statement which has not been vacated,
withdrawn, rescinded or otherwise become of no effect at least forty-five days
prior to the Termination Date.

         (d)      By the Company, prior to the Effective Time, by action of the
Company Board if (i) the Company has complied with its obligations under Section
5.07 and the Company has given Acquiror prior written notice, of not less than
the greater of seventy-two hours and two Business Days, of its intention to
terminate this Agreement and accept or recommend a Superior Proposal and of the
material terms and conditions of such Superior Proposal, provided that the
termination described in this Section 7.01(d) shall not be effective unless and
until the Company shall have paid to Acquiror the amounts specified in Section
7.03; (ii) Acquiror or Acquiror Sub has taken any action (or failed to take any
action) which would result in a failure of a condition set forth in Sections
6.02(a), 6.02(b) or 6.02(c) and which cannot be cured or has not been cured by
the earlier of (A) twenty Business Days after the giving of written notice to
Acquiror of such breach and (B) the Business Day immediately prior to
Termination Date; or (iii) CMIC takes any action (or fails to take action) which
results in the closing conditions set forth in the in the Alliance Agreement not
being satisfied which cannot be cured or has not been cured by the earlier of
(A) twenty Business Days after the giving of written notice to Acquiror of such
breach and (B) the Business Day immediately prior to Termination Date.

         (e)      By the Acquiror, prior to the Effective Time, by action of its
board of directors if (i) the Company breaches any of its covenants in Section
5.07 or the Company has taken (or the Company Board shall have resolved to
effect) any of the actions referred to in the first paragraph of Section 5.07;
(ii) the Company Board fails to recommend that the shareholders of the Company
approve this Agreement and any other matters required to be approved by the
Company's shareholders for consummation of the Merger and the transactions
contemplated hereby or a Change in Recommendation has occurred; (iii) the
Company or any of its Subsidiaries has taken any action (or failed to take any
action) which would result in a failure of a condition set forth in Sections
6.03(a), 6.03(b) or 6.03(c) and which cannot be cured or has not been cured by
the earlier of (A) twenty Business Days after the giving of written notice to
the Company of such breach and (B) the Business Day immediately prior to the
Termination Date; or (iv) CSMIC or Shield takes any action (or fails to take
action) which results in the closing conditions set forth in the Alliance
Agreement not being satisfied which cannot be cured or has not been cured by the
earlier of (A) twenty Business Days after the giving of written notice to
Acquiror of such breach and (B) the Business Day immediately prior to
Termination Date.

         7.02     Effect of Termination and Abandonment. The party desiring to
terminate this Agreement, shall give written notice of such termination to the
other party specifying the provision pursuant to which such termination is
effective. In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article 7, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (a) as set
forth in Section 7.03 and Section 8.01, and (b) that termination will not
relieve a breaching party from liability for any willful breach of this
Agreement giving rise to such termination.

         7.03     Termination Fee. If this Agreement is terminated (i) by the
Company pursuant to clause (i) of Section 7.01(d) or (ii) by Acquiror pursuant
to Section 7.01(c) or Section 7.01(e), then the Company shall pay to Acquiror in
immediately available funds an amount equal to $6.5 million. If such amount
becomes payable

                                       35
<PAGE>

pursuant to clause (i) or (ii) of this Section 7.03, such amount shall be
payable simultaneously with such termination (in the case of termination by the
Company) or within two Business Days thereafter (in the case of termination by
Acquiror). The Company acknowledges that the agreements contained in Section
7.03 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Acquiror and Acquiror Sub would not enter
into this Agreement; accordingly, if the Company fails to pay the amount due
pursuant to Section 7.03, and, in order to obtain such payment, Acquiror or
Acquiror Sub commences a suit which results in a judgment against the Company
for the amounts set forth in Section 7.03, the Company shall pay to Acquiror or
Acquiror Sub, as the case may be, its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank N.A. in effect on the date such
payment was required to be made plus two percent.

                                    ARTICLE 8

                                  MISCELLANEOUS

         8.01     Survival. None of the representations, warranties, agreements
or covenants contained in this Agreement shall continue, except that (i) those
contained in Section 7.02, and Section 7.03 and in this Article 8 shall survive
the termination of this Agreement, if this Agreement is terminated prior to the
Effective Time, and (ii) those contained in Section 5.11, Section 5.13 and in
this Article 8 shall survive the Effective Time.

         8.02     Waiver; Amendment. Prior to the Effective Time, any provision
of this Agreement may be (a) waived by the party benefited by the provision, or
(b) amended or modified at any time, by an agreement in writing executed by both
parties, except that, after approval of the Merger by the shareholders of the
Company, no amendment may be made which under applicable law requires further
approval of such shareholders without obtaining such required further approval.

         8.03     Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.

         8.04     Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia is applicable to
contracts executed in and to be performed entirely within that State, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Georgia or any Georgia state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.

         8.05     Waiver of Jury Trial. Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement or the transactions
contemplated hereby.

         8.06     Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court sitting in Georgia, this being in addition to any other remedy to which
they are entitled at law or in equity.

         8.07     Expenses. Subject to Section 7.03, each party hereto will bear
all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby, except that printing and postage expenses and
any other fees and expenses related to the Proxy Statement shall be shared
equally between the Company and the Acquiror. Acquiror shall be entitled to
select a printing company of its choice.

                                       36
<PAGE>

         8.08     Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given (i) on the
date of delivery, if personally delivered or telecopied (with confirmation),
(ii) on the first Business Day following the date of dispatch, if delivered by a
recognized next-day courier service, or (iii) on the third Business Day
following the date of mailing, if mailed by registered or certified mail (return
receipt requested), in each case to such party at its address or telecopy number
set forth below or such other address or numbers as such party may specify by
notice to the parties hereto.

              If to the Company, to:

                       Cotton States Life Insurance Company
                       244 Perimeter Center Parkway, N.E.
                       Atlanta, GA 30346
                       Attention: J. Ridley Howard, Chairman
                       Facsimile: (770) 391-8710

              With a copy to:

                       Thomas O. Powell, Esq.
                       Troutman Sanders LLP
                       600 Peachtree, N.E., Suite 5200
                       Atlanta, GA 30308-2216
                       Facsimile: (404) 962-6658

              If to the Acquiror, or Acquiror Sub, to:

                       COUNTRY Life Insurance Company
                       1701 N. Towanda Avenue
                       Bloomington, Illinois 60701
                       Attention: John D. Blackburn, Chief Executive Officer
                       Facsimile: (309) 821-4828

              With a copy to:

              Todd R. Eskelsen, Esq.             Paul Harman, General Counsel
              Sonnenschein Nath & Rosenthal      COUNTRY Life Insurance Company
              1301 K Street, N.W.                1701 N. Towanda Avenue
              Suite 60, East Tower               Bloomington, Illinois 60701
              Washington, DC 20005               Facsimile: (309) 557-2612
              Facsimile: (202) 408-6399

         8.09     Entire Understanding, No Third-Party Beneficiaries. This
Agreement (together with the Company's Disclosure Letter, the Acquiror's
Disclosure Letter, the Shareholder Agreements and the exhibits hereto and
thereto) represents the entire understanding of the parties hereto with
reference to all the matters encompassed or contemplated herein or agreed to in
contemplation hereof) and this Agreement supersedes any and all other oral or
written agreements heretofore made. Except for Section 5.11, insofar as such
Section 5.11 expressly provides certain rights to the indemnified parties named
therein, nothing in this Agreement, expressed or implied, is intended to confer
upon any Person, other than the parties hereto or their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.

         8.10     Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
prior written consent of each other party hereto, except that the Acquiror and
Acquiror Sub may

                                       37
<PAGE>

assign or delegate in their sole discretion any or all of their rights,
interests or obligations under this Agreement to any direct or indirect, wholly
owned Subsidiary of the Acquiror, but no such assignment shall relieve the
Acquiror of any of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors and assigns.

         8.11     Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "hereby,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless, otherwise stated, any statute, rule or regulation
defined or referred to herein means such statute, rule or regulation as from
time to time amended, modified or supplemented, including by succession of
comparable successor statues, rule or regulations. No rule of construction
against the drafts Person shall be applied in connection with the interpretation
or enforcement of this Agreement. Whenever this Agreement shall require a party
to take an action, such requirement shall be deemed to constitute an undertaking
by such party to cause its Subsidiaries, and to use its reasonable best efforts
to cause its other Affiliates, to take appropriate action in connection
therewith. References to "knowledge" of a Person means knowledge after
reasonable diligence in the circumstances. All references to "dollars" or "$"
mean the lawful currency of the United States unless otherwise indicated.

         8.12     Certain Definitions. The following terms are used in this
Agreement with the meanings assigned below:

         "Acquiror" has the meaning assigned in the preamble to this Agreement.

         "Acquiror Disclosure Letter" has the meaning assigned in the preamble
of Article 4.

         "Acquiror Information" has the meaning assigned in Section 5.04.

         "Acquiror Sub" has the meaning assigned in the preamble to this
Agreement.

         "Acquisition Proposal" shall mean any proposal or offer, or any
indication of interest in making an offer or proposal, made by any Person or
group (in each case, whether or not in writing and whether or not delivered to
the shareholders of the Company generally) relating to (i) any direct or
indirect acquisition or purchase which is structured to permit such Person or
group to acquire Beneficial Ownership of at least 10% of the assets of the
Company or any of its Subsidiaries or of over 10% of any class of equity
securities of the Company or any of its Subsidiaries, (ii) any tender offer or
exchange offer that, if consummated, would result in any Person, other than
Acquiror, Acquiror Sub, their Affiliates or any group of which any of them is a
member beneficially owning 10% or more of any class of equity securities of the
Company or any of its Subsidiaries, or (iii) any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries.

         "Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act; provided, however, the term Affiliate, when used in reference of
the Company or its Subsidiaries, does not include Acquiror, Acquiror Sub or any
of their executive officers, directors or shareholders.

         "Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 8.02.

                                       38
<PAGE>

         "Alliance Agreement" has the meaning assigned in Section 6.01(d).

         "Beneficial Ownership" shall having the meaning set forth in Rule 13d-3
under the Exchange Act.

         "Burdensome Condition" has the meaning assigned in Section 5.02.

         "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in Chicago, Illinois are permitted or obligated by
law to be closed for regular banking business.

         "Change in Recommendation" has the meaning assigned in Section 5.07(a).

         "Closing Date" has the meaning assigned in Section 1.02.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Company" has the meaning assigned in the preamble to this Agreement.

         "Company Actuarial Analyses" has the meaning assigned in Section
3.07(e).

         "Company Articles" means the Articles of Incorporation of the Company.

         "Company Board" means the board of directors of the Company.

         "Company By-Laws" means the by-laws of the Company.

         "Company Contracts" has the meaning assigned in Section 3.11.

         "Company Common Stock" means the common stock, $1.00 par value, of the
Company.

         "Company's Disclosure Letter" has the meaning assigned in the preamble
of Article 3.

         "Company Financial Advisor" means SunTrust Capital Markets, Inc.

         "Company Financial Statements" means the consolidated financial
statements of the Company included in the Form 10-Ks for the years ended
December 31, 2002, December 31, 2001 and December 31, 2000 and Form 10-Qs for
the quarterly periods ended March 31, 2003, June 30, 2003 and September 30, 2003
together, in the case of year-end statements, with reports thereon by the
independent auditors of the Company including in each case a consolidated
balance sheet, a consolidated statement of income, a consolidated statement of
shareholders' equity and a consolidated statement of cash flows, and
accompanying notes.

         "Company Forms" has the meaning assigned in Section 3.10(g).

         "Company IP Rights" means the Intellectual Property Rights (a) owned or
utilized by or (b) licensed to or from the Company or any of its Subsidiaries.

         "Company Investments" has the meaning assigned in Section 3.25(a).

         "Company Meeting" has the meaning assigned in Section 5.03.

         "Company Permits" has the meaning assigned in Section 3.10(b).

         "Company Reports" has the meaning assigned in Section 3.10(f).

                                       39
<PAGE>

         "Company Representatives" has the meaning assigned in Section 5.07(a).

         "Company Requisite Vote" has the meaning assigned in Section 3.05(d).

         "Company's SEC Documents" has the meaning assigned in Section 3.07.

         "Company Statutory Financial Statements" means the annual statements
and quarterly statements of each of the Company and the Company's Subsidiaries,
as filed (and, as applicable, amended by filing) with the departments of
insurance for all applicable domiciliary jurisdictions for the years ended
December 31, 2002, December 31, 2001 and December 31, 2000 and the quarters
ended June 30, 2003, March 31, 2003 and September 30, 2003 together with all
exhibits and schedules thereto.

         "Company Stock Award" has the meaning assigned in Section 2.05.

         "Company Stock Option" means each option to purchase shares of Company
Common Stock outstanding under the Company Stock Plans.

         "Company Stock Plans" has the meaning assigned in Section 3.02.

         "Compensation Plans" has, with respect to any Person, the meaning
assigned in Section 3.14(a).

         "Confidentiality Agreement" means the Confidentiality Agreement dated
September 5, 2003 by and between COUNTRY Mutual Insurance Company and Cotton
States Mutual Insurance Company.

         "Consideration" has the meaning assigned in Section 2.01(a).

         "Consideration Per Share" means $20.25 in cash without interest.

         "Contract" means, with respect to any Person, any agreement, indenture,
undertaking, debt instrument, contract, lease or other commitment, whether oral
or in writing, to which such Person or any of its Subsidiaries is a party or by
which any of them is bound or to which any of their properties is subject.

         "CSMIC" means Cotton States Mutual Insurance Company.

         "Disclosure Controls and Procedures" means controls and other
procedures of the Company that are designed to ensure that information required
to be disclosed by the issuer in registration statements under the 1933 Act or
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms; "Disclosure Controls and Procedures" include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in such registration statements and reports that it
files or submits is accumulated and communicated to the Company's management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.

         "Dissenters' Shares" means shares of Company Common Stock the holders
of which shall have perfected their dissenters' rights to payment in accordance
with Section 14-2-1301 to Section 14-2-1332 of the GBCC as of the moment
immediately prior to the Effective Time.

         "Effective Time" means the date and time at which the Merger becomes
effective.

         "Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement relating
to: (i) the protection or restoration of the

                                       40
<PAGE>

environment, health or safety (in each case as relating to the environment) or
natural resources; or (ii) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance.

         "ERISA" means the Employee Retirement Income Security Act of 1974.

         "ERISA Affiliate" has, with respect to any Person, the meaning assigned
in Section 3.15(d).

         "ERISA Affiliate Plan" has the meaning assigned in Section 3.15(d).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

         "GAAP" means generally accepted accounting principles.

         "GBCC" has the meaning assigned in the recitals to this Agreement.

         "Georgia Insurance Securities Laws" means Chapters 3, 6,10, 12, 13, 14,
15, 17, 39, and 55 of Title 33 of the Official Code of Georgia and the rules and
regulations of the State of Georgia Comptroller General Insurance Department,
including those set forth in Rules 120-2-7-.01 to 120-2-7-.13 inclusive.

         "Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality or any self regulatory organization.

         "Hazardous Substance" means any substance in any concentration that is:
(1) listed, classified or regulated pursuant to any Environmental Law; (2) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(3) any other substance which is regulated by any Governmental Authority
pursuant to any Environmental Law.

         "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.

         "IBCA" means the Illinois Business Corporation Act, as amended.

         "Indemnified Party" has the meaning assigned in Section 5.11(a).

         "Insurance Policies" has the meaning assigned in Section 3.20.

         "Intellectual Property Rights" shall mean any and all worldwide
industrial and intellectual property rights, including, without limitation, (a)
patents, patent applications, patent rights, patent disclosures and improvements
thereto and all reissues, divisions, continuations and extensions thereof, (b)
trademarks, trademark registrations and applications, service marks, service
mark registrations and applications, trade dress, logos, trade names and
corporate names, (c) copyright, copyright registrations and applications, (d)
domain names, URLs and Internet web sites, (e) franchises and licenses, (f)
inventories, customer lists, marketing and licensing records, sales literature,
trade lists, advertising and promotional records, know-how, trade secrets,
manuals, documentation, memoranda, records and all other confidential and
proprietary information, technical information, proprietary processes and
formulae, all source and object code, algorithms, architecture, structure,
display screens, layouts, inventions, development tools, databases, (g) any
computer software (other than off-the-shelf software), and (h) all other
intellectual property in whatever form or medium (other than off-the-shelf
software).

         "Internal Controls and Procedures for Financial Reporting" means
controls that pertain to the preparation of financial statements for external
purposes that are fairly presented in conformity with GAAP as addressed by the
Codification of Statements on Auditing Standards Section 319 or any superseding
definition or other literature that is adopted by the Public Company Accounting
Oversight Board.

                                       41
<PAGE>

         "IRS" means the United States Internal Revenue Service.

         "Investment Securities" means fixed income and equity securities held,
or to be held, by the Company as an investment (within the meaning of Statement
of Financial Accounting Standards No. 115) in managing its insurance operations
in the ordinary course of business for which there is a readily available
trading market in the United States where such securities are regularly traded.

         "Liability" means any liability or obligation (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated or due or to become due), including any liability or
obligation for or with respect to Taxes.

         "Liens" means any charge, mortgage, deed, assignment, pledge,
hypothecation, security interest, restriction, easement, claim, lien,
encumbrance or interest of another Person of any kind or nature.

         "Loans" means loans, financing leases, extensions of credit (including
guaranties), commitments to extend credit and other assets.

         "Material Adverse Effect" means, (i) with respect to the Company or the
Surviving Corporation, any effect that (a) is materially adverse to the assets,
liabilities, business, financial position, results of operations, shareholder's
equity or business prospects of the Company or the Surviving Corporation, as
applicable, and its Subsidiaries taken as a whole, respectively, other than
payments of expenses associated with the Merger as contemplated by this
Agreement; provided, however, that none of the following shall be deemed in
themselves, either alone or in combination, to constitute, and that none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect under this clause (a): (1) any adverse
change, effect, event, occurrence, state of facts or development to the extent,
directly or indirectly, attributable to the announcement or pendency of the
Merger, or (2) any change to the operations or business of the Surviving
Corporation effected by Acquiror or its Affiliates after the Effective Date, (3)
any adverse change, effect, event, occurrence, state of facts or development
arising from or relating to compliance with the terms of this Agreement or (b)
would materially impair the ability of either the Acquiror or the Company to
perform its obligations under this Agreement or otherwise materially delay or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement and (ii) with respect to the Acquiror or Acquiror
Sub would materially impair the ability of either the Acquiror or the Company to
perform its obligations under this Agreement or otherwise materially delay or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement.

         "Merger" has the meaning assigned in Section 1.01(a).

         "Multiemployer Plan" means, with respect to any Person, a multiemployer
plan within the meaning of Section 3(37) of ERISA.

         "Multi-Line Exclusive Agents" shall man any Person who has entered into
a Multi-Line Exclusive Agent's Contract with the Company or an ERISA Affiliate
of the Company.

         "Paying Agent" has the meaning assigned in Section 2.03.

         "Performance Share Awards Plan" means the Cotton States Life Insurance
Company 1995 Performance Shares Award Plan.

         "PBGC" means the Pension Benefit Guaranty Corporation.

         "Pension Plan" has, with respect to any Person, the meaning assigned in
Section 3.15(c).

                                       42
<PAGE>

         "Person" means any individual, bank, savings bank, insurance company,
corporation, partnership, limited liability company, association, joint-stock
company, trust, unincorporated organization or group (within the meaning of Rule
13d-3 under the Exchange Act);

         "Previously Disclosed" means, with respect to the Company or the
Acquiror, information set forth in such party's Disclosure Letter in a paragraph
or section identified as corresponding to the provision of this Agreement in
respect of which such information has been so set forth.

         "Proxy Statement" has the meaning assigned in Section 5.04.

         "Related Person" means any Person (or immediate family member of such
Person) (i) that is an Affiliate of the Company, (ii) that serves as a director,
officer, employee, partner, member, executor, or trustee of the Company or any
of its Affiliates or Subsidiaries (or in any other similar capacity), (iii) that
has, or is a member of a group having, direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least five percent of the outstanding voting
power or equity securities or other equity interests representing at least five
percent of the outstanding equity interests (a "Material Interest") in the
Company or any of its Affiliates or (iv) in which any Person that falls under
(i), (ii) or (iii) directly or indirectly, above, to the knowledge of the
Company, holds a Material Interest or serves as a director, officer, employee,
partner, member, executor, or trustee (or in any other similar capacity);
provided, however, the term Related Person, when used in reference of the
Company or its Subsidiaries, does not include Acquiror, Acquiror Sub or any of
their executive officers, directors or shareholders.

         "Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or investment or financial advisors or any
representatives of such legal or financial advisors.

         "Rights" means, with respect to any Person, securities, warrants,
agreements or obligations convertible into or exercisable or exchangeable for,
or giving any Person any right to subscribe for or acquire, or any options,
calls or commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by reference to
the market price or value of, shares of capital stock of such Person.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

         "Shareholder Agreement" has the meaning assigned in the recitals to
this Agreement.

         "Shield" means Shield Insurance Company.

         "Specific Employment Agreement" has the meaning assigned in Section
5.13(a).

         "Subsidiary" includes either a "subsidiary" as defined in Rule 1-02 of
Regulation S-X of the SEC or a "subsidiary" as defined in Section 225.2(o) of
Title Twelve of the Code of Federal Regulations.

         "Superior Proposal" shall mean an unsolicited bona fide written
proposal made by a third party to acquire all of the issued and outstanding
shares of Company Common Stock pursuant to a tender offer or a merger or to
acquire substantially all of the properties and assets of the Company on terms
and conditions that the Company Board determines in good faith, after receiving
the written advice of its financial advisor and legal counsel and taking into
account all the terms and conditions of such proposal (including, without
limitation, any expense reimbursement provisions, termination fees and
conditions), is more favorable to the

                                       43
<PAGE>

Company's shareholders from a financial point of view than the transactions
contemplated hereby and is reasonably likely to be consummated.

         "Surviving Corporation" has the meaning assigned in Section 1.01(a).

         "Takeover Laws" has the meaning assigned in Section 3.05(b).

         "Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including all net income, gross income, gross receipts,
sales, use, ad valorem, goods and services, capital, transfer, franchise,
profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, custom duties,
fees, or charges of any kind whatsoever, together with any interest and any
penalties or additions to tax with respect thereto and with respect to any
information reporting requirements imposed by the Code or any similar provision
of foreign, state or local law and any interest in respect of such additions or
penalties imposed by any taxing authority whether arising before, on or after
the Closing Date.

         "Tax Returns" means all reports and returns required to be filed on or
before the Closing Date with respect to the Taxes of the Company or any of its
Subsidiaries, including consolidated federal income tax returns and any
documentation required to be filed with any taxing authority or to be retained
by the Company or any of its Subsidiaries in respect of information reporting
requirements imposed by the Code or any similar foreign, state or local law.

         "Treasury Shares" means shares of Company Common Stock owned, directly
or indirectly, by the Company or any of its Subsidiaries.

         8.13     Tax Disclosure Authorization. Notwithstanding anything herein
to the contrary, the parties (and each Affiliate and person acting on behalf of
any party) agree that each party (and each employee, representative, and other
agent of such party) may disclose to any and all persons, without limitation of
any kind, the transaction's tax treatment and tax structure (as such terms are
used in Code Sections 6011 and 6112 and regulations thereunder) contemplated by
this Agreement and all materials of any kind (including opinions or other tax
analyses) provided to such party or such person relating to such tax treatment
and tax structure. This authorization is not intended to permit disclosure of
any information (other than that described in the preceding sentence) that is
otherwise prohibited by the terms of this Agreement.

 *** Remainder of This Page Intentionally Left Blank, Signature Page Follows ***

                                       44
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                            COUNTRY LIFE INSURANCE COMPANY

                                            By: /s/ John D. Blackburn
                                                --------------------------------
                                            Name:  John D. Blackburn
                                            Title: Chief Executive Officer

                                            COUNTRY MEDICAL PLANS, INC.

                                            By: /s/ John D. Blackburn
                                                --------------------------------
                                            Name:  John D. Blackburn
                                            Title: Chief Executive Officer

                                            COTTON STATES LIFE INSURANCE COMPANY

                                            By: /s/ J. Ridley Howard
                                                --------------------------------
                                            Name:  J. Ridley Howard
                                            Title: Chairman, President & CEO

                                       45<PAGE>

                                                                     EXHIBIT 4.5

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN
ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD IMMEDIATELY CONSULT YOUR
BROKER, BANK MANAGER, LAWYER, ACCOUNTANT, INVESTMENT ADVISOR OR OTHER
PROFESSIONAL.

         This document relates to an exchange offer (the "EXCHANGE OFFER") made
by Berkshire Hathaway Finance Corporation ("BHFC"). The Exchange Offer is
described in the Prospectus, dated [_____], 2004 (the "PROSPECTUS"), and in this
Letter of Transmittal (this "LETTER OF TRANSMITTAL"). All terms and conditions
contained or otherwise referred to in the Prospectus are deemed to be
incorporated in and form a part of this Letter of Transmittal. Therefore, you
are urged to read the Prospectus and the items referred to therein carefully.
The terms and conditions contained in the Prospectus, together with the terms
and conditions governing this Letter of Transmittal and the instructions herein,
are collectively referred to below as the "TERMS AND CONDITIONS."

                              LETTER OF TRANSMITTAL
                                   RELATING TO
               THE OFFER BY BERKSHIRE HATHAWAY FINANCE CORPORATION

                    TO EXCHANGE 3.375% SENIOR NOTES DUE 2008,
              UNCONDITIONALLY GUARANTEED BY BERKSHIRE HATHAWAY INC.

                              ("REGISTERED NOTES")

                                       FOR

                          3.375% SENIOR NOTES DUE 2008,
              UNCONDITIONALLY GUARANTEED BY BERKSHIRE HATHAWAY INC

                              ("OUTSTANDING NOTES")

         THE EXCHANGE OFFER FOR THE OUTSTANDING NOTES WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON [______], 2004, UNLESS EXTENDED BY BHFC (THE "EXPIRATION
DATE").

<PAGE>

         Each holder of Outstanding Notes wishing to accept the Exchange Offer,
except holders of Outstanding Notes executing their tenders through the
Automated Tender Offer Program ("ATOP") procedures of The Depository Trust
Company ("DTC"), should complete, sign and submit this Letter of Transmittal to
the exchange agent, J.P. Morgan Trust Company, National Association (as
successor to Bank One Trust Company, N.A.) (the "EXCHANGE AGENT"), on or prior
to the Expiration Date.

                 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
                      Institutional Trust Services OH1-0184
                         1111 Polaris Parkway, Suite 1N
                               Columbus, OH 43240
                                 Attn: Exchanges

         DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION
OF INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE OR IN
ACCORDANCE WITH THE INSTRUCTIONS HEREIN, WILL NOT CONSTITUTE VALID DELIVERY. THE
INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.

         Questions regarding the Exchange Offer or the completion of this Letter
of Transmittal should be directed to the Exchange Agent, at : 1-800-346-5153.

         This Letter of Transmittal may be used to accept the Exchange Offer if
Outstanding Notes are to be tendered by effecting a book-entry transfer into the
Exchange Agent's account at DTC and instructions are not being transmitted
through DTC's ATOP procedures. Unless you intend to tender Outstanding Notes
through ATOP, you should complete, execute and deliver this Letter of
Transmittal, along with the physical certificates for the Outstanding Notes
specified herein, to indicate the action you desire to take with respect to the
Exchange Offer.

         Holders of Outstanding Notes tendering by book-entry transfer to the
Exchange Agent's account at DTC may execute the tender through ATOP, for which
the Exchange Offer is eligible. Financial institutions that are DTC participants
may execute tenders through ATOP by transmitting acceptance of the Exchange
Offer to DTC on or prior to the Expiration Date. DTC will verify acceptance of
the Exchange Offer, execute a book-entry transfer of the tendered Outstanding
Notes into the account of the Exchange Agent at DTC and send to the Exchange
Agent a "book-entry confirmation," which shall include an agent's message. An
"agent's message" is a message, transmitted by DTC to, and received by, the
Exchange Agent and forming part of a book-entry confirmation, which states that
DTC has received an express acknowledgement from a DTC participant tendering
Outstanding Notes that the participant has received and agrees to be bound by
the terms of the Letter of Transmittal as an undersigned thereof and BHFC may
enforce such agreement against the participant. Delivery of the agent's message
by DTC will satisfy the terms of the Exchange Offer as to execution and delivery
of a Letter of Transmittal by the DTC participant identified in the agent's
message. ACCORDINGLY, HOLDERS WHO TENDER THEIR OUTSTANDING NOTES THROUGH DTC'S
ATOP PROCEDURES SHALL BE BOUND BY, BUT NEED NOT COMPLETE, THIS LETTER OF
TRANSMITTAL.

         Subject to the terms and conditions and applicable law, BHFC will
issue: for each $1,000 principal amount of Outstanding Notes, $1,000 principal
amount of Registered Notes.

         Outstanding Notes may be exchanged in minimum denominations of $1,000
and integral multiples of $1,000 in excess thereof. Registered Notes will be
issued in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof.

         Holders that anticipate tendering other than through DTC are urged to
promptly contact a bank, broker or other intermediary (that has the capability
to hold cash and securities custodially through DTC) to arrange for receipt of
any Registered Notes to be delivered pursuant to the Exchange Offer and to
obtain the information necessary to provide the required DTC participant and
account information in this Letter of Transmittal.

         Registered Notes will be issued in exchange for Outstanding Notes in
the Exchange Offer, if consummated, as soon as practicable after the Expiration
Date of the Exchange Offer (the "SETTLEMENT DATE").

                                       2
<PAGE>

                           TENDER OF OUTSTANDING NOTES

         To effect a valid tender of Outstanding Notes through the completion,
execution and delivery of this Letter of Transmittal, the undersigned must
complete the table below entitled "Description of Outstanding Notes Tendered"
and sign the Letter of Transmittal where indicated.

         Registered Notes will be delivered in book-entry form to holders
through DTC and only to the DTC account of the undersigned or the undersigned's
custodian, as specified below, on the Settlement Date, or as soon as practicable
thereafter.

         Failure to provide the information necessary to effect delivery of
Registered Notes will render such holder's tender defective, and BHFC will have
the right, which it may waive, to reject such tender without notice.

                    DESCRIPTION OF OUTSTANDING NOTES TENDERED
                           (SEE INSTRUCTIONS 2 AND 3)

                    NOTE: SIGNATURES MUST BE PROVIDED BELOW.

              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

<TABLE>
<CAPTION>
 OUTSTANDING NOTES      NAME OF DTC PARTICIPANT AND PARTICIPANT'S      AGGREGATE PRINCIPAL
   BEING TENDERED       ACCOUNT NUMBER IN WHICH OUTSTANDING NOTES     AMOUNT OF OUTSTANDING
                       ARE HELD AND/OR THE CORRESPONDING REGISTERED          NOTES*
                                NOTES ARE TO BE DELIVERED.
--------------------   --------------------------------------------   ---------------------
<S>                    <C>                                            <C>
3.375% SENIOR NOTES
                       --------------------------------------------   ---------------------
DUE 2008
                       --------------------------------------------   ---------------------

(CUSIP:  084664 AA9)
(CUSIP:  U23797AA8)
</TABLE>

*        THE PRINCIPAL AMOUNT OF OUTSTANDING NOTES TENDERED HEREBY MUST BE IN
         DENOMINATIONS OF U.S.$1,000 AND INTEGRAL MULTIPLES OF U.S.$1,000 IN
         EXCESS THEREOF WITH A MINIMUM TENDER REQUIREMENT OF U.S.$1,000. SEE
         INSTRUCTION 3.

                                       3
<PAGE>

         If the aggregate principal amount of the Outstanding Notes specified
was held as of the date of tender by more than one beneficial owner, you may
specify below the break-down of this aggregate principal amount by beneficial
owner, and, in doing so, hereby instruct the Exchange Agent to treat each such
beneficial owner as a separate holder. If the space below is inadequate, attach
a separate signed schedule using the same format.

<TABLE>
<CAPTION>
BENEFICIAL OWNER NAME OR ACCOUNT   PRINCIPAL AMOUNT OF OUTSTANDING NOTES
            NUMBER
--------------------------------   -------------------------------------
<S>                                <C>
--------------------------------   -------------------------------------

--------------------------------   -------------------------------------

--------------------------------   -------------------------------------

--------------------------------   -------------------------------------
            TOTAL:
--------------------------------   -------------------------------------
</TABLE>

                           SPECIAL RETURN INSTRUCTIONS

 TO BE COMPLETED ONLY IF OUTSTANDING NOTES NOT ACCEPTED FOR EXCHANGE ARE TO BE
 SENT TO SOMEONE OTHER THAN THE PERSON OR PERSONS WHOSE SIGNATURE(S) APPEAR(S)
                       WITHIN THIS LETTER OF TRANSMITTAL.

                               (SEE INSTRUCTION 5)

<TABLE>
<CAPTION>
             NAME OF DTC PARTICIPANT AND PARTICIPANT'S          *
             ACCOUNT NUMBER TO WHICH OUTSTANDING NOTES
             NOT ACCEPTED FOR EXCHANGE ARE TO BE
             DELIVERED.
-----------  ------------------------------------------  -----------------
<S>          <C>                                         <C>
</TABLE>

                                       4
<PAGE>

                    NOTE: SIGNATURES MUST BE PROVIDED BELOW.
              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

LADIES AND GENTLEMEN:

         The undersigned hereby tenders to BHFC the aggregate principal amount
of Outstanding Notes indicated in the table above entitled "Description of
Outstanding Notes Tendered."

         The undersigned understands that validly tendered Outstanding Notes (or
defectively tendered Outstanding Notes with respect to which BHFC has, or has
caused to be, waived such defect) will be deemed to have been accepted by BHFC
if, as and when BHFC gives oral or written notice thereof to the Exchange Agent.
The undersigned understands that subject to the terms and conditions,
Outstanding Notes properly tendered and accepted (and not validly withdrawn) in
accordance with the terms and conditions will be exchanged for Registered Notes.
The undersigned understands that Outstanding Notes delivered hereby may be
withdrawn at any time on or prior to the Expiration Date. The undersigned
understands that Outstanding Notes delivered hereby may not be withdrawn at any
time after the Expiration Date unless the Exchange Offer is extended with
changes in the terms of the Exchange Offer that are, in the reasonable judgment
of BHFC, materially adverse to the tendering holder. The undersigned understands
that, under certain circumstances, BHFC may not be required to accept any of the
Outstanding Notes tendered (including any Outstanding Notes tendered after the
Expiration Date). If any Outstanding Notes are not accepted for exchange for any
reason (or if Outstanding Notes are validly withdrawn), such unexchanged (or
validly withdrawn) Outstanding Notes will be returned without expense to the
undersigned's account at DTC or such other account as designated herein pursuant
to the book-entry transfer procedures described in the Prospectus, as promptly
as practicable after the expiration or termination of the Exchange Offer.

         Following the later of the Expiration Date or the date upon which
Outstanding Notes are tendered hereby, and subject to and effective upon BHFC's
acceptance for exchange of the principal amount of the Outstanding Notes
tendered hereby, upon the terms and conditions, the undersigned hereby:

         (1)      irrevocably sells, assigns and transfers to or upon the order
                  of BHFC or its nominees, all right, title and interest in and
                  to, and any and all claims in respect of or arising or having
                  arisen as a result of the undersigned's status as a holder of,
                  all Outstanding Notes tendered hereby, such that thereafter it
                  shall have no contractual or other rights or claims in law or
                  equity against BHFC or any fiduciary, trustee, fiscal agent or
                  other person connected with the Outstanding Notes arising
                  under, from or in connection with such Outstanding Notes;

         (2)      waives any and all rights with respect to the Outstanding
                  Notes tendered hereby (including, without limitation, any
                  existing or past defaults and their consequences in respect of
                  such Outstanding Notes); and

         (3)      releases and discharges BHFC and J.P. Morgan Trust Company,
                  National Association (as successor to Bank One Trust Company,
                  N.A.), as trustee (THE "TRUSTEE") from any and all claims the
                  undersigned may have, now or in the future, arising out of or
                  related to the Outstanding Notes tendered hereby, including,
                  without limitation, any and all claims that the undersigned is
                  entitled to receive additional principal or interest payments
                  with respect to the Outstanding Notes tendered hereby (other
                  than accrued and unpaid interest on the Outstanding Notes) or
                  to participate in any redemption or defeasance of the
                  Outstanding Notes tendered hereby.

         The undersigned understands that tenders of Outstanding Notes pursuant
to any of the procedures described in the Prospectus and in the instructions in
this Letter of Transmittal and acceptance of such Outstanding Notes by BHFC
will, following such acceptance, constitute a binding agreement between the
undersigned and BHFC upon the terms and conditions.

         All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding

                                       5
<PAGE>

upon the heirs, executors, administrators, trustees in bankruptcy, personal and
legal representatives, successors and assigns of the undersigned.

         The undersigned hereby represents, warrants and agrees that:

         (1)      it has received and reviewed the Prospectus;

         (2)      it is the beneficial owner (as defined below) of, or a duly
                  authorized representative of one or more such beneficial
                  owners of, the Outstanding Notes tendered hereby and it has
                  full power and authority to execute this Letter of
                  Transmittal;

         (3)      the Outstanding Notes being tendered hereby were owned as of
                  the date of tender, free and clear of any liens, charges,
                  claims, encumbrances, interests and restrictions of any kind,
                  and BHFC will acquire good, indefeasible and unencumbered
                  title to such Outstanding Notes, free and clear of all liens,
                  charges, claims, encumbrances, interests and restrictions of
                  any kind, when the same are accepted by BHFC;

         (4)      it will not sell, pledge, hypothecate or otherwise encumber or
                  transfer any Outstanding Notes tendered hereby from the date
                  of this Letter of Transmittal and agrees that any purported
                  sale, pledge, hypothecation or other encumbrance or transfer
                  will be void and of no effect;

         (5)      in evaluating the Exchange Offer and in making its decision
                  whether to participate therein by submitting this Letter of
                  Transmittal and tendering its Outstanding Notes, the
                  undersigned has made its own independent appraisal of the
                  matters referred to in the Prospectus and in any related
                  communications and is not relying on any statement,
                  representation or warranty, express or implied, made to such
                  holder by BHFC or the Exchange Agent other than those
                  contained in the Prospectus (as amended or supplemented to the
                  Expiration Date);

         (6)      the execution and delivery of this Letter of Transmittal shall
                  constitute an undertaking to execute any further documents and
                  give any further assurances that may be required in connection
                  with any of the foregoing, in each case on and subject to the
                  terms and conditions;

         (7)      the submission of this Letter of Transmittal to the Exchange
                  Agent shall, subject to a holder's ability to withdraw its
                  tender prior to the Expiration Date, and subject to terms and
                  conditions of the Exchange Offer generally, constitute the
                  irrevocable appointment of the Exchange Agent as its attorney
                  and agent, and an irrevocable instruction to such attorney and
                  agent to complete and execute all or any form(s) of transfer
                  and other document(s) at the discretion of such attorney and
                  agent in relation to the Outstanding Notes tendered hereby in
                  favor of BHFC or such other person or persons as they may
                  direct and to deliver such form(s) of transfer and other
                  document(s) in the attorney's and/or agent's discretion and
                  the certificate(s) and other document(s) of title relating to
                  such Outstanding Notes' registration and to execute all such
                  other documents and to do all such other acts and things as
                  may be in the opinion of such attorney or agent necessary or
                  expedient for the purpose of, or in connection with, the
                  acceptance of the Exchange Offer, and to vest in BHFC or its
                  nominees such Outstanding Notes; and

         (8)      the terms and conditions shall be deemed to be incorporated
                  in, and form a part of, this Letter of Transmittal, and the
                  terms and conditions shall be read and construed accordingly.

         The representations and warranties and agreements of a holder tendering
Outstanding Notes shall be deemed to be repeated and reconfirmed on and as of
the Expiration Date and the Settlement Date. For purposes of this Letter of
Transmittal, the "BENEFICIAL OWNER" of any Outstanding Notes shall mean any
holder that exercises sole investment discretion with respect to such
Outstanding Notes.

         The undersigned understands that tenders may not be withdrawn at any
time after the Expiration Date except as set forth in the Prospectus, unless the
Exchange Offer is extended with changes to the terms and conditions that are, in
the reasonable judgement of BHFC, materially adverse to the undersigned, in
which case tenders may be withdrawn under the conditions described in the
extension.

                                       6
<PAGE>

         If the Exchange Offer is amended in a manner determined by BHFC to be
materially adverse to tendering holders, BHFC will extend the Exchange Offer for
a period of two to ten business days, depending on the significance of the
amendment and the manner of disclosure to such holders, if the Exchange Offer
would otherwise have expired during such two- to ten-business day period. Any
change in the consideration offered to holders of Outstanding Notes in the
Exchange Offer shall be paid to all holders of Outstanding Notes whose
securities have previously been tendered and not withdrawn pursuant to the
Exchange Offer.

         If the "Special Return Instructions" box (found above) is completed,
please credit the indicated DTC account for any book-entry transfers of
Outstanding Notes not accepted for exchange.

         The undersigned recognizes that BHFC has no obligation under the
"Special Return Instructions" provision of this Letter of Transmittal to effect
the transfer of any Outstanding Notes from the holder(s) of such Outstanding
Notes if BHFC does not accept for exchange any of the principal amount of the
Outstanding Notes tendered pursuant to this Letter of Transmittal.

                                       7
<PAGE>

                                    SIGN HERE

         By completing, executing and delivering this Letter of Transmittal, the
undersigned hereby tenders to BHFC the principal amount of the Outstanding Notes
listed in the table set forth above labeled "Description of Outstanding Notes
Tendered."

_________________________________________________________    ___________________
Signature of Registered Holder(s) or Authorized Signatory           Date
          (see guarantee requirement below)

_________________________________________________________    ___________________
Signature of Registered Holder(s) or Authorized Signatory           Date
                    (see guarantee requirement below)

_________________________________________________________    ___________________
Signature of Registered Holder(s) or Authorized Signatory           Date
                    (see guarantee requirement below)

Area Code and Telephone Number:________________________________________________

         If a holder of Outstanding Notes is tendering any Outstanding Notes,
this Letter of Transmittal must be signed by the Registered Holder(s) exactly as
the name(s) appear(s) on a securities position listing of DTC or by any
person(s) authorized to become the Registered Holder(s) by endorsements and
documents transmitted herewith. If the signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person, acting in a
fiduciary or representative capacity, please set forth at the line entitled
"Capacity (full title)" and submit evidence satisfactory to the Exchange Agent
and BHFC of such person's authority to so act. See Instruction 4.

Name(s): _______________________________________________________________________

________________________________________________________________________________
                             (Please Type or Print)

Capacity (full title):__________________________________________________________

Address: _______________________________________________________________________
                              (Including Zip Code)

                          MEDALLION SIGNATURE GUARANTEE
                        (If required--See Instruction 4)

Signature(s) Guaranteed by
an Eligible Institution: _______________________________________________________
                             (Authorized Signature)

________________________________________________________________________________
                                     (Title)

________________________________________________________________________________
                                 (Name of Firm)

________________________________________________________________________________
                                    (Address)

Dated:__________________________, 2004

                                       8
<PAGE>

                   INSTRUCTIONS FORMING PART OF THE TERMS AND
                        CONDITIONS OF THE EXCHANGE OFFER

         1.       DELIVERY OF LETTER OF TRANSMITTAL. This Letter of Transmittal
is to be completed by tendering holders of Outstanding Notes if tender of such
Outstanding Notes is to be made by book-entry transfer to the Exchange Agent's
account at DTC and instructions are not being transmitted through ATOP. HOLDERS
WHO TENDER THEIR OUTSTANDING NOTES THROUGH DTC'S ATOP PROCEDURES SHALL BE BOUND
BY, BUT NEED NOT COMPLETE, THIS LETTER OF TRANSMITTAL; THUS, A LETTER OF
TRANSMITTAL NEED NOT ACCOMPANY TENDERS EFFECTED THROUGH ATOP.

         A confirmation of a book-entry transfer into the Exchange Agent's
account at DTC of all Outstanding Notes delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) or properly transmitted agent's message, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date.

         Any financial institution that is a participant in DTC may
electronically transmit its acceptance of the Exchange Offer by causing DTC to
transfer Outstanding Notes to the Exchange Agent in accordance with DTC's ATOP
procedures for such transfer on or prior to the Expiration Date. The Exchange
Agent will make available its general participant account at DTC for the
Outstanding Notes for purposes of the Exchange Offer.

         DELIVERY OF A LETTER OF TRANSMITTAL TO DTC WILL NOT CONSTITUTE VALID
DELIVERY TO THE EXCHANGE AGENT. No Letter of Transmittal should be sent to BHFC
or DTC.

         The method of delivery of this Letter of Transmittal and all other
required documents, including delivery through DTC and any acceptance or agent's
message delivered through ATOP, is at the option and risk of the tendering
holder. If delivery is by mail, registered mail, with return receipt requested
and properly insured, is recommended. Instead of delivery by mail, it is
recommended that the holder use an overnight or hand-delivery service. In all
cases, sufficient time should be allowed to ensure timely delivery.

         Neither BHFC nor the Exchange Agent is under any obligation to notify
any tendering holder of Outstanding Notes of BHFC's acceptance of tendered
Outstanding Notes prior to the Expiration Date.

         2.       DELIVERY OF THE REGISTERED NOTES. Registered Notes to be
issued according to the terms of the Exchange Offer, if consummated, will be
delivered in book-entry form to holders of Outstanding Notes tendered in the
Exchange Offer. In order to permit such delivery, the appropriate DTC
participant name and number (along with any other required account information)
must be provided in the table entitled "Description of the Outstanding Notes."
Failure to do so will render a tender of the Outstanding Notes defective, and
BHFC will have the right, which it may waive, to reject such delivery. Holders
that anticipate participating in the Exchange Offer other than through DTC are
urged to promptly contact a bank, broker or other intermediary (that has the
capability to hold securities custodially through DTC) to arrange for receipt of
any Registered Notes delivered pursuant to the Exchange Offer and to obtain the
information necessary to complete the table.

         3.       AMOUNT OF TENDERS. Tenders of Outstanding Notes will be
accepted in denominations of U.S. $1,000 and integral multiples of U.S.$1,000 in
excess thereof. Book-entry transfers to the Exchange Agent should be made in the
exact principal amount of Outstanding Notes tendered.

         4.       SIGNATURES ON LETTER OF TRANSMITTAL; INSTRUMENTS OF TRANSFER;
GUARANTEE OF SIGNATURES. For purposes of this Letter of Transmittal, the term
"REGISTERED HOLDER" means an owner of record as well as any DTC participant that
has Outstanding Notes credited to its DTC account. Except as otherwise provided
below, all signatures on this Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
NYSE Medallion Signature Program or the Stock Exchange Medallion Program (each,
a "MEDALLION SIGNATURE CO-OBLIGOR"). Signatures on the Letter of Transmittal
need not be guaranteed if:

                                       9
<PAGE>

         -        the Letter of Transmittal is signed by a participant in DTC
                  whose name appears on a security position listing as the owner
                  of the Outstanding Notes and the holder(s) has not completed
                  the box entitled "Special Return Instructions" on the Letter
                  of Transmittal; or

         -        the Outstanding Notes are tendered for the account of an
                  "eligible institution."

         An "eligible institution" is one of the following firms or other
entities identified in Rule 17Ad-15 under the Securities Exchange Act of 1934
(as the terms are used in Rule 17Ad-15):

                  (a)      a bank;

                  (b)      a broker, dealer, municipal securities dealer,
         municipal securities broker, government securities dealer or government
         securities broker;

                  (c)      a credit union;

                  (d)      a national securities exchange, registered securities
         association or clearing agency; or

                  (e)      a savings institution that is a participant in a
         Securities Transfer Association recognized program.

         If any of the Outstanding Notes tendered are held by two or more
Registered Holders, all of the Registered Holders must sign the Letter of
Transmittal.

         BHFC will not accept any alternative, conditional, irregular or
contingent tenders. By executing the Letter of Transmittal (or facsimile
thereof) or directing DTC to transmit an agent's message, you waive any right to
receive any notice of the acceptance of your Outstanding Notes for exchange.

         If this Letter of Transmittal or instruments of transfer are signed by
trustees, executors, administrators, guardians or attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by BHFC, evidence
satisfactory to BHFC of their authority to so act must be submitted with this
Letter of Transmittal.

         Beneficial owners whose tendered Outstanding Notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if they desire to tender such Outstanding Notes.

         5.       SPECIAL RETURN INSTRUCTIONS. All Outstanding Notes tendered
hereby and not accepted for exchange will be returned to the undersigned
according to the information provided in the table entitled "Description of the
Outstanding Notes Tendered" or, if completed, according to the "Special Return
Instructions" box in this Letter of Transmittal.

         6.       TRANSFER TAXES. Except as set forth in this Instruction 6,
BHFC will pay or cause to be paid any transfer taxes with respect to the
transfer and sale of Outstanding Notes to it, or to its order, pursuant to the
Exchange Offer. If payment is to be made to, or if Outstanding Notes not
tendered or purchased are to be registered in the name of any persons other than
the Registered Holder, or if tendered Outstanding Notes are registered in the
name of any persons other than the persons signing this Letter of Transmittal,
the amount of any transfer taxes (whether imposed on the Registered Holder or
such other person) payable on account of the transfer to such other person will
be deducted from the payment unless satisfactory evidence of the payment of such
taxes or exemption therefrom is submitted.

         7.       VALIDITY OF TENDERS. All questions concerning the validity,
form, eligibility (including time of receipt), acceptance and withdrawal of
tendered Outstanding Notes will be determined by BHFC in its sole discretion,
which determination will be final and binding. BHFC reserves the absolute right
to reject any and all tenders of Outstanding Notes not in proper form or any
Outstanding Notes the acceptance for exchange of which may, in the opinion of
its counsel, be unlawful. BHFC also reserves the absolute right to waive any
defect or irregularity in

                                       10
<PAGE>

tenders of Outstanding Notes, whether or not similar defects or irregularities
are waived in the case of other tendered securities. The interpretation of the
terms and conditions by BHFC shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Outstanding
Notes must be cured within such time as BHFC shall determine. None of BHFC, the
Exchange Agent or any other person will be under any duty to give notification
of defects or irregularities with respect to tenders of Outstanding Notes, nor
shall any of them incur any liability for failure to give such notification.

         Tenders of Outstanding Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Outstanding Notes
received by the Exchange Agent that are not validly tendered and as to which the
defects or irregularities have not been cured or waived will be returned by the
Exchange Agent to the holders of Outstanding Notes, unless otherwise provided in
this Letter of Transmittal, as soon as practicable following the Expiration Date
or the withdrawal or termination of the Exchange Offer.

         8.       WAIVER OF CONDITIONS. BHFC reserves the absolute right to
amend or waive any of the conditions in the Exchange Offer concerning any
Outstanding Notes at any time.

         9.       WITHDRAWAL. Tenders may be withdrawn only pursuant to the
procedures and subject to the terms set forth in the Prospectus under the
caption "The Exchange Offer--Withdrawal of Tenders."

         10.      REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance and requests for additional copies of the Prospectus and
this Letter of Transmittal may be directed to the Exchange Agent at the address
and telephone number indicated herein.

         11.      TAX IDENTIFICATION NUMBER. Federal income tax law requires
that a U.S. Holder (defined below) whose Outstanding Notes are accepted for
exchange must provide the Exchange Agent with his, her or its correct Taxpayer
Identification Number ("TIN"), which, in the case of an exchanging U.S. Holder
who is an individual, is his or her social security number. If the Exchange
Agent is not provided with the correct TIN or an adequate basis for exemption,
such holder may be subject to a $50 penalty imposed by the Internal Revenue
Service (the "IRS"), and payments made with respect to the Registered Notes or
the Exchange Offer may be subject to backup withholding at a rate of 30%
(subject to periodic reductions through 2010, at which time the rate is
currently scheduled to be increased to 31%). If withholding results in an
overpayment of taxes, a refund may be obtained.

         To prevent backup withholding, each exchanging U.S. Holder must provide
his, her or its correct TIN by completing the copy of the IRS Form W-9 attached
to this Letter of Transmittal, certifying that the TIN provided is correct (or
that such U.S. Holder is awaiting a TIN) and that the U.S. Holder is exempt from
backup withholding because (i) the holder has been notified by the IRS that he,
she or it is subject to backup withholding as a result of a failure to report
all interests or dividends, or (ii) the IRS has notified the U.S. Holder that
he, she or it is no longer subject to backup withholding. If the Outstanding
Notes are in more than one name or are not in the name of the actual owner,
consult the Form W-9 Instructions for information on which TIN to report. If you
do not provide your TIN to the Exchange Agent within 60 days, backup withholding
may begin and continue until you furnish your TIN.

         Exempt holders (including, among others, all corporations and certain
foreign individuals) are not subject to these withholding and reporting
requirements. See the enclosed copy of the IRS Form W-9. In order to satisfy
BHFC that a foreign individual qualifies as an exempt recipient, such holder
must submit a properly completed IRS Form W-8BEN (or other applicable form)
certifying, under penalty of perjury, to such holder's foreign status in order
establish an exemption from backup withholding. A copy of the Form W-8BEN is
attached to this Letter of Transmittal. Other applicable forms may be obtained
from the Exchange Agent.

         For the purposes of these instructions, a "U.S. HOLDER" is (i) a
citizen or resident of the United States, (ii) a corporation, or other entity
taxable as a corporation for U.S. federal income tax purposes, created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.

                                       11
<PAGE>

         12.      The exchange of Outstanding Notes for Registered Notes will
not be a taxable event for U.S. federal income tax purposes. See "Material
United States Federal Income Tax Consequences" in the Prospectus.

                                       12
<PAGE>

        In order to tender, a holder of Outstanding Notes should send or
  deliver a properly completed and signed Letter of Transmittal and any other
   required documents to the Exchange Agent at its address set forth below or
            tender pursuant to DTC's Automated Tender Offer Program.

                  The Exchange Agent for the Exchange Offer is:

                 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

                      Institutional Trust Services OH1-0184
                         1111 Polaris Parkway, Suite 1N
                               Columbus, OH 43240
                                 Attn: Exchanges

         Any questions or requests for assistance or for additional copies of
the Prospectus, this Letter of Transmittal, or related documents may be directed
to the Exchange Agent at 1-800-346-5153. A holder of Outstanding Notes may also
contact such holder's custodian bank, depositary, broker, trust company or other
nominee for assistance concerning the Exchange Offer.

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