Document:

EXHIBIT 4(a) 

  

 

 

BYLAWS 

 

 

 

January 19 th, 2005 

  

  
  

  Société Anonyme à Conseil
  d’Administration (Limited
  Liability Company with a Board of Directors)

  with a share capital of EUR 2,040,930,772

  542 062 559 R.C.S. Paris

  Head office : 16, rue de la Ville l’Evêque – 75008
  Paris

BYLAWS

---

SECTION I

LEGAL FORM – CORPORATE NAME – CORPORATE
PURPOSE

HEAD OFFICE - TERM 

ARTICLE 1 – LEGAL FORM OF THE COMPANY 

The company is a French Société Anonyme à Conseil
d’Administration (Limited Liability
Company with a Board of Directors).  It is governed by  current and future laws
and regulations applicable to limited liability companies and by these bylaws. 

ARTICLE 2 – CORPORATE NAME

The corporate name is Suez. 

ARTICLE 3 – CORPORATE PURPOSE

The corporate purpose of the company is the management and development of its current and future assets, in all countries and by all means and, in particular : 

	
a)      		
obtaining , purchasing, leasing and operating any and all concessions and companies involved in supplying towns with drinking or industrial water, the evacuation and treatment of waste water, drying and draining operations,
irrigation and the development of all water transport, protection and storage structures.	
	 
	
b)      		
obtaining , purchasing, leasing and operating any and all selling and service activities to local public authorities and private individuals with respect to urban development and management of the environment.	
	 
	
c)      		
the design , development and performance of any and all projects and any and all public or private works on behalf of local public authorities and private individuals; the preparation and signing of any and all treaties, contracts
and agreements relating to the performance of such projects and works.	
	 

	
d)      		
the acquisition of any and all shareholdings  through
the subscription, purchase, transfer, exchange or by any other means, of shares,
interests, bonds and any and all other securities in companies already in existence
or to be  created.	
	 
	
e)      		
obtaining , purchasing , assigning , conceding and operating of all patents, licenses and processes.	
	 
	
f)      		
and, more generally, any and all industrial, commercial, financial, personal or real-estate transactions relating directly or indirectly to the corporate purpose or which are likely to favor and develop the business of the
Company.	

ARTICLE 4 – HEAD OFFICE

The head office of the company is located at 16, rue de la Ville l’Evêque Paris, 8th District.

ARTICLE 5 – TERM OF THE COMPANY

The company will expire on December 31, 2040, barring extension or early dissolution.

SECTION II

SHARE CAPITAL – SHARES - BONDS

ARTICLE 6 – SHARE CAPITAL

The share capital is EUR 2,040,930,772, made up of 1,020,465,386 shares of EUR 2 par value each.

ARTICLE 7 – FORM AND RECORDING OF SECURITIES – IDENTIFICATION OF   HOLDERS – NOTIFICATIONS TO BE MADE TO THE COMPANY 

1 -            Form of securities

Fully paid-up shares may be held in registered or bearer form, at the option of the shareholder.

2 -            Recording of securities

Shares and all other securities issued by the company are recorded in shareholder accounts in accordance with applicable law and regulations. 

Where the securities exist in paper form, the Board of Directors may grant powers to any person, including someone from outside the company, to sign such securities. 

3 -            Identification of securities

The company may request, at any time and in accordance with applicable law and regulations, the stock market clearing house to inform it of the name and, in the case of a corporate entity, the corporate name, nationality and
address of holders of securities conferring immediate or future

entitlement to vote at shareholder meetings, together with their individual shareholdings and, where appropriate, any restrictions attached to such shares.

4 -            Mandatory notices to be made to the company 

All private individuals and corporate bodies, acting
alone or in concert, who acquire or cease to hold , directly or indirectly, a
fraction of the share capital equal to or greater than 1% or a multiple thereof,
up to 34% of the  share capital, are required to inform the company, by registered
mail with return receipt requested , within 15 days from the date on which this
threshold was crossed, of the number of shares held directly , indirectly or
in concert. 

Failure to comply with the above requirement is penalized by cancellation of the voting rights attached to those shares exceeding the unreported fraction, at all shareholder meetings held during a two year period following notice
thereof , where application of this sanction is requested by one or more shareholders holding at least 5% of the share capital of the company. This request is recorded in the minutes of the general meeting. 

ARTICLE 8 – RIGHTS ATTACHED TO THE SHARES 

Each share, irrespective of its class, confers entitlement to a percentage of the company’s assets and the liquidation premium equal to the fraction of the share capital which the share represents, taking account, where
appropriate, of capital redeemed and not redeemed, fully paid-up and not fully paid-up. 

All shares, of all classes, currently making-up the share capital or which will in the future, shall be grouped together for tax purposes. As such, all taxes and duties which, for whatever reason, fall due for certain shares only,
as a result of the total or partial redemption of the par value of these shares, either during the term  of the company or after its liquidation, shall be allocated against all shares making-up the share capital at the time of redemption, such that
all current or future shares confer on their owners the same effective benefits and entitlement to receive the same net amount, taking account where applicable of the unredeemed par value of shares and the rights attached to the different classes of
share.

Subject to legal provisions concerning voting rights at shareholder meetings and communication rights conferred on shareholders, shares are indivisible with regard to the company, such that joint holders of shares are represented
at meetings by one of them or by a single representative, appointed by the courts in the event of disagreement. 

Where it is necessary to hold several securities of a given type  or a given class in order to exercise a right, particularly in the event of exchange or allotment of securities during a transaction such as a share capital
reduction, share capital increase by capitalization of reserves, merger or other, isolated securities and securities of insufficient number do not confer any rights enforceable against the company and shareholders must personally organize the
grouping and, potentially, the purchase or sale of the necessary number of securities. 

ARTICLE 9 – PAYING-UP OF SHARES

The amount of shares issued as part of a share capital increase and to be paid up in cash is payable in accordance with the terms and conditions determined by the Board of Directors. 

Calls for funds are brought to the attention of subscribers
and holders of securities at least two months prior to the date set for each
payment, by way of a notice printed in the journal of official legal announcements
distributed in the area in which the head office are located.

All delays in payment
  of amounts due in respect of the unpaid-up amount of shares shall lead, ipso
  jure , and without the need for any legal procedures, to the payment of interest
  for  each day late, calculated based on the legal interest rate plus three
    percentage points from the due date, without prejudice to any legal action
    which may be taken by the company against the defaulting holder and the enforcement
    measures provided for by law.

ARTICLE 10 – OTHER SECURITIES

The Ordinary General Meeting can decide to issue warrants and bonds, with potentially securities attached conferring entitlement, by all means, to debt securities, as well as the issue of all debt securities, or delegate the
necessary powers to the Board of Directors to perform such issues and determine the terms and conditions. 

The Extraordinary General Meeting can authorize, subject to applicable law and regulations, the issuance of all securities conferring entitlement, by conversion, exchange, redemption, presentation of a warrant or any other means,
to the allotment of securities representing a share in the capital of the issuing company. 

SECTION III

BOARD OF
  DIRECTORS

ARTICLE 11 – MEMBERS OF THE BOARD OF DIRECTORS 

The company is managed by a Board made up of Directors appointed by Shareholder General Meetings. 

Directors must number at least three and no more than
eighteen.  However, in the event of a merger, this maximum of eighteen may be exceeded
in accordance with the terms and within the limits set by applicable law. 

Directors are appointed, re-elected and removed in accordance with applicable law and regulations. 

The term of office is set at four years.  Nonetheless, a Director appointed to replace another Director whose term of office has not expired, shall only remain in office for the remaining period of the term of office of his
predecessor. 

Each Director is required to hold at least two thousand shares in the company.

The number of Directors having reached the age of 70 years may not, at any time, exceed one third of the total number of Directors in office. Where the number of Directors cannot be divided exactly by three, the result is rounded
up.

Except in the event of termination of the employment contract, where the Director is a salaried employee, or in the event of resignation, removal or death, the term of office of a Director shall

expire at the end of the Annual General Meeting of shareholders held to approve the financial statements for the fiscal year then ended and held in the year during which the term of office of the Director expires.

ARTICLE 12 – CHAIRMAN OF THE BOARD OF DIRECTORS 

The Board of Directors elects a Chairman from among its members and, where it sees fit, one or several Vice-Chairmen. 

Irrespective of the term for which they are conferred, the Chairman shall cease to perform his duties no later than the end of the Annual General Meeting of shareholders held to approve the financial statements for the fiscal year
then ended and held in the year during which the Chairman reaches sixty-five years of age. However, the Board of Directors may, during the meeting following this General Meeting, on one or more occasions, extend this limit up to a maximum of five
years. 

Board meetings are chaired by the Chairman, or in his absence by the oldest Vice-Chairman present at the meeting, or failing this, a Director chosen by the Board at the beginning of the meeting. 

The Chairman represents the Board of Directors. He organizes and directs the activities of the Board and reports thereon to shareholder meetings. He ensures the proper functioning of Company bodies and, in particular, that all
directors are in a position to fulfil their duties. 

ARTICLE 13 - DECISIONS OF THE BOARD OF DIRECTORS 

The Chairman convenes directors to meetings of the Board, or where he is unable to do so, by a Vice-Chairman, either at the head office or any other location indicated in the notice of meeting. Where a meeting has not been called
in over two months, a minimum of one-third of Directors may ask the Chairman to call a meeting to discuss a specific agenda. The Chief Executive Officer may also ask the Chairman to call a meeting of the Board of Directors to discuss a specific
agenda. 

Notice of meetings may be given by all means, including orally. 

Decisions are made in accordance with the quorum and majority requirements provided for by applicable law. In the event of a split vote, the meeting Chairman has the power to cast the final deciding vote.

The Board appoints a secretary, who need not be a Director.

The Employee Works Council is represented at each Board meeting pursuant to the terms and conditions and in accordance with the procedures provided by applicable law.

Members of management may attend Board meetings at the request of the Chairman, where they act as consultants.

ARTICLE 14 - MINUTES

The decisions of the Board of Directors are recorded in minutes prepared in a special register or

on numbered separate sheets, in accordance with the terms of applicable law . These minutes bear the indications required by law and are signed by the Chairman of the meeting and at least one Director. Where the Chairman of the
meeting cannot sign them, the minutes are signed by at least two Directors.

Copies or extracts of the minutes are certified either by the Chairman of the Board of Directors, the Chief Executive Officer, an Executive Vice-President, a Director temporary appointed to the office of Chairman or by a
representative authorized for such purpose.

ARTICLE 15 – POWERS OF THE BOARD OF DIRECTORS 

The Board of Directors determines the strategic direction of Company activities and ensures its implementation.  It considers all issues concerning the proper functioning of the Company and settles all matters relating thereto,
within the scope of the corporate purpose and subject to those powers expressly granted by law to shareholder meetings.

The Board of Directors performs all controls and verifications it considers appropriate.  Each Director receives all information necessary to the performance of his duties and may request any documents he or she considers
necessary. 

ARTICLE 16 – COMMITTEES 

The Board of Directors can decide to set up  committees responsible for studying  issues presented by the Board or its Chairman for review. It determines the members and assignments of the committees, which exercise their
activities under its responsibility.

The Board of Directors determines, where appropriate, the compensation of committee members, recorded in the income statement as overhead expenses.

ARTICLE 17 – DIRECTORS’ COMPENSATION 

The General Meeting may allocate to the Board of Directors, in respect of directors’ fees, a fixed annual sum the amount of which shall remain unchanged until a subsequent decision to the contrary has been made.

Exceptional compensation may also be allocated to Directors by the Board of Directors, in cases and in accordance with specific conditions provided by law. 

SECTION IV

GENERAL MANAGEMENT

ARTICLE 18 – GENERAL MANAGEMENT

The general management of the Company is assumed by either the Chairman of the Board of Directors or another individual appointed by the Board of Directors and bearing the title of Chief Executive Officer. Board of Directors’
decisions regarding the choice between these two general management approaches are made in accordance with these bylaws.

Shareholders and third parties are informed of this choice in accordance with the terms and conditions set by Council of State Decree.

The Chief Executive Officer is invested with the widest possible powers to act in all circumstances in the name of the Company. He exercises these powers within the scope of the corporate purpose and subject to those powers
expressly granted by law to shareholder meetings or the Board of Directors. 

Irrespective of the term for which such powers are
conferred, the duties of Chief Executive Officer shall cease no later than the
end of the Annual General Meeting of Shareholders held to approve the financial
statements of the  fiscal year then ended and held in the year in which the Chief
Executive Officer reaches sixty-five years of age. However the Board of Directors
can decide to extend such duties, on one or several occasions, up to a maximum
of three years.

Where the  Chief Executive Officer is a Director,
    the duration of his duties may not exceed that of his term of office as Director.

Where general management of the Company is assumed by the Chairman of the Board of Directors, the requirements of the bylaws and legislation relating to the Chief Executive Officer apply to him.” 

ARTICLE 19 – EXECUTIVE VICE-PRESIDENTS 

On the recommendation of the Chief Executive Officer, the Board of Directors can appoint one or several Executive Vice-Presidents up to a maximum of five.

Where an Executive Vice-President is a Director, the duration of his duties may not exceed that of his term of office as Director. 

Irrespective of the term for which such powers are conferred, the duties of Executive Vice-President shall cease no later than the end of the Annual General Meeting of Shareholders held to approve the financial statements of the
fiscal year then ended and held in the year in which the Executive Vice-President reaches sixty-five years of age.  However the Board of Directors can, on the recommendation of the Chief Executive Officer, decide to extend such duties, on one or
several occasions, up to a maximum of three years.

With the approval of the Chief Executive Officer, the Board of Directors determines the extent and duration of powers delegated to Executive Vice-Presidents, who, nonetheless, have the same powers as the Chief Executive Officer in
their dealings with third parties. 

ARTICLE 20 – OBSERVERS

The Ordinary General Meeting can appoint to the company
one or several observers selected from among shareholders or elsewhere. Observers
are appointed for a term of four years. This term expires at the end of the Annual
General  Meeting held to approve the financial statements of the fiscal year
then ended and held in the year during which the term of office of the observer
expires.

Observers can be reelected without limit; they may
    be removed from office at any time by a decision of the shareholders at a
    general meeting.

Observers may be appointed temporarily by the Board of Directors subject to ratification by the

next General Meeting.

Observers are invited to attend Board of Directors’ meetings and act as consultants in the decision-making process. 

SECTION V

AUDIT OF THE COMPANY

ARTICLE 21 - AUDITORS

The auditors and deputy auditors are appointed and perform their engagement in accordance with applicable law. 

Their compensation is determined in accordance with applicable regulations. 

SECTION VI

SHAREHOLDER MEETINGS

ARTICLE 22 - CATEGORIES – MAKE-UP

Shareholder General Meetings are considered to be “Extraordinary” when the decisions relate to a change in the bylaws and “Ordinary” in all other cases.

All shareholders, irrespective of the number of shares
held, are entitled to attend meetings personally or be represented, on provision
of proof of their identity and the number of securities held, either through
their  registration or the deposit, at the locations indicated in the notice
of meeting, of a certificate from an intermediary stating that the shares held
in the shareholder’s account shall be unavailable for transfer up to the
date of the meeting;  the period during which these formalities must be completed
expires the day before the date of the shareholders’ meeting.

All shareholders
  may also, if permitted by the Board of Directors or its Chairman when the shareholders’ meeting
  is  convened, attend the meeting by video conference or by electronic telecommunications
  means or remote transmission, subject to and in accordance with the terms and
  conditions set by applicable law and regulations. Such shareholders are considered
   present at the meeting when calculating quorum and majority requirements. 

Shareholder meetings, regularly called and held , represent all shareholders.

All shareholders are bound by decisions of shareholder meetings made in accordance with applicable law and the bylaws. 

ARTICLE 23 - MEETINGS

Shareholder meetings are convened and deliberate in accordance with the terms and conditions provided by law.

Meetings are held at the head office or at any other place in the same département (French administrative region). 

The Chairman of the Board of Directors chairs meetings
or, in his absence, by the oldest Vice-Chairman present at the meeting, or failing
this, is a Director specially appointed for this purpose by the Board of Directors.  Failing
 this again, the shareholders’ meeting appoints its own Chairman. 

Minutes of the meeting are prepared and copies certified and filed in accordance with the law. 

ARTICLE 24 – VOTING RIGHTS

The voting rights attached to shares are in proportion to the percentage of share capital they represent and each share carries entitlement to at least one vote. 

Where shares are subject to beneficial ownership, the
voting rights attached to these shares are exercised by the beneficial owner
at Ordinary and Extraordinary General Meetings.

Double voting rights to those
  attached to other  shares, in terms of the portion of share capital they represent,
  are attributed to all fully paid-up shares held in registered form for at least
  two years in the name of the same shareholder or of this shareholder and individuals
  whose rights he  holds, either intestate or by virtue of a will, the division
  of marital property between spouses or inter
  vivos donation to a spouse or relative entitled
  to a share in the deceased ’s
  estate.

In the event of an increase in share capital by
    capitalization of profits, reserves or additional paid-in capital, double
    voting rights shall be conferred, from issuance, on registered shares allotted
    for no consideration to shareholders in respect of existing shares which
    benefit from such rights.

Shareholders may vote by correspondence in accordance
      with the terms, conditions and procedures laid down by prevailing law and
      regulations. Shareholders may submit a proxy or correspondence
    voting form on paper or, subject to a decision by the Board of Directors
    published in the notice of meeting, by remote transmission, in accordance
    with the terms and conditions set by law and regulations. 

SECTION VII

ANNUAL FINANCIAL STATEMENTS – APPROPRIATION OF EARNINGS

ARTICLE 25 – ANNUAL FINANCIAL STATEMENTS 

The company fiscal year starts on January 1 and ends on December 31.

Distributable earnings consist of net income for the year, less where appropriate prior year losses, amounts to be allocated to legal reserves and all other amount to be taken to reserves pursuant to the law, plus retained
earnings. 

ARTICLE 26 - DIVIDENDS

The following amounts are deducted from distributable earnings :

	
1.      		
The amount necessary to pay shareholders an initial dividend equal to 5% of the fully paid-up and unredeemed value of their shares, without shareholders being entitled to claim payment of this dividend out of subsequent period
profits, should profits of the period prove insufficient to cover this payment.	
	 
	
2.      		
Amounts that the General Meeting, on the proposal of the Board of Directors, decide to transfer to retained earnings or allocate to the creation of reserves or contingency funds for the purpose of total or partial redemption of
Company shares.	

Any residual distributable earnings, after the above deductions, shall be allocated equally to shareholders, pro rata to the par value of their shares, as an additional dividend. 

The Annual General Meeting which is convened to approve the financial statements for the fiscal year, can grant shareholders, for all or part of the dividend or interim dividend distributed, the choice between receiving payment of
the dividend or interim dividend in cash or in shares of the company, in accordance with applicable law and regulations.

The Ordinary General Meeting can, on the recommendation of the Board of Directors, decide for all distributions of profits or reserves, the allocation of negotiable securities in the company’s portfolio, with obligation for
shareholders, where applicable, to perform the necessary groupings in order to receive the number of securities so allocated. 

SECTION VIII

DISSOLUTION AND LIQUIDATION

ARTICLE 27

On the dissolution of the company, one or more liquidators shall be appointed by shareholders in a general meeting under quorum and majority requirements needed to hold Ordinary General Meetings. 

The liquidator represents the company. He is invested with the widest possible powers to sell corporate  assets, including by amicable settlement.  He is authorized to pay creditors and distribute the residual available
balance.

Shareholders in a general meeting can authorize the liquidator to honor  contracts already in progress and enter into new contracts for the purposes of the liquidation. 

Remaining net assets after repayment of the par value of shares is split between shareholders in the same proportion as their interest in the share capital of the company.

SECTION IX

DISPUTES 

ARTICLE 28

All disputes arising during the term of the company or its liquidation, between the company and its shareholders or between shareholders themselves, regarding corporate matters, shall be decided by the appropriate French courts
having jurisdiction over the area in which the head office is located.

  	Certified true copy	 
	 	 
	The Secretary to the Board of Directors	 
	 	 
	/s/ P. Billioud 	 
	Patrick BILLIOUD<PAGE>

                                                                  Execution Copy

                     National Atlantic Holdings Corporation

                               6,650,000 Shares (a)
                                  Common Stock
                            (No Par Value Per Share)

                             Underwriting Agreement

                                                    New York, New York
                                                    April 20, 2005

Citigroup Global Markets Inc.
Dowling & Partners Securities, LLC
Fox-Pitt, Kelton Inc.
Sandler O'Neill & Partners, L.P.
Cochran, Caronia Securities LLC
As Representatives of the several Underwriters,

c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York  10013
Ladies and Gentlemen:

            National Atlantic Holdings Corporation, a corporation organized
under the laws of the State of New Jersey (the "Company"), proposes to sell to
the several underwriters named in Schedule I hereto (the "Underwriters"), for
whom you (the "Representatives") are acting as representatives, 5,985,000 shares
of Common Stock, no par value ("Common Stock") of the Company and The Ohio
Casualty Insurance Company (the "Selling Stockholder") proposes to sell to the
Underwriters 665,000 shares of Common Stock (said shares to be issued and sold
by the Company and shares to be sold by the Selling Stockholder collectively
being hereinafter called the "Underwritten Securities"). The Company and the
Selling Stockholder also propose to grant to the Underwriters an option to
purchase up to 897,750 and 99,750, respectively, additional shares of Common
Stock to cover over-allotments (the "Option Securities"; the Option Securities,
together with the Underwritten Securities, being hereinafter called the
"Securities"). To the extent there are no additional Underwriters listed on
Schedule I

---------------------
(a) Plus an option to purchase from the Company and the Selling
        Stockholder, up to 997,500 additional Securities to cover
        over-allotments.

<PAGE>

other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. Certain terms used herein
are defined in Section 17 hereof.

            As part of the offering contemplated by this Agreement, Citigroup
Global Markets Inc. has agreed to reserve out of the Securities set forth
opposite its name on the Schedule I to this Agreement, up to 332,500 shares, for
sale to qualified general partners of independent agents who are partner agents
that own shares of the Common Stock (collectively, "Participants"), as set forth
in the Prospectus under the heading "Underwriting" (the "Directed Share
Program"). The Securities to be sold by Citigroup Global Markets Inc. pursuant
to the Directed Share Program (the "Directed Shares") will be sold by Citigroup
Global Markets Inc. pursuant to this Agreement at the public offering price. Any
Directed Shares not orally confirmed for purchase by any Participants by 8:00
A.M. New York City time on the business day following the date on which this
Agreement is executed will be offered to the public by Citigroup Global Markets
Inc. as set forth in the Prospectus.

            ARTICLE I Representations and Warranties.

            Section 1.01 The Company represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1.

            (a) The Company has prepared and filed with the Commission a
      registration statement (file number 333-117804) on Form S-1, including a
      related preliminary prospectus, for registration under the Act of the
      offering and sale of the Securities. The Company may have filed one or
      more amendments thereto, including a related preliminary prospectus, each
      of which has previously been furnished to you. The Company will next file
      with the Commission one of the following: either (1) prior to the
      Effective Date of such registration statement, a further amendment to such
      registration statement (including the form of final prospectus) or (2)
      after the Effective Date of such registration statement, a final
      prospectus in accordance with Rules 430A and 424(b). In the case of clause
      (2), the Company has included in such registration statement, as amended
      at the Effective Date, all information (other than Rule 430A Information)
      required by the Act and the rules thereunder to be included in such
      registration statement and the Prospectus. As filed, such amendment and
      form of final prospectus, or such final prospectus, shall contain all Rule
      430A Information, together with all other such required information, and,
      except to the extent the Representatives shall agree in writing to a
      modification, shall be in all substantive respects in the form furnished
      to you prior to the Execution Time or, to the extent not completed at the
      Execution Time, shall contain only such specific additional information
      and other changes (beyond that contained in the latest Preliminary
      Prospectus) as the Company has advised you, prior to the Execution Time,
      will be included or made therein.

            (b) On the Effective Date, the Registration Statement did or will,
      and when the Prospectus is delivered to the Underwriters for use in
      connection with

2
<PAGE>

      this offering, and first filed (if required) in accordance with Rule
      424(b) and on the Closing Date (as defined herein) and on any date on
      which Option Securities are purchased, if such date is not the Closing
      Date (a "settlement date"), the Prospectus (and any supplements thereto)
      will, comply in all material respects with the applicable requirements of
      the Act and the rules thereunder; on the Effective Date and at the
      Execution Time, the Registration Statement did not or will not contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary in order to make the statements
      therein not misleading; and, on the Effective Date, the Prospectus, if not
      filed pursuant to Rule 424(b), will not, and on the date of any filing
      pursuant to Rule 424(b) and on the Closing Date and any settlement date,
      the Prospectus (together with any supplement thereto) will not, include
      any untrue statement of a material fact or omit to state a material fact
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading; provided,
      however, that the Company makes no representations or warranties as to the
      information contained in or omitted from the Registration Statement, or
      the Prospectus (or any supplement thereto) in reliance upon and in
      conformity with information furnished in writing to the Company by or on
      behalf of any Underwriter through the Representatives specifically for
      inclusion in the Registration Statement or the Prospectus (or any
      supplement thereto).

            (c) Each of the Company and its subsidiaries (the "Subsidiaries")
      has been duly incorporated and is validly existing as a corporation in
      good standing under the laws of the jurisdiction in which it is chartered
      or organized with full corporate power and authority to own or lease, as
      the case may be, and to operate its properties and conduct its business as
      described in the Prospectus, and is duly qualified to do business as a
      foreign corporation and is in good standing under the laws of each
      jurisdiction which requires such qualification, except where the failure
      to so qualify or be in good standing would not reasonably be expected to
      have a material adverse effect on the condition (financial or otherwise),
      prospects, earnings, business or properties of the Company and the
      Subsidiaries, taken as a whole, whether or not arising from transactions
      in the ordinary course of business ("Material Adverse Effect"). Other than
      Niagara Atlantic Holdings Corporation ("Niagara"), Proformance Insurance
      Company ("Proformance"), National Atlantic Financial Corporation
      ("Financial Corporation"), National Atlantic Insurance Agency, Inc.
      ("Insurance Agency"), Riverview Professional Services, Inc. ("Riverview")
      and Mayfair Reinsurance Company Limited ("Mayfair") are the only
      subsidiaries of the Company; Proformance and Mayfair are the only
      insurance subsidiaries (the "Insurance Subsidiaries") of the Company.

            (d) All the outstanding shares of capital stock of each Subsidiary
      have been duly and validly authorized and issued and are fully paid and
      nonassessable, and, except as otherwise set forth in the Prospectus, all
      outstanding shares of capital stock of the Subsidiaries are owned by the
      Company either directly or through wholly owned subsidiaries free and
      clear of any perfected security interest or any other security interests,
      claims, liens or encumbrances; and none of the outstanding shares of
      capital stock of any Subsidiary of the Company was

3
<PAGE>

      issued in violation of preemptive or other similar rights of any security
      holder of such Subsidiary; there are no outstanding subscriptions,
      options, warrants, convertible or exchangeable securities or other rights
      granted to or by the Company or any Subsidiary to purchase shares of
      common stock or other securities of any Subsidiary and there are no
      commitments, plans or arrangements to issue any such securities or any
      security convertible into or exercisable for such securities.

            (e) The Company's authorized equity capitalization is as set forth
      in the Prospectus; the capital stock of the Company conforms in all
      material respects to the description thereof contained in the Prospectus;
      the outstanding shares of Common Stock have been duly and validly
      authorized and issued and are fully paid and nonassessable; the Securities
      have been duly and validly authorized, and, when issued and delivered to
      and paid for by the Underwriters pursuant to this Agreement, will be fully
      paid and nonassessable; the Common Stock is registered pursuant to Section
      12(b) of the Exchange Act; the Securities are duly listed, and admitted
      and authorized for trading, subject to official notice of issuance of the
      Securities, on the Nasdaq National Market; the certificates for the
      Securities are in valid and sufficient form under New Jersey law; the
      holders of outstanding shares of capital stock of the Company are not
      entitled to preemptive or other rights to subscribe for the Securities;
      and, except as set forth in the Prospectus, no options, warrants or other
      rights to purchase, agreements or other obligations to issue, or rights to
      convert any obligations into or exchange any securities for, shares of
      capital stock of or ownership interests in the Company are outstanding.

            (f) There is no franchise, contract or other document of a character
      required to be described in the Registration Statement or Prospectus, or
      to be filed as an exhibit thereto, which is not described or filed as
      required; and the statements in the Prospectus under the heading "Business
      -- Supervision and Regulation" fairly summarize the matters therein
      described.

            (g) This Agreement has been duly authorized, executed and delivered
      by the Company.

            (h) The Company is not and, after giving effect to the offering and
      sale of the Securities and the application of the proceeds thereof as
      described in the Prospectus, will not be an "investment company" as
      defined in the Investment Company Act of 1940, as amended.

            (i) No consent, approval, authorization, filing with or order of any
      court or governmental agency or body is required in connection with the
      transactions contemplated herein, except such as have been obtained under
      the Act and such as may be required under the blue sky laws or insurance
      securities laws of any jurisdiction in connection with the purchase and
      distribution of the Securities by the Underwriters in the manner
      contemplated herein and in the Prospectus.

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<PAGE>

            (j) Neither the issue and sale of the Securities nor the
      consummation of any other of the transactions herein contemplated nor the
      fulfillment of the terms hereof will conflict with, result in a breach or
      violation of, or imposition of any lien, charge or encumbrance upon any
      property or assets of the Company or any of its Subsidiaries pursuant to,
      (i) the charter or by-laws of the Company or any of its Subsidiaries, (ii)
      the terms of any indenture, contract, lease, mortgage, deed of trust, note
      agreement, loan agreement or other agreement, obligation, condition,
      covenant or instrument to which the Company or any of its Subsidiaries is
      a party or bound or to which its or their property is subject, or (iii)
      any statute, law, rule, regulation, judgment, order or decree applicable
      to the Company or any of its Subsidiaries of any court, regulatory body,
      administrative agency, governmental body, arbitrator or other authority
      having jurisdiction over the Company or any of its Subsidiaries or any of
      its or their properties, except in the case of clauses (ii) and (iii)
      above for such conflicts, breaches, violations, liens, charges or
      encumbrances that would not reasonably be expected to have a Material
      Adverse Effect.

            (k) Except as set forth in the Prospectus, no holders of securities
      of the Company have rights to the registration of such securities under
      the Registration Statement.

            (l) The consolidated historical financial statements and schedules
      of the Company and its consolidated Subsidiaries included in the
      Prospectus and the Registration Statement present fairly in all material
      respects the financial condition, results of operations and cash flows of
      the Company as of the dates and for the periods indicated, comply as to
      form in all material respects with the applicable accounting requirements
      of the Act and have been prepared in conformity with United States
      generally accepted accounting principles applied on a consistent basis
      throughout the periods involved (except as otherwise noted therein). The
      selected financial data set forth under the caption "Selected Financial
      Information" in the Prospectus and Registration Statement fairly present
      in all material respects, on the basis stated in the Prospectus and the
      Registration Statement, the information included therein.

            (m) The statutory financial statements of Proformance from which
      certain ratios and other statistical data filed as part of the
      Registration Statement have been derived have been prepared for each
      relevant period in conformity with statutory accounting principles or
      practices required or permitted by the National Association of Insurance
      Commissioners and by the Department of Banking and Insurance of New
      Jersey; and such statutory accounting practices have been applied on a
      consistent basis throughout the periods involved, except as may otherwise
      be indicated therein or in the notes thereto, and present fairly in all
      material respects the statutory financial position of the Insurance
      Subsidiaries as of the dates thereof, and the statutory basis results of
      operations of the Insurance Subsidiaries for the periods covered thereby.

5
<PAGE>

            (n) No action, suit or proceeding by or before any court or
      governmental agency, authority or body or any arbitrator involving the
      Company or any of its Subsidiaries or its or their property is pending or,
      to the best knowledge of the Company, threatened that (i) would reasonably
      be expected to have a material adverse effect on the performance of this
      Agreement or the consummation of any of the transactions contemplated
      hereby or (ii) would reasonably be expected to have a Material Adverse
      Effect, except as set forth in or contemplated in the Prospectus
      (exclusive of any supplement thereto filed after the date hereof).

            (o) Each of the Company and each of the Subsidiaries owns or leases
      all such properties as are necessary to the conduct of its operations as
      presently conducted.

            (p) Neither the Company nor any Subsidiary is in violation or
      default of (i) any provision of its charter or bylaws, (ii) the terms of
      any indenture, contract, lease, mortgage, deed of trust, note agreement,
      loan agreement or other agreement, obligation, condition, covenant or
      instrument to which it is a party or bound or to which its property is
      subject, or (iii) any statute, law, rule, regulation, judgment, order or
      decree of any court, regulatory body, administrative agency, governmental
      body, arbitrator or other authority having jurisdiction over the Company
      or such Subsidiary or any of its properties, as applicable, except in the
      case of clauses (ii) and (iii) above for such violations or defaults that
      would not reasonably be expected to have a Material Adverse Effect.

            (q) Deloitte & Touche LLP, who has audited certain financial
      statements of the Company and its consolidated Subsidiaries and delivered
      their reports with respect to the audited consolidated financial
      statements and schedules included in the Prospectus, is an independent
      registered public accounting firm with respect to the Company within the
      meaning of the Act and the applicable published rules and regulations
      thereunder.

            (r) Arthur Andersen LLP was, at the time of the audit of the
      consolidated financial statements of the Company and its subsidiaries for
      the fiscal year ended December 31, 2000 included as part of Registration
      Statement and the Prospectus, an independent accounting firm as required
      by the Act.

            (s) There are no transfer taxes or other similar fees or charges
      under Federal law or the laws of any state, or any political subdivision
      thereof, required to be paid in connection with the execution and delivery
      of this Agreement or the issuance by the Company or sale by the Company of
      the Securities.

            (t) The Company has filed all foreign, federal, state and local tax
      returns that are required to be filed or has requested extensions thereof
      (except in any case in which the failure so to file would not reasonably
      be expected to have a Material Adverse Effect, and except as set forth in
      or contemplated in the Prospectus (exclusive of any supplement thereto
      filed after the date hereof)) and

6
<PAGE>

      has paid all taxes required to be paid by it and any other assessment,
      fine or penalty levied against it, to the extent that any of the foregoing
      is due and payable, except for any such assessment, fine or penalty that
      is currently being contested in good faith or as would not reasonably be
      expected to have a Material Adverse Effect, except as set forth in or
      contemplated in the Prospectus (exclusive of any supplement thereto filed
      after the date hereof).

            (u) No labor problem or dispute with the employees of the Company or
      any of the Subsidiaries exists or, to the Company's knowledge, is
      threatened or imminent, and the Company is not aware of any existing or
      imminent labor disturbance by the employees of any of its or its
      Subsidiaries' principal suppliers, contractors or customers, that could
      have a Material Adverse Effect, except as set forth in or contemplated in
      the Prospectus (exclusive of any supplement thereto filed after the date
      hereof).

            (v) The Company and each of the Subsidiaries are insured by insurers
      of recognized financial responsibility against such losses and risks and
      in such amounts as are prudent and customary in the businesses in which
      they are engaged; all policies of insurance and fidelity or surety bonds
      insuring the Company or any of the Subsidiaries or their respective
      businesses, assets, employees, officers and directors are in full force
      and effect; the Company and the Subsidiaries are in compliance with the
      terms of such policies and instruments in all material respects; and there
      are no material claims by the Company or any of the Subsidiaries under any
      such policy or instrument as to which any insurance company is denying
      liability or defending under a reservation of rights clause; neither the
      Company nor any such Subsidiary has been refused any insurance coverage
      sought or applied for; and neither the Company nor any such Subsidiary has
      any reason to believe that it will not be able to renew its existing
      insurance coverage as and when such coverage expires or to obtain similar
      coverage from similar insurers as may be necessary to continue its
      business at a cost that would not have a Material Adverse Effect, except
      as set forth in or contemplated in the Prospectus (exclusive of any
      supplement thereto filed after the date hereof).

            (w) No Subsidiary of the Company is currently prohibited, directly
      or indirectly, from paying any dividends to the Company, from making any
      other distribution on such Subsidiary's capital stock, from repaying to
      the Company any loans or advances to such Subsidiary from the Company or
      from transferring any of such Subsidiary's property or assets to the
      Company or any other Subsidiary of the Company, except as described in or
      contemplated by the Prospectus (exclusive of any supplement thereto filed
      after the date hereof).

            (x) The Company and its Subsidiaries possess all licenses,
      certificates, permits and other authorizations (the "Governmental
      Authorizations") issued by the appropriate federal, state or foreign
      regulatory authorities (including, without limitation, licenses and
      permits from the insurance regulatory agencies, authorities or bodies
      having jurisdiction over the Company or any of its Subsidiaries or any of
      their properties (the "Insurance Licenses")) necessary to

7
<PAGE>

      conduct their respective businesses except for such Governmental
      Authorizations the failure of which to possess would not reasonably be
      expected to have a Material Adverse Effect; all of the Governmental
      Authorizations are valid and in full force and effect; and neither the
      Company nor any such Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any such certificate,
      authorization or permit which, singly or in the aggregate, if the subject
      of an unfavorable decision, ruling or finding, would reasonably be
      expected to have a Material Adverse Effect, except as set forth in or
      contemplated in the Prospectus (exclusive of any supplement thereto filed
      after the date hereof); the Company and the Insurance Subsidiaries have
      filed with the appropriate governmental authorities (including regulatory
      authorities) all reports, documents or other information required to be
      filed under the applicable insurance laws and regulations, except in any
      case in which the failure so to file would not reasonably be expected to
      have a Material Adverse Effect.

            (y) The Company and each of its Subsidiaries maintain a system of
      internal accounting controls sufficient to provide reasonable assurance
      that (i) transactions are executed in accordance with management's general
      or specific authorizations; (ii) except as otherwise disclosed in the
      Prospectus, transactions are recorded as necessary to permit preparation
      of financial statements in conformity with generally accepted accounting
      principles and to maintain asset accountability; (iii) access to assets is
      permitted only in accordance with management's general or specific
      authorization; and (iv) the recorded accountability for assets is compared
      with the existing assets at reasonable intervals and appropriate action is
      taken with respect to any differences.

            (z) The Company has not taken, directly or indirectly, any action
      designed to or that would constitute or that might reasonably be expected
      to cause or result in, under the Exchange Act or otherwise, stabilization
      or manipulation of the price of any security of the Company to facilitate
      the sale or resale of the Securities.

            (aa) The Company and its Subsidiaries are (i) in compliance with any
      and all applicable foreign, federal, state and local laws and regulations
      relating to the protection of human health and safety, the environment or
      hazardous or toxic substances or wastes, pollutants or contaminants
      ("Environmental Laws"), (ii) have received and are in compliance with all
      permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses and (iii) have
      not received notice of any actual or potential liability under any
      environmental law, except where such non-compliance with Environmental
      Laws, failure to receive required permits, licenses or other approvals, or
      liability would not reasonably be expected, individually or in the
      aggregate, to have a Material Adverse Effect, and except as set forth in
      or contemplated in the Prospectus (exclusive of any supplement thereto
      filed after the date hereof). Except as set forth in the Prospectus,
      neither the Company nor any of the Subsidiaries has been named as a
      "potentially responsible party" under

8
<PAGE>

      the Comprehensive Environmental Response, Compensation, and Liability Act
      of 1980, as amended.

            (bb) Except as disclosed in the Prospectus, since the date of the
      latest audited financial statements included in the Prospectus there has
      been no material adverse change, nor any development or event involving a
      prospective material adverse change, in the condition (financial or
      otherwise), business affairs or prospects, properties or results of
      operations of the Company and its Subsidiaries taken as a whole, and,
      except as disclosed in or contemplated by the Prospectus, there has been
      no dividend or distribution of any kind declared, paid or made by the
      Company on any class of its capital stock; since December 31, 2004, (i) no
      downgrading shall have occurred in the financial strength, claims paying
      ability or financial enhancement rating of any of the Company's
      Subsidiaries by A.M. Best Company, Inc. ("A.M. Best") or any "nationally
      recognized statistical rating organization," as that term is defined by
      the Commission for purposes of Rule 436(g)(2) under the Act, (ii) no
      downgrading shall have occurred in the financial strength, claims paying
      ability or financial enhancement rating of any of the Company's
      Subsidiaries by Demotech, Inc. ("Demotech"), and (iii) neither A.M. Best
      or any "nationally recognized statistical rating organization," as that
      term is defined by the Commission for purposes of Rule 436(g)(2) under the
      Act nor Demotech shall have publicly announced that it has placed under
      surveillance or review, with possible negative implications, its rating of
      any of the financial strength, claims paying ability or financial
      enhancement rating of any of the Company's Subsidiaries.

            (cc) Except as disclosed in the Prospectus, the Company and the
      Insurance Subsidiaries have made no material change in their insurance
      reserving practices since December 31, 2004.

            (dd) All reinsurance treaties and arrangements to which the Company
      and any Insurance Subsidiary is a party are in full force and effect and
      neither the Company nor any Insurance Subsidiary is in violation of, or in
      default in the performance, observance or fulfillment of, any obligation,
      agreement, covenant or condition contained therein, except where the
      failure to be in full force and effect or where such violation or default
      would not reasonably be expected, individually or in the aggregate, to
      have a Material Adverse Effect; neither the Company nor any of the
      Insurance Subsidiaries has received any notice from any of the other
      parties to such treaties, contracts or agreements that such other party
      intends not to perform such treaty and, to the knowledge of the Company
      and the Insurance Subsidiaries, none of the other parties to such treaties
      or arrangements will be unable to perform such treaty or arrangement
      except to the extent adequately and properly reserved for in the audited
      historical financial statements of the Company on a consolidated basis
      included in the Prospectus, except where such nonperformance would not
      reasonably be expected, individually or in the aggregate, to have a
      Material Adverse Effect.

9
<PAGE>

            (ee) The minimum funding standard under Section 302 of the Employee
      Retirement Income Security Act of 1974, as amended, and the regulations
      and published interpretations thereunder ("ERISA"), has been satisfied by
      each "pension plan" (as defined in Section 3(2) of ERISA) which has been
      established or maintained by the Company and/or one or more of its
      Subsidiaries, and the trust forming part of each such plan which is
      intended to be qualified under Section 401 of the Code is so qualified;
      each of the Company and its Subsidiaries has fulfilled its obligations, if
      any, under Section 515 of ERISA; neither the Company nor any of its
      Subsidiaries maintains or is required to contribute to a "welfare plan"
      (as defined in Section 3(1) of ERISA) which provides retiree or other
      post-employment welfare benefits or insurance coverage (other than
      "continuation coverage" (as defined in Section 602 of ERISA)); each
      pension plan and welfare plan established or maintained by the Company
      and/or one or more of its Subsidiaries is in compliance in all material
      respects with the currently applicable provisions of ERISA; and neither
      the Company nor any of its Subsidiaries has incurred or could reasonably
      be expected to incur any withdrawal liability under Section 4201 of ERISA,
      any liability under Section 4062, 4063, or 4064 of ERISA, or any other
      liability under Title IV of ERISA.

            (ff) The Company and its Subsidiaries own, possess, license or have
      other rights to use, on reasonable terms, all patents, patent
      applications, trade and service marks, trade and service mark
      registrations, trade names, copyrights, licenses, inventions, trade
      secrets, technology, know-how and other intellectual property
      (collectively, the "Intellectual Property") necessary for the conduct of
      the Company's business as now conducted or as proposed in the Prospectus
      to be conducted except where the failure to own, possess, license or have
      any such Intellectual Property would not reasonably be expected,
      individually or in the aggregate, to have a Material Adverse Effect.
      Except as set forth in the Prospectus, (a) there are no rights of third
      parties to any such Intellectual Property; (b) there is no material
      infringement by third parties of any such Intellectual Property; (c) there
      is no pending or, to the Company's knowledge, threatened action, suit,
      proceeding or claim by others challenging the Company's rights in or to
      any such Intellectual Property, and the Company is unaware of any facts
      which would form a reasonable basis for any such claim; (d) there is no
      pending or, to the Company's knowledge, threatened action, suit,
      proceeding or claim by others challenging the validity or scope of any
      such Intellectual Property, and the Company is unaware of any facts which
      would form a reasonable basis for any such claim; (e) there is no pending
      or threatened action, suit, proceeding or claim by others that the Company
      infringes or otherwise violates any patent, trademark, copyright, trade
      secret or other proprietary rights of others, and the Company is unaware
      of any other fact which would form a reasonable basis for any such claim;
      (f) to the Company's knowledge there is no U.S. patent or published U.S.
      patent application which contains claims that dominate or may dominate any
      Intellectual Property described in the Prospectus as being owned by or
      licensed to the Company or that interferes with the issued or pending
      claims of any such Intellectual Property; and (g) the Company does not
      hold any U.S. patent issued by the U.S. Patent and Trademark Office.

10
<PAGE>

            (gg) To the knowledge of the Company, there are no affiliations with
      member firms of the National Association of Securities Dealers, Inc. (the
      "NASD") among the Company's officers, directors or any stockholder of the
      Company, except as set forth in the Registration Statement or otherwise
      disclosed in writing to the Representatives.

            (hh) No transaction has occurred (i) between the Company and any of
      its officers or directors or 5% stockholders or any affiliate or
      affiliates of any such officer or director or 5% stockholders or (ii) to
      the knowledge of the Company, between or among any of the Company's
      officers or directors or 5% stockholders or any affiliate or affiliates of
      any such officer or director or 5% stockholders, in each case that is
      required to be described in and is not described in the Registration
      Statement and the Prospectus.

            (ii) Neither the Company nor any of its Subsidiaries nor, to the
      knowledge of the Company, any director, officer, agent, employee or
      affiliate of the Company or any of its Subsidiaries is aware of or has
      taken any action, directly or indirectly, that would result in a violation
      by such Persons of the FCPA, including, without limitation, making use of
      the mails or any means or instrumentality of interstate commerce corruptly
      in furtherance of an offer, payment, promise to pay or authorization of
      the payment of any money, or other property, gift, promise to give, or
      authorization of the giving of anything of value to any "foreign official"
      (as such term is defined in the FCPA) or any foreign political party or
      official thereof or any candidate for foreign political office, in
      contravention of the FCPA and the Company, the Subsidiaries and, to the
      knowledge of the Company, its affiliates have conducted their businesses
      in compliance in all material respects with the FCPA and have instituted
      and maintain policies and procedures designed to ensure, and which are
      reasonably expected to continue to ensure, continued compliance in all
      material respects therewith; "FCPA" means Foreign Corrupt Practices Act of
      1977, as amended, and the rules and regulations thereunder.

            (jj) The operations of the Company and its Subsidiaries are and have
      been conducted at all times in compliance in all material respects with
      applicable financial recordkeeping and reporting requirements of the
      Currency and Foreign Transactions Reporting Act of 1970, as amended, the
      money laundering statutes of all jurisdictions, the rules and regulations
      thereunder and any related or similar rules, regulations or guidelines,
      issued, administered or enforced by any governmental agency (collectively,
      the "Money Laundering Laws") and no action, suit or proceeding by or
      before any court or governmental agency, authority or body or any
      arbitrator involving the Company or any of its Subsidiaries with respect
      to the Money Laundering Laws is pending or, to the knowledge of the
      Company, threatened.

            (kk) Neither the Company nor any of its Subsidiaries nor, to the
      knowledge of the Company, any director, officer, agent, employee or
      affiliate of the Company or any of its Subsidiaries is currently subject
      to any U.S. sanctions

11
<PAGE>

      administered by the Office of Foreign Assets Control of the U.S. Treasury
      Department ("OFAC"); and the Company will not directly or indirectly use
      the proceeds of the offering contemplated hereby, or lend, contribute or
      otherwise make available such proceeds to any Subsidiary, joint venture
      partner or other person or entity, for the purpose of financing the
      activities of any person currently subject to any U.S. sanctions
      administered by OFAC.

            Furthermore, the Company represents and warrants to Citigroup Global
      Markets Inc. that (i) the Registration Statement, the Prospectus and any
      preliminary prospectus comply, and any further amendments or supplements
      thereto will comply, with any applicable laws or regulations of any
      foreign jurisdictions in which the Prospectus or any preliminary
      prospectus, as amended or supplemented, if applicable, are distributed in
      connection with the Directed Share Program, and that (ii) no
      authorization, approval, consent, license, order, registration or
      qualification of or with any government, governmental instrumentality or
      court, other than such as have been obtained, is necessary under the
      securities laws and regulations of foreign jurisdictions in which the
      Directed Shares are offered outside the United States, if any. The Company
      has not offered, or caused the Underwriters to offer, Securities to any
      person pursuant to the Directed Share Program with the specific intent to
      unlawfully influence (i) a customer or supplier of the Company to alter
      the customer's or supplier's level or type of business with the Company,
      or (ii) a trade journalist or publication to write or publish favorable
      information about the Company or its products.

            Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.

            Section 1.02 The Selling Stockholder represents and warrants to, and
agrees with, each Underwriter that:

            (a) The Selling Stockholder is the record and beneficial owner of
      the Securities to be sold by it hereunder free and clear of all liens,
      encumbrances, equities and claims and has duly endorsed such Securities in
      blank, and, assuming that each Underwriter acquires its interest in the
      Securities it has purchased from the Selling Stockholder without notice of
      any adverse claim (within the meaning of Section 8-105 of the New York
      Uniform Commercial Code ("UCC")), each Underwriter that has purchased such
      Securities delivered on the Closing Date to The Depository Trust Company
      or other securities intermediary by making payment therefor as provided
      herein, and that has had such Securities credited to the securities
      account or accounts of such Underwriters maintained with The Depository
      Trust Company or such other securities intermediary will have acquired a
      security entitlement (within the meaning of Section 8-102(a)(17) of the
      UCC) to such Securities purchased by such Underwriter, and no action based
      on an adverse claim (within the meaning of Section 8-105 of the UCC) may
      be asserted against such Underwriter with respect to such Securities.

12
<PAGE>

            (b) The Selling Stockholder has not taken, directly or indirectly,
      any action designed to or that would constitute or that might reasonably
      be expected to cause or result in, under the Exchange Act or otherwise,
      stabilization or manipulation of the price of any security of the Company
      to facilitate the sale or resale of the Securities.

            (c) The Selling Stockholder has full right, power and authority to
      enter into this Agreement and to sell, assign, transfer and deliver the
      Securities to be sold by such Selling Stockholder hereunder. The Selling
      Stockholder has entered into and delivered to the Representatives a
      lock-up agreement substantially in the form of Exhibit A hereto and the
      Selling Stockholder as full right, power and authority to enter into such
      lock-up agreement.

            (d) No consent, approval, authorization or order of any court or
      governmental agency or body is required for the consummation by the
      Selling Stockholder of the transactions contemplated herein, except such
      as may have been obtained under the Act and such as may be required under
      the blue sky laws of any jurisdiction in connection with the purchase and
      distribution of the Securities by the Underwriters and such other
      approvals as have been obtained.

            (e) Neither the sale of the Securities being sold by the Selling
      Stockholder nor the consummation of any other of the transactions herein
      contemplated by the Selling Stockholder or the fulfillment of the terms
      hereof by the Selling Stockholder will conflict with, result in a breach
      or violation of, or constitute a default under (i) any law, (ii) the
      charter or code of regulations of the Selling Stockholder or (iii) the
      terms of any indenture or other agreement or instrument to which the
      Selling Stockholder is a party or bound, or any judgment, order or decree
      applicable to the Selling Stockholder of any court, regulatory body,
      administrative agency, governmental body or arbitrator having jurisdiction
      over the Selling Stockholder, except in the case of clauses (i) and (iii)
      above for such conflicts, breaches, violations or defaults as would not
      materially and adversely affect the validity of this Agreement or the
      ability of the Selling Stockholder to consummate the transactions
      contemplated hereby.

            (f) The sale of Securities by the Selling Stockholder pursuant
      hereto is not prompted by any non-public information concerning the
      Company or any of its subsidiaries.

            (g) In respect of any statements in or omissions from the
      Registration Statement or the Prospectus or any supplements thereto made
      in reliance upon and in conformity with information furnished in writing
      to the Company by the Selling Stockholder specifically for use in
      connection with the preparation thereof, the Selling Stockholder hereby
      makes the same representations and warranties to each Underwriter as the
      Company makes to such Underwriter under paragraph (i)(b) of this Section.

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<PAGE>

            Any certificate signed by any officer of the Selling Stockholder and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Selling Stockholder, as to matters covered thereby, to each
Underwriter.

            ARTICLE II Purchase and Sale.

            (a) Subject to the terms and conditions and in reliance upon the
      representations and warranties herein set forth, the Company agrees to
      issue and sell 5,985,000 Underwritten Securities, and the Selling
      Stockholder agrees to sell 665,000 Underwritten Securities to each
      Underwriter, and each Underwriter agrees, severally and not jointly, to
      purchase from the Company and the Selling Stockholder, at a purchase price
      of $11.16 per share, the amount of the Underwritten Securities set forth
      opposite such Underwriter's name in Schedule I hereto.

            (b) Subject to the terms and conditions and in reliance upon the
      representations and warranties herein set forth, the Company, with respect
      to 897,750 Option Securities, and the Selling Stockholder, with respect to
      99,750 Option Securities, hereby grant an option to the several
      Underwriters to purchase, severally and not jointly, the amount of Option
      Securities at the same purchase price per share as the Underwriters shall
      pay for the Underwritten Securities, as set forth opposite such
      Underwriter's name in Schedule II hereto. Said option may be exercised
      only to cover over-allotments in the sale of the Underwritten Securities
      by the Underwriters. Said option may be exercised in whole or in part at
      any time on or before the 30th day after the date of the Prospectus upon
      written notice by the Representatives to the Company and the Selling
      Stockholder setting forth the number of shares of the Option Securities as
      to which the several Underwriters are exercising the option and the
      settlement date. The number of Option Securities to be purchased by the
      Underwriters from each of the Company and the Selling Stockholder shall be
      in the same proportion as set forth in 2(a) above. The number of Option
      Securities to be purchased by each Underwriter shall be in the same
      percentage of the total number of shares of the Option Securities to be
      purchased by the several Underwriters as such Underwriter is purchasing of
      the Underwritten Securities, subject to such adjustments as you in your
      absolute discretion shall make to eliminate any fractional shares.

            ARTICLE III Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
April 26, 2005 or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement between the Representatives and the
Company and the Selling Stockholder or as provided in Section 9 hereof (such
date and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Representatives
for the respective accounts of the several Underwriters

14
<PAGE>

against payment by the several Underwriters through the Representatives of the
purchase price thereof to or upon the order of the Company (with respect to the
Securities sold by the Company) and the Selling Stockholder (with respect to the
Securities sold by the Selling Stockholder) by wire transfer payable in same-day
funds to the account specified by the Company (with respect to the Securities
sold by the Company) and the account specified by the Selling Stockholder (with
respect to the Securities sold by the Selling Stockholder). Delivery of the
Underwritten Securities and the Option Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.

            If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company and the Selling
Stockholder each will deliver their portion of the Option Securities (at the
respective expense of the Company and the Selling Stockholder) to the
Representatives, at 388 Greenwich St., New York, New York on the date specified
by the Representatives (which shall be not earlier than three Business Days
after the date of the exercise of said option) for the respective accounts of
the several Underwriters, against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company (with respect to the Option Securities sold by the Company) and the
Selling Stockholder with respect to the Option Securities sold by the Selling
Stockholder) by wire transfer payable in same-day funds to an account specified
by the Company (with respect to the Option Securities sold by the Company) and
to the account designated by the Selling Stockholder (with respect to the Option
Securities sold by the Selling Stockholder). If settlement for the Option
Securities occurs after the Closing Date, the Company and the Selling
Stockholder will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.

            ARTICLE IV Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.

            ARTICLE V Agreements.

            Section 5.01 The Company agrees with the several Underwriters that:

            (a) The Company will use its best efforts to cause the Registration
      Statement, if not effective at the Execution Time, and any amendment
      thereof, to become effective. Prior to the termination of the offering of
      the Securities, the Company will not file any amendment of the
      Registration Statement or supplement to the Prospectus or any Rule 462(b)
      Registration Statement unless the Company has furnished you a copy for
      your review prior to filing and will not file any such proposed amendment
      or supplement to which you reasonably object. Subject to the foregoing
      sentence, if the Registration Statement has become or becomes effective
      pursuant to Rule 430A, or filing of the Prospectus is otherwise

15
<PAGE>

      required under Rule 424(b), the Company will cause the Prospectus,
      properly completed, and any supplement thereto to be filed in a form
      approved by the Representatives with the Commission pursuant to the
      applicable paragraph of Rule 424(b) within the time period prescribed and
      will provide evidence reasonably satisfactory to the Representatives of
      such timely filing. The Company will promptly advise the Representatives
      (1) when the Registration Statement, if not effective at the Execution
      Time, shall have become effective, (2) when the Prospectus, and any
      supplement thereto, shall have been filed (if required) with the
      Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration
      Statement shall have been filed with the Commission, (3) when, prior to
      termination of the offering of the Securities, any amendment to the
      Registration Statement shall have been filed or become effective, (4) of
      any request by the Commission or its staff for any amendment of the
      Registration Statement, or any Rule 462(b) Registration Statement, or for
      any supplement to the Prospectus or for any additional information, (5) of
      the issuance by the Commission of any stop order suspending the
      effectiveness of the Registration Statement or the institution or
      threatening of any proceeding for that purpose of which the Company is
      aware and (6) of the receipt by the Company of any notification with
      respect to the suspension of the qualification of the Securities for sale
      in any jurisdiction or the institution or threatening of any proceeding
      for such purpose. The Company will use its best effort to prevent the
      issuance of any such stop order or the suspension of any such
      qualification and, if issued, to obtain as soon as possible the withdrawal
      thereof.

            (b) If, at any time when a prospectus relating to the Securities is
      required to be delivered under the Act, any event occurs as a result of
      which the Prospectus as then supplemented would include any untrue
      statement of a material fact or omit to state any material fact necessary
      to make the statements therein in the light of the circumstances under
      which they were made not misleading, or if it shall be necessary to amend
      the Registration Statement or supplement the Prospectus to comply with the
      Act or the rules thereunder, the Company promptly will (1) notify the
      Representatives of any such event; (2) prepare and file with the
      Commission, subject to the second sentence of paragraph (a) of this
      Section 5, an amendment or supplement which will correct such statement or
      omission or effect such compliance; and (3) supply any supplemented
      Prospectus to you in such quantities as you may reasonably request.

            (c) If the Company elects to rely upon Rule 462(b), the Company
      shall file a Rule 462(b) Registration Statement with the Commission in
      compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the
      date of this Agreement, and the Company shall at the time of filing either
      pay to the Commission the filing fee for the Rule 462(b) Registration
      Statement or give irrevocable instructions for the payment of such fee
      pursuant to Rule 111(b) under the Act.

            (d) As soon as practicable, the Company will make generally
      available to its security holders and to the Representatives an earnings
      statement or

16
<PAGE>

      statements of the Company and its Subsidiaries which will satisfy the
      provisions of Section 11(a) of the Act and Rule 158 under the Act.

            (e) The Company will furnish to the Representatives and counsel for
      the Underwriters signed copies of the Registration Statement (including
      exhibits thereto) and to each other Underwriter a copy of the Registration
      Statement (without exhibits thereto) and, so long as delivery of a
      prospectus by an Underwriter or dealer may be required by the Act, as many
      copies of each Preliminary Prospectus and the Prospectus and any
      supplement thereto as the Representatives may reasonably request.

            (f) The Company will arrange, if necessary, for the qualification of
      the Securities for sale under the laws of such jurisdictions as the
      Representatives may designate and will maintain such qualifications in
      effect so long as required for the distribution of the Securities;
      provided that in no event shall the Company be obligated to qualify to do
      business in any jurisdiction where it is not now so qualified or to take
      any action that would subject it to service of process in suits, other
      than those arising out of the offering or sale of the Securities, in any
      jurisdiction where it is not now so subject or subject it to taxation in
      any jurisdiction where it is not now so subject.

            (g) The Company will not, without the prior written consent of
      Citigroup Global Markets Inc., offer, sell, contract to sell, pledge, or
      otherwise dispose of, (or enter into any transaction which is designed to,
      or might reasonably be expected to, result in the disposition (whether by
      actual disposition or effective economic disposition due to cash
      settlement or otherwise) by the Company or any affiliate of the Company or
      any person in privity with the Company or any affiliate of the Company),
      directly or indirectly, including the filing (or participation in the
      filing) of a registration statement with the Commission in respect of, or
      establish or increase a put equivalent position or liquidate or decrease a
      call equivalent position within the meaning of Section 16 of the Exchange
      Act, any shares of Common Stock other than those being issued pursuant
      hereto or any securities convertible into, or exercisable, or exchangeable
      for, shares of Common Stock; or publicly announce an intention to effect
      any such transaction for a period of 180 days following the Execution
      Time, provided, however, that the Company may issue stock options,
      restricted stock and other awards pursuant to its employee or agent
      benefit plans described in the Prospectus (the "Benefit Plans"), issue and
      sell Common Stock pursuant to the Benefit Plans (or pursuant to an
      outstanding option or award issued under such plans) and the Company may
      issue Common Stock issuable upon the conversion of the non-voting common
      stock of the Company outstanding at the Execution Time.

            (h) The Company will comply in all material respects with all
      applicable securities and other applicable laws, rules and regulations,
      including, without limitation, the Sarbanes-Oxley Act of 2002 and the
      rules and regulations promulgated in connection therewith (the
      "Sarbanes-Oxley Act"), and use all reasonable efforts to cause the
      Company's directors and officers, in their

17
<PAGE>

      capacities as such, to comply in all material respects with such laws,
      rules and regulations, including, without limitation, the provisions of
      the Sarbanes-Oxley Act.

            (i) The Company will not take, directly or indirectly, any action
      designed to or that would constitute or that might reasonably be expected
      to cause or result in, under the Exchange Act or otherwise, stabilization
      or manipulation of the price of any security of the Company to facilitate
      the sale or resale of the Securities.

            (j) The Company will use the net proceeds received by it from the
      sale of the Underwritten Securities pursuant to this Agreement in the
      manner specified in the Prospectus under the caption "Use of Proceeds."

            (k) The Company will its best efforts to effect and maintain the
      quotation of the Securities on the Nasdaq National Market and will file
      with the Nasdaq National Market all documents and notices required by the
      Nasdaq National Market of companies that have securities that are listed
      on the Nasdaq National Market.

            (l) The Company will file with the Commission such information as
      may be required by Rule 463 under the Act.

            (m) The Company, during the period when the Prospectus is required
      to be delivered under the Act or the Exchange Act, will file all documents
      required to be filed with the Commission pursuant to the Exchange Act
      within the time periods required by the Exchange Act and the rules and
      regulations under the Exchange Act (the "Exchange Act Regulations").

            (n) The Company agrees to pay the costs and expenses relating to the
      following matters: (i) the preparation, printing or reproduction and
      filing with the Commission of the Registration Statement (including
      financial statements and exhibits thereto), each Preliminary Prospectus,
      the Prospectus, and each amendment or supplement to any of them; (ii) the
      printing (or reproduction) and delivery (including postage, air freight
      charges and charges for counting and packaging) of such copies of the
      Registration Statement, each Preliminary Prospectus, the Prospectus, and
      all amendments or supplements to any of them, as may, in each case, be
      reasonably requested for use in connection with the offering and sale of
      the Securities; (iii) the preparation, printing, authentication, issuance
      and delivery of certificates for the Securities, including any stamp or
      transfer taxes in connection with the original issuance and sale of the
      Securities; (iv) the printing (or reproduction) and delivery of this
      Agreement, any blue sky memorandum and all other agreements or documents
      printed (or reproduced) and delivered in connection with the offering of
      the Securities; (v) the registration of the Securities under the Exchange
      Act and the listing of the Securities on the Nasdaq National Market; (vi)
      any registration or qualification of the Securities for offer and sale
      under the securities or blue sky and insurance securities laws of the

18
<PAGE>

      several states (including filing fees and the reasonable fees and expenses
      of counsel, not to exceed $10,000, for the Underwriters relating to such
      registration and qualification); (vii) any filings required to be made
      with the NASD (including filing fees and the reasonable fees and expenses
      of counsel, not to exceed $15,000, for the Underwriters relating to such
      filings); (viii) the travel, transportation and other expenses incurred by
      or on behalf of Company representatives in connection with presentations
      to prospective purchasers of the Securities; (ix) the fees and expenses of
      the Company's accountants and the fees and expenses of counsel (including
      local and special counsel) for the Company; and (x) all other costs and
      expenses incident to the performance by the Company and the Selling
      Stockholder of their obligations hereunder.

            (o) The Company will use its best efforts to obtain and furnish to
      the Representatives a letter substantially in the form of the letter
      contemplated by Section 6(l) from each stockholder that is not an officer
      or director and owns less than 5% of the Common Stock.

            (p) The Company agrees to pay (1) all reasonable fees and
      disbursements of counsel incurred by the Underwriters in connection with
      the Directed Share Program, (2) all costs and expenses incurred by the
      Underwriters in connection with the printing (or reproduction) and
      delivery (including postage, air freight charges and charges for counting
      and packaging) of copies of the Directed Share Program material and (3)
      all stamp duties, similar taxes or duties or other taxes, if any, incurred
      by the Underwriters in connection with the Directed Share Program.

            Furthermore, the Company covenants with Citigroup Global Markets
      Inc. that the Company will comply with all applicable securities and other
      applicable laws, rules and regulations in each foreign jurisdiction in
      which the Directed Shares are offered in connection with the Directed
      Share Program, if any.

            Section 5.02 The Selling Stockholder agrees with the several
Underwriters that:

            (a) The Selling Stockholder will not take, directly or indirectly,
      any action designed to or that would constitute or that might reasonably
      be expected to cause or result in, under the Exchange Act or otherwise,
      stabilization or manipulation of the price of any security of the Company
      to facilitate the sale or resale of the Securities.

            (b) The Selling Stockholder will advise you promptly, and if
      requested by you, will confirm such advice in writing, so long as delivery
      of a prospectus relating to the Securities by an underwriter or dealer may
      be required under the Act, of any change in information in the
      Registration Statement or the Prospectus relating to the Selling
      Stockholder.

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<PAGE>

            (c) The Selling Stockholder will pay all fees and expenses of
      counsel for the Selling Stockholder incurred in connection with the
      offering of the Securities.

            ARTICLE VI Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholder made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholder of its obligations hereunder and to the following additional
conditions:

            (a) If the Registration Statement has not become effective prior to
      the Execution Time, unless the Representatives agree in writing to a later
      time, the Registration Statement will become effective not later than (i)
      6:00 PM New York City time on the date of determination of the public
      offering price, if such determination occurred at or prior to 3:00 PM New
      York City time on such date or (ii) 9:30 AM on the Business Day following
      the day on which the public offering price was determined, if such
      determination occurred after 3:00 PM New York City time on such date; if
      filing of the Prospectus, or any supplement thereto, is required pursuant
      to Rule 424(b), the Prospectus, and any such supplement, will be filed in
      the manner and within the time period required by Rule 424(b); and no stop
      order suspending the effectiveness of the Registration Statement shall
      have been issued and no proceedings for that purpose shall have been
      instituted or threatened.

            (b) The Company shall have requested and caused Patricia Forsyth,
      General Counsel of the Company, to have furnished to the Representatives
      her opinion, dated the Closing Date and addressed to the Representatives,
      to the effect that:

                  (i) each of the Company and Proformance, Insurance Agency and
            Riverview (collectively, "New Jersey Subsidiaries") has been duly
            incorporated and is validly existing as a corporation in good
            standing under the laws of New Jersey, with full corporate power and
            authority to own or lease, as the case may be, and to operate its
            properties and conduct its business as described in the Prospectus,
            and is duly qualified to do business as a foreign corporation and is
            in good standing under the laws of each jurisdiction which requires
            such qualification, except where the failure to be so qualified
            would not reasonably be expected to have a Material Adverse Effect;
            other than Niagara and the Subsidiaries set forth in the
            Underwriting Agreement, to such counsel's knowledge, the Company
            does not own or control, directly or indirectly, more than 5% of any
            class of equity security of any corporation, association or other
            entity;

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<PAGE>

                  (ii) each of the New Jersey Subsidiaries has all permits,
            licenses and authorizations under the laws, rules and regulations of
            the United States and the State of New Jersey (including, without
            limitation, any insurance laws) as are necessary to conduct its
            existing business as described in the Prospectus, except for such
            permits, licenses and authorizations the failure of which to have
            would not reasonably be expected to have a Material Adverse Effect;
            to the knowledge of such counsel, there is no pending or threatened
            action, suit, proceeding or investigation that would reasonably be
            expected to result in the revocation, termination or suspension of
            any Insurance Licenses; and except as disclosed in the Prospectus,
            to the knowledge of such counsel, no regulatory agency or body has
            issued, or commenced any proceeding for the issuance of, any order
            or decree impairing, restricting or prohibiting the payment of
            dividends by Proformance to its parent;

                  (iii) the Company's authorized equity capitalization is as set
            forth in the Prospectus; the capital stock of the Company conforms
            in all material respects to the description thereof contained in the
            Prospectus; the outstanding shares of Common Stock (including the
            Securities being sold hereunder by the Selling Stockholder) have
            been duly and validly authorized and issued and are fully paid and
            nonassessable; to such counsel's knowledge, none of the outstanding
            shares of capital stock, including the Securities to be purchased by
            the Underwriters, was issued in violation of or are otherwise
            subject to any preemptive or other similar rights of any
            securityholder of the Company.

                  (iv) all the outstanding shares of capital stock of each New
            Jersey Subsidiary have been duly and validly authorized and issued
            and are fully paid and nonassessable, and, except as otherwise set
            forth in the Prospectus, all outstanding shares of capital stock of
            the New Jersey Subsidiaries are owned by the Company either directly
            or through wholly owned subsidiaries free and clear of any perfected
            security interest and, to the knowledge of such counsel, any other
            security interest, claim, lien or encumbrance;

                  (v) except as disclosed in the Prospectus, there are no
            restrictions on the voting or transfer of any Common Stock pursuant
            to the Company's certificate of incorporation, by-laws or any
            agreement or other instrument known to such counsel to which the
            Company is a party or by which the Company is bound;

                  (vi) to the knowledge of such counsel, (i) there is no New
            Jersey statute or regulation, no pending or threatened action, suit
            or proceeding by or before any court or governmental agency,
            authority or body or any arbitrator involving the Company or any of
            its Subsidiaries or its or their property of a character required to
            be disclosed in the Prospectus which is not disclosed in the
            Prospectus, and (ii) there is no

21
<PAGE>

            franchise, contract, indenture, lease or other document of a
            character required to be described in the Registration Statement or
            Prospectus, or to be filed as an exhibit thereto, which is not
            described or filed as required;

                  (vii) the statements included in the Prospectus under the
            headings "Risk Factors -- We are subject to comprehensive regulation
            in the State of New Jersey, particularly by the New Jersey
            Department of Banking and Insurance, and we must obtain prior
            approval to take certain actions which may limit our ability to take
            advantage of profitable opportunities," "Risk Factors -- There are
            anti-takeover provisions contained in our organizational documents
            and in laws of the State of New Jersey that could delay or impede
            the removal of our directors and management and could make a merger,
            tender offer or proxy contest involving us more difficult, or could
            discourage a third party from attempting to acquire control of us,
            even if such a transaction were beneficial to the interest of our
            shareholders," "Business - Supervision and Regulation" and under
            Item 14 (Indemnification of Directors and Officers) in Part II of
            the Registration Statement insofar as such statements summarize
            legal matters, agreements, documents or proceedings discussed
            therein, are accurate summaries in all material respects of such
            legal matters, agreements, documents or proceedings; the statements
            made in the Prospectus under the caption "Description of Capital
            Stock", insofar as they purport to constitute summaries of the terms
            of the Company's capital stock (including the Securities),
            constitute accurate summaries of the terms of such capital stock in
            all material respects;

                  (viii) the Securities have been duly and validly authorized,
            and, when issued and delivered to and paid for by the Underwriters
            pursuant to this Agreement, will be fully paid and nonassessable;

                  (ix) the certificates for the Securities comply in all
            material respects with all applicable statutory requirements, and
            with any applicable requirements of the certificate of incorporation
            and by-laws of the Company;

                  (x) neither the issue and sale of the Securities, nor the
            consummation of any other of the transactions herein contemplated
            nor the fulfillment of the terms hereof will conflict with, result
            in a breach or violation of, or imposition of any lien, charge or
            encumbrance upon any property or assets of the Company or its
            Subsidiaries pursuant to the charter or by-laws of the Company or
            its Subsidiaries, and

                  (xi) this Agreement has been duly authorized, executed and
            delivered by the Company.

            In rendering such opinion, such counsel may rely (A) as to matters
            involving the application of laws of any jurisdiction

22
<PAGE>

            other than the State of New Jersey or the Federal laws of the United
            States, to the extent they deem proper and specified in such
            opinion, upon the opinion of other counsel of good standing whom
            they believe to be reliable and who are satisfactory to counsel for
            the Underwriters and (B) as to matters of fact, to the extent they
            deem proper, on certificates of responsible officers of the Company
            and public officials. References to the Prospectus in this paragraph
            (b) shall also include any supplements thereto at the Closing Date.

            (c) The Company shall have requested and caused Dewey Ballantine
      LLP, special counsel for the Company, to have furnished to the
      Representatives their opinion, dated the Closing Date and addressed to the
      Representatives, to the effect that:

                  (i) the Securities are duly listed, and admitted and
            authorized for trading, subject to official notice of issuance of
            the Securities, on the Nasdaq National Market; the certificates for
            the Securities comply in all material respects with the requirements
            of the Nasdaq National Market; to the knowledge of such counsel,
            except as set forth in the Prospectus, the holders of outstanding
            shares of capital stock of the Company are not entitled to
            preemptive or other rights to subscribe for the Securities; and to
            the knowledge of such counsel, except as set forth in the
            Prospectus, no options, warrants or other rights to purchase,
            agreements or other obligations to issue, or rights to convert any
            obligations into or exchange any securities for, shares of capital
            stock of or ownership interests in the Company are outstanding;

                  (ii) to the knowledge of such counsel, except as set forth in
            the Prospectus, no holders of securities of the Company have rights
            to the registration of such securities under the Registration
            Statement or to demand registration of any security owned by such
            holder during the period ending 180 days after the date of this
            Agreement;

                  (iii) to the knowledge of such counsel, (i) there is no New
            York or Federal statute or regulation, no pending or threatened
            action, suit or proceeding by or before any court or governmental
            agency, authority or body or any arbitrator involving the Company or
            any of its Subsidiaries or its or their property of a character
            required to be disclosed in the Registration Statement which is not
            disclosed in the Prospectus, and (ii) there is no franchise,
            contract, agreement, indenture, lease or other document of a
            character required to be described in the Registration Statement or
            Prospectus, or to be filed as an exhibit thereto, which is not
            described or filed as required;

23
<PAGE>

                  (iv) the statements included in the Prospectus under the
            headings "Shares Eligible for Future Sale" and "Material United
            States Federal Income and Estate Tax Considerations for Non-United
            States Holders of Common Stock" insofar as such statements summarize
            legal matters, agreements, documents or proceedings discussed
            therein, are accurate summaries in all material respects of such
            legal matters, agreements, documents or proceedings;

                  (v) neither the issue and sale of the Securities, nor the
            consummation of any other of the transactions herein contemplated
            nor the fulfillment of the terms hereof will conflict with, result
            in a breach or violation of, or imposition of any lien, charge or
            encumbrance upon any property or assets of the Company or its
            Subsidiaries pursuant to, (i) except as set forth in the Prospectus
            under the heading "Certain Relationships and Related Party
            Transactions," the terms of any indenture, contract, lease,
            mortgage, deed of trust, note agreement, loan agreement or other
            agreement, obligation, condition, covenant or instrument to which
            the Company or its Subsidiaries is a party or bound or to which its
            or their property is subject and which is known to such counsel, or
            (ii) any New York or Federal statute, law, rule, regulation, or
            judgment, order or decree applicable to the Company or its
            Subsidiaries of any New York or federal court, regulatory body,
            administrative agency, governmental body, arbitrator or other
            authority having jurisdiction over the Company or its Subsidiaries
            or any of its or their properties, and which is known to such
            counsel;

                  (vi) no consent, approval, authorization, filing with or order
            of any New York or Federal court or governmental agency or body is
            required in connection with the transactions contemplated herein,
            except such as have been obtained under the Act and such as may be
            required under the blue sky or insurance securities laws of any
            jurisdiction in connection with the purchase and distribution of the
            Securities by the Underwriters in the manner contemplated in this
            Agreement and in the Prospectus and such other approvals (specified
            in such opinion) as have been obtained;

                  (vii) the Registration Statement has become effective under
            the Act; any required filing of the Prospectus, and any supplements
            thereto, pursuant to Rule 424(b) has been made in the manner and
            within the time period required by Rule 424(b); to the knowledge of
            such counsel, no stop order suspending the effectiveness of the
            Registration Statement has been issued, no proceedings for that
            purpose have been instituted or threatened and the Registration
            Statement and the Prospectus (other than the financial statements
            and other financial and statistical information contained therein,
            as to which such counsel need express no opinion) comply as to form
            in all material respects with the applicable requirements of the Act
            and the rules thereunder; and

24
<PAGE>

                  (viii) the Company is not and, after giving effect to the
            offering and sale of the Securities and the application of the
            proceeds thereof as described in the Prospectus, will not be, an
            "investment company" as defined in the Investment Company Act of
            1940, as amended.

            Such counsel will also indicate that it has no reason to believe
            that on the Effective Date the Registration Statement contained any
            untrue statement of a material fact or omitted to state any material
            fact required to be stated therein or necessary to make the
            statements therein not misleading or that the Prospectus as of its
            date and on the Closing Date included or includes any untrue
            statement of a material fact or omitted or omits to state a material
            fact necessary to make the statements therein, in the light of the
            circumstances under which they were made, not misleading (in each
            case, other than the financial statements and other financial and
            statistical information contained therein, as to which such counsel
            need express no opinion);

            In rendering such opinion, such counsel may rely (A) as to matters
            involving the application of laws of any jurisdiction other than the
            State of New York or the Federal laws of the United States, to the
            extent they deem proper and specified in such opinion, upon the
            opinion of Patricia Forsyth and (B) as to matters of fact, to the
            extent they deem proper, on certificates of responsible officers of
            the Company and public officials. References to the Prospectus in
            this paragraph (c) shall also include any supplements thereto at the
            Closing Date.

            (d) The Selling Stockholder shall have requested and caused Debra K.
      Crane, Esq., counsel for the Selling Stockholder, to have furnished to the
      Representatives their opinion dated the Closing Date and addressed to the
      Representatives, to the effect that:

                  (i) this Agreement and the lock-up agreement have been duly
            authorized, executed and delivered by the Selling Stockholder, and
            the Selling Stockholder has full legal right and authority to sell,
            transfer and deliver in the manner provided in this Agreement the
            Securities being sold by the Selling Stockholder hereunder;

                  (ii) assuming that each Underwriter acquires its interest in
            the Securities it has purchased from the Selling Stockholder without
            notice of any adverse claim (within the meaning of Section 8-105 of
            the UCC), each Underwriter that has purchased such Securities
            delivered on the Closing Date to The Depository Trust Company or
            other securities intermediary by making payment therefor as provided
            herein, and that has had such

25
<PAGE>

            Securities credited to the securities account or accounts of such
            Underwriters maintained with The Depository Trust Company or such
            other securities intermediary will have acquired a security
            entitlement (within the meaning of Section 8-102(a)(17) of the UCC)
            to such Securities purchased by such Underwriter, and no action
            based on an adverse claim (within the meaning of Section 8-105 of
            the UCC) may be asserted against such Underwriter with respect to
            such Securities;

                  (iii) no consent, approval, authorization or order of any
            court or governmental agency or body is required for the
            consummation by the Selling Stockholder of the transactions
            contemplated herein, except such as may have been obtained under the
            Act and such as may be required under the blue sky laws of any
            jurisdiction in connection with the purchase and distribution of the
            Securities by the Underwriters and such other approvals (specified
            in such opinion) as have been obtained; and

                  (iv) neither the sale of the Securities being sold by the
            Selling Stockholder nor the consummation of any other of the
            transactions herein contemplated by the Selling Stockholder or the
            fulfillment of the terms hereof by the Selling Stockholder will
            conflict with, result in a breach or violation of, or constitute a
            default under any law or the charter or Regulations of the Selling
            Stockholder or the terms of any indenture or other agreement or
            instrument known to such counsel and to which the Selling
            Stockholder is a party or bound, or any judgment, order or decree
            known to such counsel to be applicable to the Selling Stockholder of
            any court, regulatory body, administrative agency, governmental body
            or arbitrator having jurisdiction over the Selling Stockholder.

            In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Ohio or the Federal laws of the United States, to the extent they deem proper
and specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are reasonably satisfactory to
counsel for the Underwriters, and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Selling Stockholder
and public officials.

            (e) The Representatives shall have received from LeBoeuf, Lamb,
      Greene & MacRae, L.L.P., counsel for the Underwriters, such opinion or
      opinions, dated the Closing Date and addressed to the Representatives,
      with respect to the issuance and sale of the Securities, the Registration
      Statement, the Prospectus (together with any supplement thereto filed
      after the date hereof) and other related matters as the Representatives
      may reasonably require, and the Company and the Selling Stockholder shall
      have furnished to such counsel such documents as they reasonably request
      for the purpose of enabling them to pass upon such matters.

26
<PAGE>

            (f) The Company shall have furnished to the Representatives a
      certificate of the Company, signed on behalf of the Company and not in
      their personal capacity by the Chairman of the Board or the President and
      the principal financial or accounting officer of the Company, dated the
      Closing Date, to the effect that the signers of such certificate have
      carefully examined the Registration Statement, the Prospectus, any
      supplements to the Prospectus and this Agreement and that:

                  (i) the representations and warranties of the Company in this
            Agreement are true and correct on and as of the Closing Date with
            the same effect as if made on the Closing Date and the Company has
            complied with all the agreements and satisfied all the conditions on
            its part to be performed or satisfied at or prior to the Closing
            Date;

                  (ii) no stop order suspending the effectiveness of the
            Registration Statement has been issued and no proceedings for that
            purpose have been instituted or, to the Company's knowledge,
            threatened;

                  (iii) since the date of the most recent financial statements
            included in the Prospectus (exclusive of any supplement thereto
            filed after the date hereof), there has been no material adverse
            effect on the condition (financial or otherwise), prospects,
            earnings, business or properties of the Company and its
            Subsidiaries, taken as a whole, whether or not arising from
            transactions in the ordinary course of business, except as set forth
            in or contemplated in the Prospectus (exclusive of any supplement
            thereto filed after the date hereof); and

                  (iv) no downgrading has occurred in the rating accorded to the
            financial strength or claims paying ability of the Company or any of
            the Insurance Subsidiaries by A.M. Best or any "nationally
            recognized statistical rating organization," as that term is defined
            by the Commission for purposes of Rule 436(g)(2) under the Act; no
            downgrading has occurred in the rating according to the financial
            strength or claims paying ability of the Company or any of the
            Insurance Subsidiaries by Demotech; and no such organization has
            publicly announced that it has under surveillance or review, with
            possible negative implications, its rating of the financial strength
            or claims paying ability of the Company or any of the Insurance
            Subsidiaries.

            (g) The Selling Stockholder shall have furnished to the
      Representatives a certificate, signed by the Chief Executive Officer and
      the principal financial or accounting officer of the Selling Stockholder,
      dated the Closing Date, to the effect that the representations and
      warranties of the Selling Stockholder in this Agreement are true and
      correct in all material respects on and as of the Closing Date to the same
      effect as if made on the Closing Date.

27
<PAGE>

            (h) The Company shall have requested and caused Deloitte & Touche
      LLP to have furnished to the Representatives, at the Execution Time and at
      the Closing Date, letters, dated respectively as of the Execution Time and
      as of the Closing Date, in form and substance satisfactory to the
      Representatives, confirming that they are an independent registered public
      accounting firm within the meaning of the Act and the applicable rules and
      regulations adopted by the Commission thereunder and stating in effect
      that:

                  (i) in their opinion the audited consolidated financial
            statements and financial statement schedules included in the
            Registration Statement and the Prospectus and reported on by them
            comply as to form in all material respects with the applicable
            accounting requirements of the Act and the related rules and
            regulations adopted by the Commission;

                  (ii) on the basis of certain specified procedures (but not an
            audit or a review in accordance with standards of the Public Company
            Accounting Oversight Board (United States)) which would not
            necessarily reveal matters of significance with respect to the
            comments set forth in such letter; a reading of the minutes of the
            meetings of the board of directors of the Company and the
            Subsidiaries; and inquiries of certain officials of the Company who
            have responsibility for financial and accounting matters of the
            Company and its Subsidiaries as to transactions and events
            subsequent to December 31, 2004, nothing came to their attention
            which caused them to believe that, with respect to the period
            subsequent to December 31, 2004, there were any changes, at a
            specified date not more than five days prior to the date of the
            letter, in the common stock of the Company or increase of long-term
            debt of the Company and its Subsidiaries as compared with the
            amounts shown on the December 31, 2004 audited balance sheet
            included in the Registration Statement and the Prospectus, or for
            the period from January 1, 2005 to such specified date there were
            any decreases, as compared with the corresponding period in the
            preceding year in net earned premiums of the Company and its
            Subsidiaries, except in all instances for changes or decreases set
            forth in such letter, in which case the letter shall be accompanied
            by an explanation by the Company as to the significance thereof
            unless said explanation is not deemed necessary by the
            Representatives;

                  (iii) nothing came to their attention which caused them to
            believe that the information included in the Registration Statement
            and Prospectus in response to Regulation S-K, Item 301 (Selected
            Financial Data; other than the financial data with respect to fiscal
            year 2000), Item 302 (Supplementary Financial Information) and Item
            402 (Executive Compensation) is not in conformity with the
            applicable disclosure requirements of Regulation S-K; and

                  (iv) they have performed certain other specified procedures as
            a result of which they determined that certain information of an
            accounting,

28
<PAGE>

            financial or statistical nature (which is limited to accounting,
            financial or statistical information derived from the general
            accounting records of the Company and its Subsidiaries) set forth in
            the Registration Statement and the Prospectus, including the
            information set forth under the caption "Selected Historical
            Financial Data" (other than financial data with respect to fiscal
            year 2000) in the Prospectus, agrees with the accounting records of
            the Company and its Subsidiaries, excluding any questions of legal
            interpretation.

References to the Prospectus in this paragraph (h) include any supplement
   thereto at the date of the letter.

            (i) Subsequent to the Execution Time or, if earlier, the dates as of
      which information is given in the Registration Statement (exclusive of any
      amendment thereof) and the Prospectus (exclusive of any supplement thereto
      filed after the date hereof), there shall not have been (i) any change or
      decrease specified in the letter or letters referred to in paragraph (h)
      of this Section 6 or (ii) any change, or any development involving a
      prospective change, in or affecting the condition (financial or
      otherwise), earnings, business or properties of the Company and its
      Subsidiaries taken as a whole, whether or not arising from transactions in
      the ordinary course of business, except as set forth in or contemplated in
      the Prospectus (exclusive of any supplement thereto filed after the date
      hereof) the effect of which, in any case referred to in clause (i) or (ii)
      above, is, in the sole judgment of the Representatives, so material and
      adverse as to make it impractical or inadvisable to proceed with the
      offering or delivery of the Securities as contemplated by the Registration
      Statement (exclusive of any amendment thereof) and the Prospectus
      (exclusive of any supplement thereto filed after the date hereof).

            (j) Subsequent to the Execution Time, (A) there shall not have been
      any decrease in the rating of any of the Company's debt securities by any
      "nationally recognized statistical rating organization" (as defined for
      purposes of Rule 436(g) under the Act) or any notice given of any intended
      or potential decrease in any such rating or of a possible change in any
      such rating that does not indicate the direction of the possible change;
      and (B) no downgrading shall have occurred in the rating accorded to the
      financial strength or claims paying ability of the Company or any of the
      Insurance Subsidiaries by Demotech, A.M. Best or any "nationally
      recognized statistical rating organization" and no such organization shall
      have publicly announced that it has under surveillance or review, with
      possible negative implications, its rating of the financial strength or
      claims paying ability of the Company or any of the Insurance Subsidiaries.

            (k) The Securities shall have been listed and admitted and
      authorized for trading on the Nasdaq National Market, subject to notice of
      issuance of the Securities, and reasonably satisfactory evidence of such
      actions shall have been provided to the Representatives.

29
<PAGE>

            (l) At the Execution Time, the Company shall have furnished to the
      Representatives a letter substantially in the form of Exhibit A hereto
      from each officer, director and 5% stockholder of the Company addressed to
      the Representatives; such letters shall be in force and effect as of the
      Execution Time and the Closing Date.

            (m) The Company shall have furnished to the Representatives such
      further information, certificates and documents as the Representatives may
      reasonably request, including, without limitation, (i) a certificate
      signed by the Chief Executive Officer of the Company on behalf of the
      Company and not in his individual capacity confirming as of the time they
      were made the representations by the Company to Arthur Andersen LLP at the
      time of the audit of the consolidated financial statements of the Company
      and its Subsidiaries for the year ended December 31, 2000, and (ii) a
      certificate signed by the Executive Vice President - Corporate Finance and
      Treasurer of the Company on behalf of the Company and not in his
      individual capacity as to (A) the consolidated financial statements of the
      Company and its Subsidiaries for the year ended December 31, 2000, and (B)
      the statutory financial statements of Proformance for the years ended and
      as of December 31, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003
      and 2004.

            If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.

            The documents required to be delivered by this Section 6 shall be
delivered at the office of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for
the Underwriters, at 125 West 55th Street, New York, NY 10019, on the Closing
Date.

            ARTICLE VII Reimbursement of Underwriters' Expenses. If the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company or the Selling
Stockholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Citigroup Global Markets Inc. on
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities. If the Company is
required to make any payments to the Underwriters under this Section 7 because
of the Selling Stockholder's refusal, inability or failure to satisfy any
condition to the obligations of the Underwriters set forth in Sections 6(d) and
(g), the Selling Stockholder

30
<PAGE>

pro rata in proportion to the percentage of Securities to be sold shall
reimburse the Company on demand for all amounts so paid.

            ARTICLE VIII Indemnification and Contribution.

            (a) The Company agrees to indemnify and hold harmless the Selling
      Stockholder and each Underwriter, the directors, officers, employees and
      agents of the Selling Stockholder and each Underwriter and each person who
      controls the Selling Stockholder and any Underwriter within the meaning of
      either the Act or the Exchange Act against any and all losses, claims,
      damages or liabilities, joint or several, to which they or any of them may
      become subject under the Act, the Exchange Act or other Federal or state
      statutory law or regulation, at common law or otherwise, insofar as such
      losses, claims, damages or liabilities (or actions in respect thereof)
      arise out of or are based upon any untrue statement or alleged untrue
      statement of a material fact contained in the registration statement for
      the registration of the Securities as originally filed or in any amendment
      thereof, or in any Preliminary Prospectus or the Prospectus, or in any
      amendment thereof or supplement thereto, or arise out of or are based upon
      the omission or alleged omission to state therein a material fact required
      to be stated therein or necessary to make the statements therein not
      misleading, and agrees to reimburse each such indemnified party, as
      incurred, for any legal or other expenses reasonably incurred by them in
      connection with investigating or defending any such loss, claim, damage,
      liability or action; provided, however, that the Company will not be
      liable in any such case to the extent that any such loss, claim, damage or
      liability arises out of or is based upon any such untrue statement or
      alleged untrue statement or omission or alleged omission made therein in
      reliance upon and in conformity with written information furnished to the
      Company by or on behalf of any Underwriter through the Representatives
      specifically for inclusion therein. This indemnity agreement will be in
      addition to any liability which the Company may otherwise have.

            (b) The Company agrees to indemnify and hold harmless Citigroup
      Global Markets Inc., the directors, officers, employees and agents of
      Citigroup Global Markets Inc. and each person, who controls Citigroup
      Global Markets Inc. within the meaning of either the Act or the Exchange
      Act ("Citigroup Entities"), from and against any and all losses, claims,
      damages and liabilities to which they may become subject under the Act,
      the Exchange Act or other Federal or state statutory law or regulation, at
      common law or otherwise (including, without limitation, any legal or other
      expenses reasonably incurred in connection with defending or investigating
      any such action or claim), insofar as such losses, claims damages or
      liabilities (or actions in respect thereof) (i) arise out of or are based
      upon any untrue statement or alleged untrue statement of a material fact
      contained in the prospectus wrapper material, if any, prepared by or with
      the consent of the Company for distribution in foreign jurisdictions in
      connection with the Directed Share Program attached to the Prospectus or
      any preliminary prospectus, or arise out of or are based upon the omission
      or alleged omission to state therein a material fact required to be stated
      therein or necessary to make the

31
<PAGE>

      statement therein, when considered in conjunction with the Prospectus or
      any applicable preliminary prospectus, not misleading; (ii) caused by the
      failure of any Participant to pay for and accept delivery of the
      securities which immediately following the Effective Date of the
      Registration Statement, were subject to a properly confirmed agreement to
      purchase; or (iii) related to, arising out of, or in connection with the
      Directed Share Program, , except that this clause (iii) shall not apply to
      the extent that such loss, claim, damage or liability is finally
      judicially determined to have resulted primarily from the gross negligence
      or willful misconduct of the Citigroup Entities.

            (c) The Selling Stockholder severally agrees to indemnify and hold
      harmless the Company, each of its directors, each of its officers who
      signs the Registration Statement, each Underwriter, the directors,
      officers, employees and agents of each Underwriter and each person who
      controls the Company or any Underwriter within the meaning of either the
      Act or the Exchange Act to the same extent as the foregoing indemnity from
      the Company to each Underwriter, but only with reference to written
      information furnished to the Company by or on behalf of the Selling
      Stockholder specifically for inclusion in the documents referred to in the
      foregoing indemnity. This indemnity agreement will be in addition to any
      liability which the Selling Stockholder may otherwise have.

            (d) Each Underwriter severally and not jointly agrees to indemnify
      and hold harmless the Company, each of its directors, each of its officers
      who signs the Registration Statement, and each person who controls the
      Company within the meaning of either the Act or the Exchange Act and the
      Selling Stockholder, to the same extent as the foregoing indemnity to each
      Underwriter, but only with reference to written information relating to
      such Underwriter furnished to the Company by or on behalf of such
      Underwriter through the Representatives specifically for inclusion in the
      documents referred to in the foregoing indemnity. This indemnity agreement
      will be in addition to any liability which any Underwriter may otherwise
      have. The Company and the Selling Stockholder acknowledge that the
      statements set forth in the last paragraph of the cover page regarding
      delivery of the Securities and, under the heading "Underwriting" or "Plan
      of Distribution," (i) the list of Underwriters and their respective
      participation in the sale of the Securities, (ii) the sentences related to
      concessions and reallowances, (iii) the paragraph related to
      stabilization, syndicate covering transactions and penalty bids, (iv) the
      paragraph relating to the availability of the Prospectus on the Internet
      and possible Internet distributions, and (v) the paragraph related to
      restrictions with respect to the underwriters' offering of the Securities
      in non-U.S. jurisdictions, in any Preliminary Prospectus and the
      Prospectus constitute the only information furnished in writing by or on
      behalf of the several Underwriters for inclusion in any Preliminary
      Prospectus or the Prospectus.

            (e) Promptly after receipt by an indemnified party under this
      Section 8 of notice of the commencement of any action, such indemnified
      party will, if a claim in respect thereof is to be made against the
      indemnifying party under this

32
<PAGE>

      Section 8, notify the indemnifying party in writing of the commencement
      thereof; but the failure so to notify the indemnifying party (i) will not
      relieve it from liability under paragraph (a), (b), (c) or (d) above
      unless and to the extent it did not otherwise learn of such action and
      such failure results in the forfeiture by the indemnifying party of
      substantial rights and defenses and (ii) will not, in any event, relieve
      the indemnifying party from any obligations to any indemnified party other
      than the indemnification obligation provided in paragraph (a), (b), (c) or
      (d) above. The indemnifying party shall be entitled to appoint counsel of
      the indemnifying party's choice at the indemnifying party's expense to
      represent the indemnified party in any action for which indemnification is
      sought (in which case the indemnifying party shall not thereafter be
      responsible for the fees and expenses of any separate counsel retained by
      the indemnified party or parties except as set forth below); provided,
      however, that such counsel shall be satisfactory to the indemnified party.
      Notwithstanding the indemnifying party's election to appoint counsel to
      represent the indemnified party in an action, the indemnified party shall
      have the right to employ separate counsel (including local counsel), and
      the indemnifying party shall bear the reasonable fees, costs and expenses
      of such separate counsel if (i) the use of counsel chosen by the
      indemnifying party to represent the indemnified party would present such
      counsel with a conflict of interest, (ii) the actual or potential
      defendants in, or targets of, any such action include both the indemnified
      party and the indemnifying party and the indemnified party shall have
      reasonably concluded that there may be legal defenses available to it
      and/or other indemnified parties which are different from or additional to
      those available to the indemnifying party, (iii) the indemnifying party
      shall not have employed counsel satisfactory to the indemnified party to
      represent the indemnified party within a reasonable time after notice of
      the institution of such action or (iv) the indemnifying party shall
      authorize in writing the indemnified party to employ separate counsel at
      the expense of the indemnifying party. The indemnifying party shall not be
      liable for any settlement of any proceeding effected without its written
      consent, but if settled with such consent or if there be a final judgment
      for the plaintiff, the indemnifying party agrees to indemnify the
      indemnified party from and against any loss or liability by reason of such
      settlement or judgment. An indemnifying party will not, without the prior
      written consent of the indemnified parties, settle or compromise or
      consent to the entry of any judgment with respect to any pending or
      threatened claim, action, suit or proceeding in respect of which
      indemnification or contribution may be sought hereunder (whether or not
      the indemnified parties are actual or potential parties to such claim or
      action) unless such settlement, compromise or consent includes an
      unconditional release of each indemnified party from all liability arising
      out of such claim, action, suit or proceeding.

            (f) In the event that the indemnity provided in paragraph (a), (b),
      (c) or (d) of this Section 8 is unavailable to or insufficient to hold
      harmless an indemnified party for any reason, the Company, the Selling
      Stockholder and the Underwriters agree to contribute to the aggregate
      losses, claims, damages and liabilities (including legal or other expenses
      reasonably incurred in connection with investigating or defending same)
      (collectively "Losses") to which the

33
<PAGE>

      Company, the Selling Stockholder and one or more of the Underwriters may
      be subject in such proportion as is appropriate to reflect the relative
      benefits received by the Company, by the Selling Stockholder and by the
      Underwriters from the offering of the Securities; provided, however, that
      in no case shall (i) any Underwriter (except as may be provided in any
      agreement among underwriters relating to the offering of the Securities)
      be responsible for any amount in excess of the underwriting discount or
      commission applicable to the Securities purchased by such Underwriter
      hereunder. If the allocation provided by the immediately preceding
      sentence is unavailable for any reason, the Company, the Selling
      Stockholder and the Underwriters shall contribute in such proportion as is
      appropriate to reflect not only such relative benefits but also the
      relative fault of the Company, of the Selling Stockholder and of the
      Underwriters in connection with the statements or omissions which resulted
      in such Losses as well as any other relevant equitable considerations.
      Benefits received by the Company and by the Selling Stockholder shall be
      deemed to be equal to the total net proceeds from the offering (before
      deducting expenses) received by each of them, and benefits received by the
      Underwriters shall be deemed to be equal to the total underwriting
      discounts and commissions, in each case as set forth on the cover page of
      the Prospectus. Relative fault shall be determined by reference to, among
      other things, whether any untrue or any alleged untrue statement of a
      material fact or the omission or alleged omission to state a material fact
      relates to information provided by the Company, or the Selling Stockholder
      on the one hand or the Underwriters on the other, the intent of the
      parties and their relative knowledge, access to information and
      opportunity to correct or prevent such untrue statement or omission. The
      Company, the Selling Stockholder and the Underwriters agree that it would
      not be just and equitable if contribution were determined by pro rata
      allocation or any other method of allocation which does not take account
      of the equitable considerations referred to above. Notwithstanding the
      provisions of this paragraph (f), no person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Act) shall
      be entitled to contribution from any person who was not guilty of such
      fraudulent misrepresentation. For purposes of this Section 8, each person
      who controls an Underwriter within the meaning of either the Act or the
      Exchange Act and each director, officer, employee and agent of an
      Underwriter shall have the same rights to contribution as such
      Underwriter, and each person who controls the Company within the meaning
      of either the Act or the Exchange Act, each officer of the Company who
      shall have signed the Registration Statement and each director of the
      Company shall have the same rights to contribution as the Company; and
      each person who controls the Selling Stockholder within the meaning of the
      Act or the Exchange Act, each officer of the Selling Stockholder and each
      director of the Selling Stockholder shall have the same rights to
      contribution as the Selling Stockholder, subject in each case to the
      applicable terms and conditions of this paragraph (f).

            (g) The liability of the Selling Stockholder under the Selling
      Stockholder's representations and warranties contained in Section 1 hereof
      and under the indemnity and contribution agreements contained in this
      Section 8 shall be limited to an amount equal to the initial public
      offering price of the Securities

34
<PAGE>

      sold by the Selling Stockholder to the Underwriters. The Company and the
      Selling Stockholder may agree, as among themselves and without limiting
      the rights of the Underwriters under this Agreement, as to the respective
      amounts of such liability for which they each shall be responsible.

            ARTICLE IX Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of
Securities set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not purchase
all the Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter, the Selling Stockholder or the Company. In the event
of a default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives and the Company jointly shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company, the Selling Stockholder and any nondefaulting Underwriter for
damages occasioned by its default hereunder.

            ARTICLE X Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the Nasdaq National Market or the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on the Nasdaq National Market or the New York Stock Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto filed after the date
hereof).

            ARTICLE XI Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or

35
<PAGE>

on behalf of any Underwriter, the Selling Stockholder or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.

            ARTICLE XII Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Citigroup Global Markets Inc. General
Counsel (fax no.: (212) 816-7912) with a confirming copy sent to the General
Counsel, Citigroup Global Markets Inc., at 388 Greenwich Street, New York, New
York, 10013, Attention: General Counsel; or, if sent to the Company, will be
mailed, delivered or telefaxed to (732) 761-0243 with a confirming copy sent to
it at 4 Paragon Way, Freehold, New Jersey 07728, attention of the Chief
Executive Officer; or if sent to the Selling Stockholder, will be mailed,
delivered or telefaxed to Debra K. Crane, Senior Vice President, General Counsel
and Secretary, The Ohio Casualty Insurance Company (fax no.: (513) 603-2208)
with a confirming copy sent to The Ohio Casualty Insurance Company, at 9450
Seward Road, Fairfield, Ohio 45014, attention of the General Counsel.

            ARTICLE XIII Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.

            ARTICLE XIV Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.

            ARTICLE XV Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

            ARTICLE XVI Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.

            ARTICLE XVII Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.

"Act" shall mean the Securities Act of 1933, as amended, and the rules and
         regulations of the Commission promulgated thereunder.

"Business Day" shall mean any day other than a Saturday, a Sunday or a legal
         holiday or a day on which banking institutions or trust companies
         are authorized or obligated by law to close in New York City.

"Commission" shall mean the Securities and Exchange Commission.

36
<PAGE>

"Effective Date" shall mean each date and time that the Registration Statement,
         any post-effective amendment or amendments thereto and any Rule 462(b)
         Registration Statement became or become effective.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
         the rules and regulations of the Commission promulgated thereunder.

"Execution Time" shall mean the date and time that this Agreement is executed
         and delivered by the parties hereto.

"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
         paragraph 1(a) above and any preliminary prospectus included in the
         Registration Statement at the Effective Date that omits Rule 430A
         Information.

"Prospectus" shall mean the prospectus relating to the Securities that is first
         filed pursuant to Rule 424(b) after the Execution Time or, if no filing
         pursuant to Rule 424(b) is required, shall mean the form of final
         prospectus relating to the Securities included in the Registration
         Statement at the Effective Date.

"Registration Statement" shall mean the registration statement referred to in
         paragraph 1(a) above, including exhibits and financial statements, as
         amended at the Execution Time (or, if not effective at the Execution
         Time, in the form in which it shall become effective) and, in the event
         any post-effective amendment thereto or any Rule 462(b) Registration
         Statement becomes effective prior to the Closing Date, shall also mean
         such registration statement as so amended or such Rule 462(b)
         Registration Statement, as the case may be. Such term shall include any
         Rule 430A Information deemed to be included therein at the Effective
         Date as provided by Rule 430A.

"Rule 424," "Rule 430A" and "Rule 462" refer to such rules under the Act.

"Rule 430A Information" shall mean information with respect to the Securities
         and the offering thereof permitted to be omitted from the Registration
         Statement when it becomes effective pursuant to Rule 430A.

"Rule 462(b) Registration Statement" shall mean a registration statement and
         any amendments thereto filed pursuant to Rule 462(b) relating to the
         offering covered by the registration statement referred to in Section
         1(a) hereof.

37
<PAGE>

            If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholder and the several Underwriters.

                                      Very truly yours,

                                      National Atlantic Holdings Corporation

                                      By: /s/ James V. Gorman
                                          -------------------------------------
                                           Name: James V. Gorman
                                           Title: Chief Executive Officer

                                      The Ohio Casualty Insurance Company

                                      By: /s/ Michael A. Winner
                                          -------------------------------------
                                          Name: Michael A. Winner
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

39
<PAGE>

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Citigroup Global Markets Inc.
Cochran, Caronia Securities LLC
Dowling & Partners Securities, LLC
Fox-Pitt, Kelton Inc.
Sandler O'Neill & Partners, L.P.,

     c/o Citigroup Global Markets Inc.

     By:   /s/ Scott Littlejohn
         --------------------------------
         Name: Scott Littlejohn
         Title: Managing Director

For themselves and the other
several Underwriters named in
Schedule I to the
foregoing Agreement.

40
<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
                                                                 NUMBER OF                  NUMBER OF
                                                               UNDERWRITTEN              UNDERWRITTEN
                                                             SECURITIES TO BE           SECURITIES TO BE
                                                              PURCHASED FROM             PURCHASED FROM
UNDERWRITERS                                                    THE COMPANY            SELLING STOCKHOLDER
------------                                                    -----------            -------------------
<S>                                                          <C>                       <C>
Citigroup Global Markets Inc. .......................           3,890,250                    432,250

Dowling & Partners Securities, LLC ..................             538,650                     59,850

Fox-Pitt, Kelton Inc. ...............................             538,650                     59,850

Sandler O'Neill & Partners, L.P. ....................             538,650                     59,850

Cochran, Caronia Securities LLC .....................             478,800                     53,200
                                                                ---------                    --------
                  Total..............................           5,985,000                    665,000
                                                                =========                    ========
</TABLE>

<PAGE>

                                   SCHEDULE II

<TABLE>
<CAPTION>
                                                               NUMBER OF OPTION             NUMBER OF OPTION
                                                               SECURITIES TO BE             SECURITIES TO BE
                                                                PURCHASED FROM               PURCHASED FROM
                                                                 THE COMPANY               SELLING STOCKHOLDER
                                                                 -----------               -------------------
<S>                                                            <C>                         <C>
Citigroup Global Markets Inc. .........................            583,537                       64,837

Dowling & Partners Securities, LLC ....................             80,798                        8,978

Fox-Pitt, Kelton Inc. .................................             80,797                        8,977

Sandler O'Neill & Partners, L.P. ......................             80,797                        8,977

Cochran, Caronia Securities LLC .......................             71,821                        7,981

                                                                   -------                       ------
                  Total................................            897,750                       99,750
                                                                   =======                       ======
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                            FORM OF LOCK-UP AGREEMENT

                     National Atlantic Holdings Corporation
                         Public Offering of Common Stock

                                                          _______ __, 2004

Citigroup Global Markets Inc.
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York  10013
Ladies and Gentlemen:

            This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between National
Atlantic Holdings Corporation, a New Jersey corporation (the "Company"), The
Ohio Casualty Insurance Company as selling shareholder, and you as
representative of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, no par value per share (the
"Common Stock"), of the Company.

            In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Citigroup Global Markets Inc., (a) offer, sell, contract to sell,
pledge or otherwise dispose of, (b) enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned with respect to any shares of Common Stock or
any affiliate of the undersigned, directly or indirectly or in the filing of a
registration statement with the Securities and Exchange Commission in respect
of, or (c) establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder with respect to,
any shares of capital stock of the Company or any securities convertible into,
or exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date of the Underwriting Agreement.

<PAGE>

            Notwithstanding the foregoing: (a) if the undersigned is a
partnership, the partnership may transfer shares of capital stock (or any
securities convertible into, exercisable for, or exchangeable for capital stock)
to a partner of such partnership or by operation of law; (b) if the undersigned
is an individual, he or she may transfer shares of capital stock (or any
securities convertible into, exercisable for, or exchangeable for capital stock)
by gift, will, or intestate succession; and (c) the undersigned may transfer any
shares of capital stock (or any securities convertible into, exercisable for, or
exchangeable for capital stock) to an affiliate (as such term is defined in Rule
3b-18 of the regulations under the Securities Exchange Act of 1934 ("Exchange
Act")) of the undersigned; provided, however, that in any such case it shall be
a condition to the transfer that (i) each transferee execute an agreement
stating that the transferee is receiving and holding the shares of capital stock
(or any securities convertible into, exercisable for, or exchangeable for
capital stock) subject to the provisions of this Lock-Up Agreement, and there
shall be no further transfer of such shares of capital stock (or any securities
convertible into, exercisable for, or exchangeable for capital stock) except in
accordance with this Lock-Up Agreement, and (ii) no filing by any party
(transferee or transferor) under Section 16(a) of or Regulation 13D-G under the
Exchange Act shall be required or shall be made voluntarily in connection with
such transfer or distribution.

            If for any reason the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated. This Lock-Up Agreement
shall terminate and be of no further force and effect in the event the Company
has not consummated the public offering as contemplated by this Lock-Up
Agreement on or prior to May 31, 2005.

                                   Yours very truly,

                                   _________________________________________
                                   [Name of officer, director or stockholder]

                                   Address: ____________________________
                                            ____________________________

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