Document:

Prepared and filed by St Ives Financial

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into between William F. Mitchell ("Executive") and Environmental Tectonics Corporation (the "Company"), collectively referred to as the "Parties," with an "Effective Date" of July 24, 2006.

	
     1.     Executive's Position/Duties.  During the term of this Agreement, Executive will be employed as the President and Chief Executive Officer of the Company, and shall have all of the duties and responsibilities of that position. Executive shall be considered a key employee of the Company and shall be entitled to all the Company benefits afforded to key employees. Executive agrees to dedicate all of his working time (during normal working hours other than during excused absences such as for illness or vacation), skill and attention to the business of the Company, agrees to remain loyal to the Company, and not to engage in any conduct that creates a conflict of interest to, or damages the reputation
of, the Company.

	 
	
     2.     Term of Employment.  The term of this Agreement shall be for a period of three years. Executive's employment under this Agreement will commence on the Effective Date, and will continue for a period of three years, unless terminated earlier in accordance with the provisions of this Agreement.  The Company shall, at least six months prior to each scheduled expiration of this Agreement, provide Executive with written acknowledgment of the renewal of Executive's employment with the Company for a period of three years from the end of the current term (the "Acknowledgement").  If the Company fails to provide the Acknowledgement, and such failure is not cured within ten (10) days of the
Company receiving notice by Executive of this failure, the Executive shall be entitled to terminate his employment with the Company pursuant to Section 4 and receive the benefits set forth in Section 5(a). 

	 
	
     3.     Compensation.

	 
	
                    (a)     Base Salary.  During the term of this Agreement, the Company shall provide Executive with a base salary ("Base Salary") as shall be determined by the Compensation Committee of the Board of Directors of the Company (the "Board") and as set forth on Exhibit “A” hereto; provided, however, that such Base Salary shall not be reduced unless such reduction is pursuant and proportionate to a company-wide reduction ("Salary Reduction") of all base salaries for management personnel. Base Salary shall be subject to increase (a "Salary Increase") based on Executive’s annual performance review as
conducted by the Board of Directors.  Base Salary shall be paid in accordance with the Company's normal payroll policies.  

	 
	
                    (b)     Bonuses/Distributions.  Each year during the term of this Agreement, the Executive shall be eligible to receive a bonus based on the formula and targets established under and in accordance with the Company's Chief Executive Officer Bonus Plan as set forth on Exhibit “B” hereto and as administered by the Board of Directors. Executive may receive additional bonuses at the discretion of the Board of Directors.

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                    (c)     Benefits.  Executive shall be entitled to all benefits, including, but not limited to participation in any compensation plan, health, dental and insurance program, pension plans, profit sharing, vacation, sick leave, expense accounts, and retirement benefit, all as afforded other management personnel or as determined by the Board of Directors. 

	 
	
                    (d)     Expenses.  The Company shall reimburse Executive for reasonable expenses incurred in the performance of his duties and services hereunder and in furtherance of the business of the Company, in accordance with the policies and procedures established by the Company.

	 
	
                    (e)     Automobile.  Executive shall have the use of a company automobile in connection with the performance of his duties hereunder.

	 
	
     4.     Termination of Employment.  Executive's employment with the Company may be terminated as follows:

	 
	
                    (a)     Death.  In the event of Executive's death, Executive's employment will be terminated immediately.

	 
	
                    (b)     Disability.  In the event of Executive's Disability, as defined below, Executive's employment will be terminated upon thirty (30) days written notice. "Disability" shall mean a written determination by a physician mutually agreeable to the Company and Executive (or, in the event of Executive's total physical or mental disability, Executive's legal representative) that Executive is physically or mentally unable to perform his duties as President and Chief Executive Officer under this Agreement and that such disability has continued or can reasonably be expected to continue for a period of six (6) consecutive months or for shorter periods aggregating one
hundred eighty (180) days in any 12-month period.

	 
	
                    (c)     Termination by the Company for Cause or by Executive without Good Reason.  The Company shall be entitled to terminate Executive's employment upon written notice if it has "Cause," which shall mean any of the following: (i) a documented repeated and willful failure by Executive to perform his duties, but only after the Board of Directors' written demand and only if termination is effected by action taken by a vote of (A) prior to a Change in Control (as defined below), at least a majority of the directors (not including Executive) of the Company then in office, or (B) after a Change in Control, at least 80% of the non-officer directors then
in office of the Company, (ii)  Executive is convicted of a felony or enters a plea of guilty or nolo contendere to a felony, a crime of falsehood or a crime involving fraud or moral turpitude or the actual incarceration of Executive for at least forty-five (45) consecutive days, (iii) conduct by Executive constituting moral turpitude, or (iv) conduct by Executive involving dishonesty in business dealings that are directly and materially injurious to the Company.  Executive shall also be entitled to terminate this Agreement upon thirty (30) days written notice without Good Reason (as defined herein).

	 
	
                    (d)     Without Cause.  Either the Company or Executive may terminate Executive's employment at any time without cause upon ninety (90) days written notice; provided, however, that if a Change of Control has occurred Executive may terminate his employment upon thirty (30) days written notice.

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                    (e)     Termination by Executive with Good Reason.  Executive shall be entitled to terminate his employment upon thirty (30) days written notice after the occurrence of any of the following events (each of which shall constitute "Good Reason"): 

		 	 	 	 
	
                              (i)     prior to a Change in Control:

					 
	
                                        a change in Executive's status or position, or any material diminution in his duties or responsibilities;

				 	 
	
                                        a reduction in Base Salary, other than a Salary Reduction;

				 	 
	
                                        a failure to increase Base Salary consistent with Executive’s performance review within a twenty-four (24) month period since the previous Salary Increase; provided, however, that such period shall not apply if there are no increases of base salaries on a company-wide basis for the Company’s management personnel or if there is a voluntary deferral by Executive of the last Company offered Salary Increase;

				 	 
	
                                        failure of the Company, which is not cured within ten (10) days of receiving notice by Executive of such failure, to deliver the Acknowledgment to Executive at least six months prior to any scheduled expiration of the Agreement; or

				 	 
	
                                        any purported termination of Executive's employment which is not in accordance with the terms of this Agreement; and

		 	 	 	 
	
                              (ii)     after a Change in Control:

					 
	
                                        a change in Executive's status or position, or any material diminution in his duties or responsibilities;

				 	 
	
                                        any increase in Executive's duties inconsistent with his position;

				 	 
	
                                        any reduction in Base Salary;

				 	 
	
                                        a failure to increase Base Salary consistent with Executive’s performance review within a twelve (12) month period since the most recent of either the last Salary Increase or the Executive’s most recent performance review;

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                                        a failure to continue in effect any Employee Benefit Plan (as such term is defined in the Employee Retirement Income Security Act of 1974 ("ERISA"), Section 3(3)) in which Executive participates, including (whether or not they constitute Employee Benefit Plans) incentive bonus, stock option, or other qualified or nonqualified plans of deferred compensation (x) other than as a result of the normal expiration of such a plan, or (y) unless such plan is merged or consolidated into, or replaced with, a plan with benefits which are of equal or greater value;

	 
	
                                        requiring Executive to be based anywhere other than the county where their principal office was located immediately prior to the Change in Control;

		 	 
	
                                        refusal to allow the Executive to attend to matters or engage in activities in which he was permitted to engage prior to the Change in Control;

		 	 
	
                                        failure of the Company, which is not cured within ten (10) days of receiving notice by Executive of such failure, to deliver the Acknowledgment to Executive at least six months prior to any scheduled expiration of the Agreement;

		 	 
	
                                        failure to secure the affirmation by a Successor, within three (3) business days prior to a Change in Control, of this Agreement and the continuing obligations hereunder (or where the Company does not have at least three (3) business days advance notice that a Person may become a Successor, within one (1) business day after having notice that such Person may become or has become a Successor).  "Person" has the same meaning as such term has for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended and as the same may be amended from time to time (the "1934 Act").  "Successor" means any Person that succeeds to, or has the practical ability to control (either immediately or
 with the passage
of time), the Company's business directly, by merger or consolidation, or indirectly, by purchase of the Company's voting securities or all or substantially all of its assets; or

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                                        any purported termination of Executive's employment which is not in accordance with the terms of this Agreement.

Notwithstanding anything herein to the contrary, at the election of Executive, beginning one hundred eighty-one (181) days following a Change in Control and continuing through the first anniversary of such Change in Control, Executive may terminate his employment upon thirty (30) days written notice for any reason or no reason and such termination will be treated as having occurred for Good Reason.

	
                    (f)     Change of Control.  A "Change in Control" of the Company, means the occurrence of any of the following events:

		 	 	 
		 	 	
     (i)     any Person (other than Executive or H. F. Lenfest) is or becomes the beneficial owner, directly or indirectly, of the Company's securities representing 30.0% or more of the combined voting power of the Company's then outstanding securities, other than pursuant to a transaction described in clause (iii);

		 	 	 
		 	 	     (ii)     there occurs a sale, exchange, transfer or other disposition of substantially all of the assets of the Company to another entity, except to an entity controlled directly or indirectly by the Company;

		 	 	 
		 	 	     (iii)     there occurs a merger, consolidation, share exchange, tender offer, division or other reorganization of or relating to the Company, unless

			 
	
                                        the shareholders of the Company immediately before such merger, consolidation, share exchange, division or reorganization own, directly or indirectly, immediately thereafter at least 66-2/3% of the combined voting power of the outstanding voting securities of the Surviving Company (as defined below) in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation, share exchange, division or reorganization; and

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                                        the individuals who, immediately before such merger, consolidation, share exchange, division or reorganization, are members of the Incumbent Board (as defined below) continue to constitute at least two-thirds of the board of directors of the Surviving Company; provided, however, that if the election, or nomination for election by the Company's shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such director shall, for the purposes hereof, be considered a member of the Incumbent Board; and provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest or
Proxy Contest (as
both such terms are defined below), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; and

	 
	
                                        no Person (other than Executive or H. F. Lenfest) has beneficial ownership of 30.0% or more of the combined voting power of the Surviving Company's outstanding voting securities immediately following such merger, consolidation, share exchange, tender offer, division or reorganization.  "Incumbent Board" means the Board of Directors of the Company as constituted at any relevant time. "Election Contest" means a solicitation with respect to the election or removal of directors that is subject to the provisions of Rule 14a-11 of the 1934 Act. "Proxy Contest" means the solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors;

		 	 	 
		 	 	
     (iv)     a plan of liquidation or dissolution of the Company, other than pursuant to bankruptcy or insolvency laws, is adopted; or

		 	 	 
		 	 	
     (v)     during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors cease for any reason to constitute at least a majority of the Board of Directors, unless the election, or the nomination for election by the Company's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; provided, however, that no individual shall be considered a member of the Board of Directors at the beginning of such period if such individual initially assumed office as a result of either an actual or threatened Election Contest or Proxy Contest, including
by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest.

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Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred if a Person becomes the beneficial owner, directly or indirectly, of securities representing 30.0% or more of the combined voting power of the Company's then outstanding securities solely as a result of an acquisition by the Company of its voting securities which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person; provided, however, that if a Person becomes a beneficial owner of 30.0% or more of the combined voting power of the Company's then outstanding securities by reason of share repurchases by the Company and thereafter becomes the beneficial owner, directly or indirectly, of any
additional voting securities of the Company, then a Change in Control shall be deemed to have occurred with respect to such Person under clause (i).

Notwithstanding anything contained herein to the contrary, if the Executive's employment is terminated and he reasonably demonstrates that such termination (x) was at the request of a third party who has indicated an intention of taking steps reasonably calculated to effect a Change in Control and who effects a Change in Control, or (y) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes hereof, a Change in Control shall be deemed to have occurred on the day immediately prior to the date of the termination of Executive's employment.

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     5.     Compensation and Benefits Upon Termination.

	 
	
                    (a)     If Executive's employment is terminated for Good Reason, without Cause or by reason of Disability: 

		 	 	 
		 	 	
     (i)     Base Salary and Payment Schedule. The Company shall, for a period of thirty-six (36) months from the date of termination, pay to Executive the highest Base Salary paid during the period including the year in which such termination occurs and the preceding two (2) years, in accordance with the normal payroll policies of the Company.  Executive shall also be entitled to a payment ("Vacation Payment") attributable to Base Salary for unused vacation accrued. Such Vacation Payment shall be made to Executive in a lump sum within thirty (30) days following the date of Executive's termination of employment.

		 	 	 
		 	 	
     (ii)      Bonus.  The Company shall, for a period of thirty-six (36) months from the date of termination, pay Executive an amount equal to the highest bonus payment made, if any, to Executive during the preceding two (2) years pursuant to any Company incentive bonus plan.

		 	 	 
		 	 	
     (iii)     Contribution Plans.  The Company shall, for a period of thirty-six (36) months from the date of termination, pay Executive an amount equal to the highest amounts contributed to all Company tax qualified and non-qualified contribution plans (other than Executive’s own contributions) in the year of Executive’s termination of employment or the proceeding two (2) years;

		 	 	 
		 	 	
     (iv)     Medical Benefits.  Executive will be eligible to: 

		 	 	 
		 	 	
     (v)     elect individual and dependent continuation group health and (if applicable) dental coverage, as provided under Section 4980B(f) of the Internal Revenue Code ("COBRA"), for the maximum COBRA coverage period available, subject to all conditions and limitations (including payment of premiums and cancellation of coverage upon obtaining duplicate coverage or Medicare entitlement).  If Executive's covered dependents elects COBRA coverage, then the Company shall pay the cost of the COBRA coverage the maximum COBRA coverage period available (and thereafter shall pay (or reimburse Executive) for health and dental coverage for Executive and Executive's dependent for the period from the end of the
maximum COBRA coverage period through the date which in thirty-six (36) months from the date of termination); or 

		 	 	 
		 	 	
     (vi)     receive payments from the Company in equal amounts to payments the Company would have to make pursuant to 5(a)(v) above. 

		 	 	 
		 	 	
     (vii)     Benefit Plans.  Executive shall continue to accrue additional benefits under any Company tax-qualified or non-tax qualified defined benefit plan (each a "Defined Benefit Plan") for a period of thirty-six (36) months from the date of termination based on the highest compensation paid to Executive in the year of Executive’s termination of employment or the proceeding two (2) years.  Any payments due to Executive pursuant to this Section 5(a)(vii) shall be made in accordance with the applicable Defined Benefit Plan.

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     (viii)     Offset.  If such termination is due to Disability, the Company shall have the right to offset any payments made to Executive pursuant to this Section 5(a)(vii) by any amounts paid to Executive pursuant to any Company disability plan.

		 	 	 
		 	 	
     (ix)     Disability Benefits.  If such termination is due to Disability, Executive shall be eligible to:

		 	 	 
		 	 	
     (x)     elect to continue to receive all disability benefits pursuant to any Company disability plan for the remaining term of this Agreement.  If Executive elects to continue to receive disability benefits, then the Company shall pay all costs related to Executive’s continued participation in the disability plan; or

		 	 	 
		 	 	
     (xi)     receive tax-effected payments from the Company in equal amounts to payments the Company would have to make pursuant to 5(a)(x) above.

		 	 
	
                    (b)     If Executive's employment is terminated by reason of Death: 

		 	 	 
		 	 	
     (i)     Base Salary and Payment Schedule. The Company shall for one (1) year pay to Executive's legal representative the highest Base Salary paid during the period including the year in which such termination occurs and the preceding two (2) years, in accordance with the normal payroll policies of the Company;

		 	 	 
		 	 	
     (ii)      Bonus.  The Company shall for one (1) year, pay Executive's legal representative an amount equal to the highest payment made to Executive during the preceding two (2) years pursuant to any Company incentive bonus plan.

		 	 	 
		 	 	
     (iii)     Contribution Plans.  The Company shall for one (1) year, pay Executive's legal representative an annual amount equal to the highest amounts contributed to all tax qualified and non-qualified contribution plans (other than Executive’s own contributions) in the year of Executive’s termination of employment or the proceeding two (2) years;

		 	 	 
		 	 	
     (iv)     Medical Benefits.  Executive’s covered dependants will be eligible to: 

		 	 	 
		 	 	
     (v)     elect individual and dependent continuation group health and (if applicable) dental coverage, as provided under Section 4980B(f) of the Internal Revenue Code ("COBRA"), for the maximum COBRA coverage period available, subject to all conditions and limitations (including payment of premiums and cancellation of coverage upon obtaining duplicate coverage or Medicare entitlement).  If Executive's covered dependents elects COBRA coverage, then the Company shall pay the cost of the COBRA coverage for the maximum COBRA coverage period available; or 

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     (vi)     receive payments from the Company in equal amounts to payments the Company would have to make pursuant to 5(b)(v) above. 

		 	 	 
		 	 	
     (vii)     Benefit Plans.  Executive shall continue to accrue additional benefits under any Company tax-qualified or non-tax qualified defined benefit plan (each, a "Defined Benefit Plan") for one (1) year based on the highest compensation paid to Executive in the year of Executive’s termination of employment or the proceeding two (2) years.  Any payments due to Executive's legal representative pursuant to this Section 5(b)(vii) shall be made in accordance with the applicable Defined Benefit Plan.

		 	 
	
                    (c)     If Executive's employment is terminated by Executive without Good Reason or by the Company for Cause, the Company will pay to Executive all Base Salary, at the rate then in effect, accrued through the date of Executive's termination of active employment and Executive shall also be entitled to a Vacation Payment attributable to Base Salary for unused vacation accrued. Such Vacation Payment shall be made to Executive in a lump sum within thirty (30) days following the date of Executive's termination of employment. 

		 
	
     6.     Funding of Termination Compensation and Benefits.  If this Agreement is terminated (a) by the Company without Cause or by the Executive for Good Reason and (b) a Change in Control has occurred, Executive may require that (x) all compensation and benefits payable to Executive pursuant to Section 5 shall be secured through a grantor trust, letter of credit, or similar arrangement and (y) that the present value of certain compensation (including, without limitation, Base Salary, Bonus and Vacation Payment)payments shall be paid to Executive in one lump sum payment.

	 
	
     7.     Gross-Up.  If there is a change in control of the Company (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")), the Company shall be required to pay (the "Gross-Up Payment")to Executive or on his behalf any excise taxes imposed on any payments and benefits paid to Executive pursuant to Section 5 hereof.  The Company shall also pay any additional income tax liability imposed on Executive as a result of the Gross-Up Payment.

	 
	
     8.     Offset for Severance Pay.  The Company shall have the right to offset any payments and benefits made to Executive pursuant to Section 5 by any payments made to Executive pursuant to any severance agreement or policy.

	 
	
     9.     No Mitigation.  Upon termination of Executive’s employment (i) without Cause, (ii) for Good Reason, or (iii) in any case after a Change in Control, Executive shall not be required to mitigate damages with respect to the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided under this Agreement be reduced by retirement benefits, deferred compensation or any compensation earned by Executive as a result of employment by another employer.

	 
	
     10.     D&O Insurance.  The Company shall provide Executive with commercially reasonable director and officer liability insurance at all times during the term of this Agreement (including any renewal term), and for a period of six (6) years following the expiration or termination of this Agreement.

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     11.     Confidentiality/Settlement of Existing Rights. 

	 
	
                    (a)     In order to induce Executive to enter into this Agreement, and in order to enable Executive to provide services on behalf of the Company, during the term of this Agreement, the Company will provide Executive with access to certain trade secrets and confidential or proprietary information belonging to the Company, which may include, but is not limited to, the identities, customs, and preferences of the Company's existing and prospective clients, customers or vendors; the identities and skills of the Company's employees; the Company's methods, procedures, analytical techniques, and models used in providing products and services, and in pricing or estimating the cost of
such products and services; the Company's financial data, business and marketing plans, projections and strategies; customer lists and data; tenant lists and data, vendor lists and data; training manuals, policy manuals, and quality control manuals; software programs and information systems; and other information relating to the development, marketing, and provision of the Company's products, services, and systems (i.e., "Confidential Information").  Executive acknowledges that this Confidential Information constitutes valuable, special and unique property of the Company.

	 
	
                    (b)     Executive agrees that, except as may be necessary in the ordinary course of performing his duties under this Agreement, Executive shall not, without prior express written consent of the Company (i) use such Confidential Information for Executive's own benefit or for the benefit of another; or (ii) disclose, directly or indirectly, such Confidential Information to any person, firm, corporation, partnership, association, or other entity (except for authorized personnel of the Company) at any time prior or subsequent to the termination or expiration of this Agreement.

	 
	
                    (c)     By this Agreement, the Company is providing Executive with rights that Executive did not previously have. In exchange for the foregoing and the additional terms agreed to in this Agreement, Executive agrees that all Company Proprietary and Confidential Information learned or developed by Executive during past employment with the Company and all goodwill developed with the Company's clients, customers and other business contacts by Executive during past employment with the Company is now the exclusive property of the Company, and will be used only for the benefit of the Company, whether previously so agreed or not. Executive expressly waives and releases any claim or
allegation that he should be able to use client and customer goodwill, specialized Company training, or Confidential Information, that was previously received or developed by Executive while working for the Company for the benefit of any competing person or entity.  

	 
	
     12.     Return of Company Property.  Executive acknowledges that all memoranda, notes, correspondence, databases, discs, records, reports, manuals, books, papers, letters, CD Roms, keys, passwords and access codes, client/customer/vendor/supplier profile data, contracts, orders, and lists, software programs, information and records, and other documentation (whether in draft or final form) relating to the Company's business, and any and all other documents containing Confidential Information furnished to Executive by any representative of the Company or otherwise acquired or developed by him in connection with his association with the Company (collectively, "Recipient Materials") shall at all
times be the property of the Company. Within seventy-two (72) hours of the termination of his relationship with the Company, Executive promises to return to the Company any Recipient Materials that are in his possession, custody or control, regardless of whether such Materials are located in Executive's office, automobile, or home or on Executive's business or personal computers. Executive also shall authorize and permit the Company to inspect all computer drives used or maintained by Executive during his employment or consulting at the Company and, if necessary, to permit the Company to delete any Recipient Materials or Proprietary Information contained on such drives. 

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     13.     Protective Covenants.  Executive agrees that the following covenants are reasonable and necessary agreements for the protection of the business interests covered in the fully enforceable, ancillary agreements set forth in this Agreement:

	 
	
                    (a)     No Interference with Client/Customer Relationships.  Executive agrees that, for one year after Executive's employment with the Company ceases, Executive will not induce or attempt to induce any client or customer of the Company to diminish, curtail, divert, or cancel its business relationship with the Company. This paragraph is geographically limited to a fifty (50) mile radius of Southampton, Pennsylvania. 

	 
	
                    (b)     No Unfair Competition.  Executive agrees that for one year after Executive's employment with the Company ceases, Executive will not participate in, work for, or assist a Competing Business in any capacity (as owner, employee, consultant, contractor, officer, director, lender, investor, agent, or otherwise), unless given the prior written consent of the Board to do so. This restriction is limited to a fifty (50) mile radius of Southampton, Pennsylvania.  Nothing herein will prohibit ownership of less than 5% of the publicly traded capital stock of a corporation so long as this is not a controlling interest, or ownership of mutual fund investments. 

	 
	
                    (c)     Remedies.  In the event of breach or threatened breach by Executive of any provision of Section 11, 12 or 13 hereof, the Company shall be entitled to (i) injunctive relief by temporary restraining order, temporary injunction, and/or permanent injunction; (ii) recovery of all attorneys' fees and costs incurred by the Company in obtaining such relief; and (iii) any other legal and equitable relief to which may be entitled, including, without limitation, any and all monetary damages that the Company may incur as a result of said breach or threatened breach, in each case without the necessity of posting any bond.  The Company may pursue any remedy available, including
declaratory relief, concurrently or consecutively in any order as to any breach, violation, or threatened breach or violation, and the pursuit of one such remedy at any time will not be deemed an election of remedies or waiver of the right to pursue any other remedy.

	 
	
     14.     Arbitration.  If any dispute shall arise between any of the parties hereto with reference to the interpretation of this Agreement or their rights with respect to any transaction involved, the dispute shall be settled solely and exclusively through arbitration in accordance with the rules of the American Arbitration Association; provided, however, that Company shall remain entitled to all remedies under Section 13(c).  

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     15.     Merger or Acquisition; Disposition and Assignment.  In the event the Company should consolidate, or merge into another entity, or transfer all or substantially all of its assets or operations to another Person, or divide its assets or operations among a number of entities, this Agreement shall continue in full force and effect with regard to the surviving entity and may be assigned by the Company if necessary to achieve this purpose. Executive's obligations under this Agreement are personal in nature and may not be assigned by Executive to another Person.  

	 
	
     16.     Payment of Fees and Expenses Relating to Agreement.  The Company shall reimburse Executive for all fees and expenses incurred in connection with enforcing this Agreement (including without limitation, attorneys’ fees).

	 
	
     17.     Notices.  All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed to have been delivered on the date personally delivered or on the date deposited in a receptacle maintained by the United States Postal Service for such purpose, postage prepaid, by certified mail, return receipt requested, or by express mail or overnight courier, addressed to the address indicated under the signature block for that party provided below.  Either party may designate a different address by providing written notice of a new address to the other party.  

	 
	
     18.     Severability.  If any provision contained in this Agreement is determined to be void, illegal or unenforceable by a court of competent jurisdiction, in whole or in part, then the other provisions contained herein shall remain in full force and effect as if the provision that was determined to be void, illegal, or unenforceable had not been contained herein. In making any such determination, the determining court shall deem any such provision to be modified so as to give it the maximum effect permitted by applicable law.  

	 
	
     19.     Waiver, Construction and Modification.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.  This Agreement may not be modified, altered or amended except by written agreement of all the parties hereto.  

	 
	
     20.     Governing Law and Venue.  It is the intention of the parties that the laws of the Commonwealth of Pennsylvania should govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto without regard to any contrary conflicts of laws principles.  The agreed upon venue and personal jurisdiction for the parties on any claims or disputes under this Agreement is Bucks County, Pennsylvania.  

	 
	
     21.     Representation of Executive.  Executive acknowledges that he has read and is fully familiar with the terms of this Agreement, has had a reasonable opportunity to consider this Agreement and to seek legal counsel, and after such review, Executive stipulates that the promises made by him in this Agreement are not greater than necessary for the protection of the Company's good will and other legitimate business interests and do not create undue hardship for Executive or the public. 

	 
	
     22.     Complete Agreement.  This Agreement contains the complete agreement and understanding concerning the employment arrangement between the parties and will supersede all other agreements, understandings or commitments between the parties as to such subject matter.  The parties agree that neither of them has made any representations concerning the subject matter of this Agreement except such representations as are specifically set forth herein.  The parties agree that, except as specifically contemplated by this Agreement, this Agreement supersedes any other agreement, plan or arrangement that may now exist that may otherwise apply to or include Executive regarding employment, compensation, bonus,
severance or retention benefits, that any such agreements, plans or arrangements are hereby terminated with respect to Executive and that none of the Company nor any affiliate of the Company will have any liability or obligation to Executive, his heirs, successors or beneficiaries with respect to the existence or termination of any such agreements, plans or arrangements, notwithstanding the terms of any of them.  

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     23.     Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Company, its successors, legal representatives and assigns, and upon Executive, his heirs, executors, administrators, representatives and assigns. It is specifically agreed that upon the occurrence of any of the events specified in Section 15 above, the provisions of this Agreement shall be binding upon and inure to the benefit of and be assumed by any surviving or resulting Person or any such Person to which such assets shall be transferred.  

		 
	
     24.     Captions.  The Section and other headings used in this Agreement are for the convenience of the parties only, are not substantive and shall not affect the meaning or interpretation of any provision of this Agreement.  

		 
	
     25.     Counterparts.  This Agreement may be signed in counterparts, which together shall constitute one and the same agreement.  

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     IN WITNESS WHEREOF, and intending to be legally bound, the parties agree to each of the foregoing terms.  

                         EXECUTIVE: 

                         By: /s/ William F. Mitchell

                         Name: William F. Mitchell

                         Address: c/o Environmental Tectonics Corporation

                                                                     125 Jamesway

                                                                     Southampton, PA 18966

                         THE COMPANY:

                         ENVIRONMENTAL TECTONICS CORPORATION

                         By: /s/ Duane D. Deaner

                         Name:  Duane D. Deaner

                         Title:     Chief Financial Officer

                         Address:  Environmental Tectonics Corporation

                                                      125 Jamesway

                                                       Southampton, PA 18966

Exhibit A:  Base Salary

     $225,000 per annum, payable in accordance with the Company's normal payroll policies.

Exhibit B:  Chief Executive Officer Bonus Plan

     The terms and conditions of the Company's Chief Executive Officer's Bonus Plan shall be determined by the Compensation Committee of the Company's Board of Directors.Confidential
                Treatment Requested 

              Under
                17 C.F.R. Sections 200.80(B)(4), 

              200.83
                and 200.406

            

    

    

    RENEWAL
      RIGHTS AND ASSET PURCHASE AGREEMENT

     

    By
      and Among

     

    AMTRUST
      FINANCIAL SERVICES, INC.

     

    and

     

    ALEA
      NORTH AMERICA COMPANY

    

     

    and

    

     

    ALEA
      NORTH AMERICA INSURANCE COMPANY

    

     

    Dated
      as of November 21, 2005

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    TABLE
      OF CONTENTS

    

    

      
        	
                ARTICLE
                  I

              	 	
                DEFINITIONS

              	
                1

              
	 	 	 	 
	
                1.1.

              	 	
                Definitions

              	
                1

              
	
                1.2.

              	 	
                Interpretation.

              	
                7

              
	 	 	 	 
	
                ARTICLE
                  II

              	 	
                TRANSFER
                  OF ASSETS

              	
                8

              
	 	 	 	 
	
                2.1.

              	 	
                The
                  Closing

              	
                8

              
	
                2.2.

              	 	
                The
                  Closing Transactions

              	
                8

              
	
                2.3.

              	 	
                Non-Assumption
                  of Liabilities

              	
                8

              
	
                2.4.

              	 	
                Closing
                  Deliveries.

              	
                9

              
	
                2.5.

              	 	
                Writing
                  of Covered Insurance Contracts

              	
                9

              
	
                2.6.

              	 	
                Consideration.

              	
                9

              
	
                2.7.

              	 	
                Tax
                  Allocation of Payments

              	
                9

              
	 	 	 	 
	
                ARTICLE
                  III

              	 	
                REPRESENTATIONS
                  AND WARRANTIES OF SELLER PARTIES

              	
                10

              
	 	 	 	 
	
                3.1.

              	 	
                Corporate
                  Existence and Power

              	
                10

              
	
                3.2.

              	 	
                Corporate
                  Authority

              	
                10

              
	
                3.3.

              	 	
                Non-Contravention

              	
                11

              
	
                3.4.

              	 	
                Compliance
                  with Laws

              	
                11

              
	
                3.5.

              	 	
                Liens
                  and Encumbrances on Transferred Assets

              	
                11

              
	
                3.6.

              	 	
                Litigation

              	
                11

              
	
                3.7.

              	 	
                Consents
                  and Approvals

              	
                11

              
	
                3.8.

              	 	
                Producers
                  and Producer Agreements

              	
                11

              
	
                3.9.

              	 	
                Rates,
                  Rules and Forms

              	
                12

              
	
                3.10.

              	 	
                Payment
                  of Commissions

              	
                12

              
	
                3.11.

              	 	
                Employees

              	
                12

              
	
                3.12.

              	 	
                Territorial
                  Restrictions

              	
                12

              
	
                3.13.

              	 	
                Brokers

              	
                12

              
	 	 	 	 
	
                ARTICLE
                  IV

              	 	
                REPRESENTATIONS
                  AND WARRANTIES OF PURCHASER

              	
                12

              
	 	 	 	 
	
                4.1.

              	 	
                Corporate
                  Existence and Power

              	
                12

              
	
                4.2.

              	 	
                Corporate
                  Authority

              	
                13

              
	
                4.3.

              	 	
                Non-Contravention

              	
                13

              
	
                4.4.

              	 	
                Licenses

              	
                13

              
	
                4.5.

              	 	
                Due
                  Investigation

              	
                13

              
	
                4.6.

              	 	
                Consents
                  and Approvals

              	
                14

              
	
                4.7.

              	 	
                Brokers

              	
                14

              
	 	 	 	 
	
                ARTICLE
                  V

              	 	
                INSURANCE
                  CONTRACTS AND PRODUCERS

              	
                14

              
	 	 	 	 
	
                5.1.

              	 	
                No
                  Representations On Market Reaction

              	
                14

              
	
                5.2.

              	 	
                No
                  Infringement on Producer Rights

              	
                14

              
	
                5.3.

              	 	
                Authority
                  of the Seller Parties to Nonrenew and Withdraw

              	
                15

              
	
                5.4.

              	 	
                No
                  Limitations on the Seller Parties Operations

              	
                15

              

      

       

      
        
          
          

        

        
          -
            i
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  VI

              	 	
                COVENANTS
                  OF EACH OF THE PARTIES

              	
                15

              
	 	 	 	 
	
                6.1.

              	 	
                Covenants
                  of the Seller Parties.

              	
                15

              
	
                6.2.

              	 	
                Covenants
                  of the Purchaser.

              	
                16

              
	 	 	 	 
	
                ARTICLE
                  VII

              	 	
                COVENANTS
                  OF SELLER PARTIES AND PURCHASER

              	
                17

              
	 	 	 	 
	
                7.1.

              	 	
                Governmental
                  Authority Approvals

              	
                17

              
	
                7.2.

              	 	
                Compliance
                  With Law

              	
                18

              
	
                7.3.

              	 	
                Expenses

              	
                18

              
	
                7.4.

              	 	
                Use
                  of Names.

              	
                18

              
	
                7.5.

              	 	
                Public
                  Announcements and Disclosure

              	
                18

              
	
                7.6.

              	 	
                Confidentiality

              	
                18

              
	
                7.7.

              	 	
                Further
                  Assurances

              	
                19

              
	 	 	 	 
	
                ARTICLE
                  VIII

              	 	
                EMPLOYEE
                  MATTERS

              	
                19

              
	 	 	 	 
	
                8.1.

              	 	
                Offers
                  of Employment

              	
                19

              
	
                8.2.

              	 	
                Employee
                  Benefits

              	
                20

              
	
                8.3.

              	 	
                Non-Transferred
                  Employees

              	
                20

              
	
                8.4.

              	 	
                Transferred
                  Employees Cooperation

              	
                20

              
	
                8.5.

              	 	
                No
                  Solicitation of Transferred Employees

              	
                21

              
	
                8.6.

              	 	
                No
                  Solicitation of Non-Transferred Employees

              	
                21

              
	 	 	 	 
	
                ARTICLE
                  IX

              	 	
                NON-SOLICITATION
                  OF PRODUCERS

              	
                21

              
	 	 	 	 
	
                9.1.

              	 	
                Non-Solicitation

              	
                21

              
	 	 	 	 
	
                ARTICLE
                  X

              	 	
                CONDITIONS
                  PRECEDENT TO THE OBLIGATION OF PURCHASER TO CLOSE

              	
                22

              
	 	 	 	 
	
                10.1.

              	 	
                Representations,
                  Warranties and Covenants

              	
                22

              
	
                10.2.

              	 	
                Approvals

              	
                22

              
	
                10.3.

              	 	
                Closing
                  Deliveries

              	
                22

              
	
                10.4.

              	 	
                Injunction
                  and Litigation

              	
                23

              
	
                10.5.

              	 	
                Purchaser
                  Primary Insurer

              	
                23

              
	
                10.6.

              	 	
                Release
                  of Transferred Employees From Non-Compete

              	
                23

              
	
                10.7.

              	 	
                Other
                  Documents

              	
                23

              
	 	 	 	 
	
                ARTICLE
                  XI

              	 	
                CONDITIONS
                  PRECEDENT TO THE OBLIGATION OF SELLER PARTIES TO CLOSE

              	
                23

              
	 	 	 	 
	
                11.1.

              	 	
                Representations,
                  Warranties and Covenants

              	
                23

              
	
                11.2.

              	 	
                Approvals

              	
                24

              
	
                11.3.

              	 	
                Closing
                  Deliveries

              	
                24

              
	
                11.4.

              	 	
                Payment
                  to the Seller Parties

              	
                24

              
	
                11.5.

              	 	
                Injunction
                  and Litigation

              	
                24

              
	
                11.6.

              	 	
                Purchaser
                  Primary Insurer

              	
                24

              
	
                11.7.

              	 	
                Insurer
                  Rating

              	
                24

              
	
                11.8.

              	 	
                Maintenance
                  of Rating

              	
                 

              
	
                11.9.

              	 	
                Other
                  Documents

              	
                24

              

      

       

      
        
          
          

        

        
          -
            ii
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                ARTICLE
                  XII

              	 	
                TERMINATION
                  PRIOR TO CLOSING

              	
                24

              
	 	 	 	 
	
                12.1.

              	 	
                Termination
                  of Agreement

              	
                24

              
	
                12.2.

              	 	
                Survival
                  Upon Termination

              	
                25

              
	
                12.3.

              	 	
                No
                  Interference With Renewal Rights

              	
                 

              
	 	 	 	 
	
                ARTICLE
                  XIII

              	 	
                SURVIVAL;
                  INDEMNIFICATION

              	
                26

              
	 	 	 	 
	
                13.1.

              	 	
                Survival

              	
                26

              
	
                13.2.

              	 	
                Indemnification.

              	
                26

              
	
                13.3.

              	 	
                Procedures
                  for Third Party Claims.

              	
                29

              
	
                13.4.

              	 	
                Procedures
                  for Direct Claims

              	
                30

              
	
                13.5.

              	 	
                Exclusive
                  Remedy

              	
                30

              
	
                13.6.

              	 	
                Specific
                  Performance

              	
                31

              
	 	 	 	 
	
                ARTICLE
                  XIV

              	 	
                TRANSITION
                  PERIOD

              	
                31

              
	 	 	 	 
	
                14.1.

              	 	
                Sublease.

              	
                31

              
	
                14.2.

              	 	
                Embedded
                  IP Rights

              	
                32

              
	
                14.3.

              	 	
                Temporary
                  Access to Seller Parties’ Systems

              	
                33

              
	
                14.4.

              	 	
                Disclaimer

              	
                33

              
	
                14.5.

              	 	
                Transition
                  Team

              	
                34

              
	 	 	 	 
	
                ARTICLE
                  XV

              	 	
                MISCELLANEOUS
                  PROVISIONS

              	
                34

              
	 	 	 	 
	
                15.1.

              	 	
                Entire
                  Agreement

              	
                34

              
	
                15.2.

              	 	
                Assignment;
                  Binding Effect

              	
                34

              
	
                15.3.

              	 	
                No
                  Third-Party Beneficiaries

              	
                34

              
	
                15.4.

              	 	
                Invalidity

              	
                35

              
	
                15.5.

              	 	
                Governing
                  Law

              	
                35

              
	
                15.6.

              	 	
                Jurisdiction

              	
                35

              
	
                15.7.

              	 	
                Waiver
                  of Jury Trial

              	
                35

              
	
                15.8.

              	 	
                Counterparts

              	
                36

              
	
                15.9.

              	 	
                Headings

              	
                36

              
	
                15.10.

              	 	
                Communications

              	
                36

              
	
                15.11.

              	 	
                Notices

              	
                36

              
	
                15.12.

              	 	
                Waiver
                  of Compliance

              	
                37

              

      

    

     

    
      
        
        

      

      
        -
          iii
          -

        
          

        

      

      
        
        

      

    

     

    INDEX
      OF EXHIBITS

     

    Exhibit A    —    Bordereau

     

    Exhibit
      B    —    Transferred
      Assets

     

    Exhibit
      C    —    Form
      of
      Purchaser Officer’s Certificate

     

    Exhibit
      D    —    Purchaser
      Rating Certificate

     

    Exhibit
      E    —    Sublease
      Agreement

     

    Exhibit
      F    —    Bill
      of
      Sale and General Assignment Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    INDEX
      OF SCHEDULES

     

    

      
        	
                Schedule 1.1(a)

              	
                —

              	
                Insurance
                  Contracts

              
	
                Schedule
                  1.1(b)

              	
                —

              	
                Terminated
                  Programs

              
	
                Schedule 2.5

              	
                —

              	
                
                  Purchaser
                    Producers and Agents

                

              
	
                Schedule
                  2.6(a)

              	
                —

              	
                Allocation
                  of Initial Payment

              
	
                Schedule 3.7

              	
                —

              	
                
                  Seller
                    Parties Regulatory Approvals and/or Other
                    Consents

                

              
	
                Schedule 3.8(a)

              	
                —

              	
                Producers
                  

              
	
                Schedule 3.8(b)

              	
                —

              	
                Producer
                  Agreements

              
	
                Schedule
                  3.8(c)

              	
                —

              	
                Producer
                  Statistics

              
	
                Schedule
                  3.8(d)

              	
                —

              	
                Notice
                  of Producer Termination

              
	
                Schedule 4.4

              	
                —

              	
                
                  Jurisdictions
                    Where Purchaser Is Not Licensed

                

              
	
                Schedule 4.6

              	
                —

              	
                
                  Purchaser
                    Regulatory Approvals and/or Other Consents

                

              
	
                Schedule
                  6.1(b)

              	
                —

              	
                Certain
                  Books and Records

              
	
                Schedule 8.1 

              	
                —

              	
                
                  Employee
                    Group

                

              
	
                Schedule
                  14.2

              	
                —

              	
                
                  Delivered
                    Software and Documentation

                

              
	
                Schedule
                  14.5

              	
                —

              	
                
                  Transition
                    Team

                

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    RENEWAL
      RIGHTS AND ASSET PURCHASE AGREEMENT

     

    This
      RENEWAL RIGHTS AND ASSET PURCHASE AGREEMENT (this “Agreement”),
      dated
      as of November 21, 2005 (the “Effective
      Date”),
      is
      entered into by and among Alea North America Company, a Delaware business
      corporation, and Alea North America Insurance Company, a New York property
      and
      casualty insurance company (individually and collectively, as applicable, the
      “Seller
      Parties”)
      and
AmTrust
      Financial Services, Inc., a Delaware corporation
      (the
“Purchaser”).

     

    RECITALS:

     

    WHEREAS,
      the Seller Parties desire to sell to the Purchaser, and the Purchaser desires
      to
      acquire from the Seller Parties, the right to renew and/or replace the Insurance
      Contracts; and

     

    WHEREAS,
      in connection therewith, (i) the Seller Parties desire to transfer to the
      Purchaser, and the Purchaser desires to acquire from the Seller Parties, certain
      assets of the Seller Parties, (ii) the Purchaser desires to make offers of
      employment to all the employees of the Seller Parties in the Employee Group,
      and
      (iii) the Seller Parties and the Purchaser desire to enter into certain
      other agreements with respect to the transactions contemplated hereby, in each
      case, subject to the terms, conditions and limitations set forth in this
      Agreement and the Ancillary Agreements.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises and the mutual promises
      and covenants set forth herein, and in reliance upon the representations,
      warranties, conditions and covenants contained herein, and intending to be
      legally bound hereby and thereby, the parties hereto do hereby agree as
      follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    1.1.    Definitions.
      The
      following terms, when used in this Agreement, have the meanings set forth in
      this Section 1.1.

     

    “Accessed
      Software”
has
      the
      meaning ascribed to it in Section 14.3.

     

    “Affiliate”
of
      any
      Person means another Person that directly or indirectly controls, is controlled
      by, or is under common control with, such first Person, where “control”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management policies of a Person, whether through the ownership
      of voting securities, by contract, as trustee or executor, or
      otherwise.

     

    “ANAIC”
has
      the
      meaning ascribed to it in Section 9.1

     

    “Ancillary
      Agreements”
means
      (i) the Bill of Sale and General Assignment Agreement, and (ii) the
      Sublease Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Applicable
      Law”
means
      any applicable order, law, statute, regulation, rule, pronouncement, ordinance,
      bulletin, writ, injunction, directive, judgment, decree, principle of common
      law, constitution or treaty enacted, promulgated, issued, enforced or entered
      by
      any Governmental Authority applicable to the parties hereto, or any of their
      respective businesses, properties or assets.

     

    “Available
      Systems”
has
      the
      meaning ascribed to it in Section 14.3.

     

    “Base
      Compensation”
means
      a
      Transferred Employee’s annual salary.

     

    “Bill
      of Sale and General Assignment Agreement”
means
      the Bill of Sale and General Assignment Agreement in form attached hereto as
      Exhibit
      F.

     

    “Bordereau”
means
      the form and information to be contained therein set forth in Exhibit
      A.

     

    “Business
      Day”
means
      any day other than a Saturday, Sunday or a day on which banking institutions
      in
      the State of New York are permitted or obligated by Applicable Law to be closed
      for regular banking business.

     

    “Closing”
and
      “Closing
      Date”
have
      the respective meanings set forth in Section 2.1.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended, and the regulations promulgated
      thereunder.

     

    “Covered
      Insurance Contracts”
has
      the
      meaning ascribed to it in Section 2.5.

     

    “Covered
      Premium”
means
      all Gross Written Premium billed by or on behalf of the Purchaser, any of the
      Purchaser’s Affiliates, or the Purchaser Primary Insurer, on or with respect to
      the Covered Insurance Contracts.

     

    “Damages”
has
      the
      meaning ascribed to it in Section 13.2(a).

     

    “Embedded
      IP Rights”
has
      the
      meaning ascribed to it in Section 14.2.

     

    “Employee
      Group”
has
      the
      meaning ascribed to it in Section 8.1.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and the rules
      and regulations promulgated thereunder.

     

    “Governmental
      Authority”
means
      any foreign, domestic, federal, territorial, state or local U.S. or non-U.S.
      governmental authority, quasi-governmental authority, instrumentality, court
      or
      government, self-regulatory organization, commission, tribunal or organization
      or any political or other subdivision, department, branch or representative
      of
      any of the foregoing.

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

     

    “Gross
      Written Premium”
means
      any and all amounts charged to a Policyholder or other Person on or with respect
      to a Covered Insurance Contract that are required to be reported as premium
      on
      the statutory financial statements of the Purchaser, the Purchaser Insurer
      Affiliate or the Purchaser Primary Insurer, as applicable with respect to such
      premium, in accordance with Applicable Law, exclusive of any surcharges, however
      described, that are billed on behalf of, and to the extent remitted to, any
      Governmental Authority, less any such amounts returned for cancellation of
      any
      such Covered Insurance Contract.

     

    “Indemnified
      Party”
has
      the
      meaning ascribed to it in Section 13.3(a).

     

    “Indemnifying
      Party”
has
      the
      meaning ascribed to it in Section 13.3(a).

     

    “Insurance
      Contracts”
means
      all insurance contracts, policies, certificates, binders, slips, covers or
      other
      agreements of insurance, including all supplements, riders and endorsements
      issued or written in connection therewith and extensions thereto, issued,
      renewed, or written by the Alea Alternative Risk division of Alea North America
      Insurance Company, including those identified on Schedule 1.1(a)
      (which
Schedule
      1.1(a)
      shall be
      delivered by the Seller Parties to the Purchaser on the Closing Date using
      information reasonably available to the Seller Parties prior to the Closing
      Date), that are in-force as of the Closing Date, and all renewals or
      reinstatements thereof, whether on or after the Closing Date, that are required
      by Applicable Law or the terms of the Insurance Contracts; provided,
      however,
      that
      Insurance Contracts will not include any (i) Insurance Contracts issued in
      California, North Carolina or Colorado, (ii) insurance or reinsurance contracts,
      policies, certificates, binders, slips, covers or other agreements of insurance
      or reinsurance assumed by Alea North America Insurance Company as reinsurer,
      and
      (iii) Insurance Contracts issued with respect to the terminated programs
      identified on Schedule
      1.1(b).

     

    “Insurer
      Affiliate”
as
      to
      any of the Seller Parties or the Purchaser, means an Affiliate of such Person
      that is a duly licensed, eligible or otherwise authorized insurance
      company.

     

    “Knowledge
      of the Seller Parties”
means
      the actual knowledge, after due inquiry, of the chief executive officer, chief
      financial officer, chief operating officer, president and general counsel of
      the
      Seller Parties.

     

    “Knowledge
      of the Purchaser”
means
      the actual knowledge, after due inquiry, of the chief executive officer, chief
      financial officer, chief operating officer, president and general counsel of
      the
      Purchaser.

     

    “Liability”
or
      “Liabilities”
means
      a
      liability, obligation, commitment, expense, claim or cause of action (of any
      kind or nature whatsoever, whether absolute, accrued, contingent or other,
      and
      whether known or unknown).

     

    “Lien”
shall
      mean any mortgage, pledge, hypothecation, assignment, lien (statutory or
      otherwise), preference, priority, charge or other encumbrance, charge, adverse
      claim (whether pending or, to the knowledge of the Person against whom the
      adverse claim is being asserted, threatened) or restriction of any kind
      affecting title or resulting in an encumbrance against property, real or
      personal, tangible or intangible, or a security interest of any kind, including
      any conditional sale or other title retention agreement, any right of first
      refusal, any lease in the nature thereof, and any filing of or agreement to
      give
      any financing statement under the Uniform Commercial Code (or equivalent
      statute) of any jurisdiction (other than a financing statement which is filed
      or
      given solely to protect the interest of a lessor).

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

    “Litigation”
means
      any action, cause of action (whether at law or in equity), arbitration, claim
      or
      complaint by any Person alleging potential liability, wrongdoing or misdeed
      of
      another Person, or any administrative or other similar proceeding, criminal
      prosecution or investigation by any Governmental Authority alleging potential
      liability, wrongdoing or misdeed of another Person.

     

    “Main
      Landlord”
shall
      have the meaning ascribed to it in Section 14.1(a).

     

    “Material
      Adverse Effect”
means
      a
      material adverse effect on the ability of the Purchaser to renew, or write
      new
      insurance policies with respect to, the Insurance Contracts, taken as a whole;
      provided,
      however,
      that
      the following shall be excluded from the definition of “Material Adverse Effect”
and from any determination as to whether a Material Adverse Effect has occurred
      or may occur: (i) the effects of changes affecting the economy and
      securities markets generally; (ii) the effects of changes affecting the
      insurance, reinsurance and financial services industries generally, including
      the general competitive forces in the insurance and reinsurance markets;
      (iii) any downgrade or potential downgrade of the financial strength,
      claims paying ability, insurance or other ratings of any of the Seller Parties,
      the Purchaser or any of their respective Affiliates; (iv) any changes in
      the financial condition or business plans of any of the Seller Parties, the
      Purchaser or any of their respective Affiliates; (v) any changes in laws,
      regulations, accounting or actuarial principles, or regulations or policies
      of
      general applicability; (vi) any changes in general economic, regulatory, or
      political conditions; (vii) any changes in the customer, client, vendor,
      Policyholder, or Producer relationships of the Seller Parties or their
      Affiliates as a result of or related to, the transactions contemplated by this
      Agreement; (viii) any changes resulting from actions or omissions of a
      party hereto taken with the prior written consent of the other parties with
      respect to this Agreement or the Ancillary Agreements or the transactions
      contemplated hereby or thereby, and (ix) any adverse changes resulting from
      this Agreement or the Ancillary Agreements or the transactions contemplated
      hereby or thereby or from the announcement of the transactions contemplated
      by
      this Agreement or the Ancillary Agreements or the identity of the parties hereto
      as parties to such transactions.

     

    “Non-Transferred
      Employees”
has
      the
      meaning ascribed to it in Section 8.1.

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

     

    “Offer
      of Employment”
has
      the
      meaning ascribed to it in Section 8.1.

     

    “Override
      Payments”
has
      the
      meaning ascribed to it in Section 2.6(d).

     

    “Override
      Payments Offset”
has
      the
      meaning ascribed to it in Section 2.6(e).

     

    “Permitted
      Liens”
mean
      (i) Liens securing the payment of Taxes, either not yet due and payable or
      the validity of which is being contested in good faith by appropriate
      proceedings; (ii) reservations, exceptions, encroachments, easements,
      rights-of-way, covenants, conditions, restrictions, leases and other title
      exceptions and encumbrances affecting real property which do not materially
      affect the property, or the intended use of the property, secured thereby;
      and
      (iii) Liens of carriers, warehousemen, mechanics, materialmen, and
      landlords incurred in the ordinary course of business for sums not overdue
      or
      being contested in good faith by appropriate proceedings.

     

    “Person”
means
      an individual, corporation, partnership, association, joint stock company,
      limited liability company, Governmental Authority, trust joint venture, labor
      union, estate, unincorporated organization or other entity.

     

    “Policyholders”
means
      policyholders and named insureds of the Insurance Contracts.

     

    “Producers”
means
      the agents, brokers, managing general agents, third party administrators,
      managing agents, managing general underwriters or intermediaries, whether
      appointed by any of the Seller Parties or not, through whom or which any
      Policyholder has or may have secured any Insurance Contract with any of the
      Seller Parties and which are identified on Schedule 3.8(a).

     

    “Purchaser”
has
      the
      meaning ascribed to it in the introduction to this Agreement.

     

    “Purchaser
      Brand New Policies”
has
      the
      meaning ascribed to it in Section 2.5.

     

    “Purchaser
      Primary Insurer”
means
      a
      duly licensed, eligible or authorized insurance company, reasonably acceptable
      to the Seller Parties, with which the Purchaser and/or any of its Insurer
      Affiliates may, during the Renewal Period, enter into a reinsurance relationship
      whereby the Purchaser Primary Insurer will offer, quote, solicit, issue, write
      and/or bind the Covered Insurance Contracts in the place of the Purchaser and/or
      the Purchaser’s Insurer Affiliates in all jurisdictions in which neither the
      Purchaser nor any of its Insurer Affiliates is authorized to write the Covered
      Insurance Contracts and in any other jurisdictions reasonably necessary to
      effect the transfer of the Renewal Rights to the Purchaser, as contemplated
      herein, which Covered Insurance Contracts written by the Purchaser Primary
      Insurer will be reinsured by the Purchaser and/or any of its Insurer Affiliates;
      provided,
      however,
      that
      the Purchaser Primary Insurer must in all cases have and maintain during the
      Renewal Period an A. M. Best insurer financial strength rating of at least
“A-”
or a Standard & Poor’s insurer financial strength rating of at least
“A-”.

     

    “Purchaser
      Indemnity Cap”
has
      the
      meaning ascribed to it in Section 13.2(b).

     

    
      
        
        

      

      
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    “Purchaser
      Indemnity Deductible”
has
      the
      meaning ascribed to it in Section 13.2(b).

     

    “Purchaser
      New Policies”
has
      the
      meaning ascribed to it in Section 2.5.

     

    “Purchaser
      Renewal Policies”
has
      the
      meaning ascribed to it in Section 2.5.

     

    “Renewal
      Period”
has
      the
      meaning ascribed to it in Section 2.6(d).

     

    “Renewal
      Rights”
means
      all of the Seller Parties’ existing rights to offer, quote and/or solicit the
      renewals of any of the Insurance Contracts, including the right to offer to
      cancel and rewrite any of the Insurance Contracts and to solicit replacement
      insurance coverage, and the relationships that the Seller Parties enjoy with
      each of the Producers, subject in each case to all rights of Producers and
      Policyholders and Applicable Law.

     

    “Representative”
means,
      with respect to any Person, such Person’s officers, directors, employees,
      Affiliates, agents and representatives (including any investment banker,
      financial advisor, accountant, actuary, appraiser, analyst, consultant, legal
      counsel, agent, representative or expert retained by or acting on behalf of
      such
      Person or its subsidiaries).

     

    “Seller
      Parties”
has
      the
      meaning ascribed to it in the introduction.

     

    “Seller
      Parties Indemnity Cap”
has
      the
      meaning ascribed to it in Section 13.2(a).

     

    “Seller
      Parties Indemnity Deductible”
has
      the
      meaning ascribed to it in Section 13.2(a).

     

    “Software
      License”
has
      the
      meaning ascribed to it in Section 2.4(a)(iii).

     

    “Sublease
      Agreement”
means
      the Sublease Agreement in form attached hereto as Exhibit
      E.

     

    “Sub-Leased
      Premises”
has
      the
      meaning ascribed to it in Section 14.1(b).

     

    “Taxes”
means
      all taxes, charges, duties, fees, levies, or other similar assessments or
      liabilities, including all net and gross income, gross receipts, ad valorem,
      premium, excise, real property, personal property, windfall profit, sales,
      use,
      transfer, license, withholding, employment, payroll, profit, estimated,
      severance, stamp, occupation, value added, registration, environmental, workers’
compensation, social security and franchise taxes imposed by the United States
      Internal Revenue Service or any taxing authority (whether domestic or foreign
      including, any state, county, local or foreign government or any subdivision
      or
      taxing agency thereof (including a United States possession)); and such term
      shall include any interest, fines, penalties, assessments, or additions to
      tax
      relating to, resulting from, attributable to, or incurred in connection with
      any
      such tax or any contest or dispute thereof.

     

    
      
        
        

      

      
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    “Termination
      Date”
means
      December 30, 2005.

     

    “Third
      Party Claims”
has
      the
      meaning ascribed to it in Section 13.3.

     

    “Total
      Consideration Payable”
means
      the Initial Payment plus
      all
      Override Payments less
      the
      Override Payments Offset.

     

    “Transferred
      Assets”
means
      those physical assets of the Seller Parties specifically identified on
Exhibit
      B.
      

     

    “Transferred
      Employees”
has
      the
      meaning ascribed to it in Section 8.1.

     

    “Transition
      Period”
has
      the
      meaning ascribed to it in Section 14.1(b).

     

    1.2.    Interpretation. 

     

    (a)    The
      parties hereto have participated jointly in the negotiation and drafting of
      this
      Agreement. Consequently, in the event that an ambiguity or question of intent
      or
      interpretation arises, this Agreement will be construed as if drafted jointly
      by
      the parties hereto, and no presumption or burden of proof will arise favoring
      or
      disfavoring any party by virtue of the authorship of any provision of this
      Agreement.

     

    (b)    When
      a
      reference is made in this Agreement to a section or article, such reference
      will
      be to a section or article of this Agreement unless otherwise clearly
      indicated to the contrary. Whenever the words “include”,
      “includes”
or
      “including”
are
      used in this Agreement they will be deemed to be followed by the words
“without limitation.”
The
      words “hereof,”
      “herein”
and
      “herewith”
and
      words of similar import will, unless otherwise stated, be construed to refer
      to
      this Agreement (including the schedules and exhibits) as a whole and not to
      any
      particular provision of this Agreement. The meaning assigned to each term used
      in this Agreement will be equally applicable to both the singular and the plural
      forms of such term, and words denoting any gender will include all genders.
      Where a word or phrase is defined herein, each of its other grammatical forms
      will have a corresponding meaning.

     

    (c)    The
      schedules and exhibits attached hereto are incorporated into this Agreement
      and
      will be deemed a part hereof as if set forth herein in full. In the event of
      any
      conflict between the provisions of this Agreement and any schedule or
      exhibit, the provisions of this Agreement will control. Capitalized terms used
      in the schedules have the meanings assigned to them in this Agreement. The
      section references referred to in the schedules are to sections of this
      Agreement, unless otherwise expressly indicated

     

    
      
        
        

      

      
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    ARTICLE
      II

    TRANSFER
      OF ASSETS

     

    2.1.    The
      Closing.
      The
      closing of the transactions contemplated by this Agreement (the “Closing”)
      will
      take place at the offices of Lord, Bissell & Brook, 885 Third Avenue, 26th
      Floor, New York, New York, two (2) Business Days following the satisfaction
      or
      waiver of all conditions to closing described in Article X and Article XI or
      at
      such other time and place as the parties mutually agree (the “Closing
      Date”),
      but
      in no event later than the Termination Date. The transactions contemplated
      by
      this Agreement shall be deemed to be effective as of 12:01 a.m. on the date
      thereof.

     

    2.2.    The
      Closing Transactions.
      Upon
      the terms, conditions, and limitations of this Agreement, and for the
      consideration stated herein, on the Closing Date the Seller Parties will sell,
      assign and transfer to the Purchaser, and the Purchaser will accept and acquire,
      all of the Seller Parties’ respective rights, title and interest in the Renewal
      Rights and the Transferred Assets. All sales, assignments and transfers of
      the
      Transferred Assets to the Purchaser hereunder will be evidenced by the Bill
      of
      Sale and General Assignment Agreement which will be executed and delivered
      on
      the Closing Date by the Seller Parties. The Transferred Assets shall not
      include, or otherwise be deemed to include, any other assets or properties
      of
      any of the Seller Parties, other than those physical assets of the Seller
      Parties identified on Exhibit
      B.
      On or
      before the Closing Date, in accordance with Article VIII, the Purchaser shall
      extend offers of employment to all the employees of the Seller Parties in the
      Employee Group.

     

    2.3.    Non-Assumption
      of Liabilities.
      Other
      than pursuant to the Ancillary Agreements, as applicable, neither the Purchaser
      nor any of its Affiliates will, directly or indirectly, assume any Liability
      of
      the Seller Parties or their Affiliates of any kind, character or description
      attributable to the conduct of the business of the Seller Parties or the
      ownership or use of the Transferred Assets, in each case, prior to the Closing
      Date, regardless of when discovered or reported, including, but not limited
      to,
      the following Liabilities which shall remain Liabilities of the Seller Parties
      and/or their Affiliates, to the extent such Liabilities do not arise from any
      acts, errors or omissions of the Purchaser, its Affiliates or their respective
      Representatives:

     

    (a)    any
      Liability relating to any failure or alleged failure to comply with, or any
      violation or alleged violation of, any Applicable Law, which failure or
      violation occurred or was alleged to have occurred prior to the Closing
      Date;

     

    (b)    any
      Liability relating to any breach of any contract included in the Transferred
      Assets occurring prior to the Closing Date;

     

    (c)    any
      Liability occurring prior to the Closing Date with respect to (i) any
      employee benefit plan or employee benefits maintained by the Seller Parties,
      (ii) the termination of any such employee benefits or employee benefit plan
      by the Seller Parties, (iii) payroll and employee benefits accrued by any
      employee of the Seller Parties, or (iv) the termination of employment of
      any officer or employee by the Seller Parties prior to the Closing Date
      (including, but not limited to, any such termination deemed to have occurred
      upon the consummation of the Closing);

     

    
      
        
        

      

      
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    (d)    any
      Liability arising under the express terms and conditions of the Insurance
      Contracts issued, renewed or written by the Seller Parties prior to the Closing
      Date; and

     

    (e)    any
      Liability for Taxes arising prior to the Closing Date.

     

    2.4.    Closing
      Deliveries. 

     

    (a)    On
      or
      before the Closing, the Purchaser
      will
      deliver to the Seller Parties the following:

     

    (i)    Payment
      of the Initial Payment in accordance with Section 2.6; and

     

    (ii)   any
      other
      deliveries contemplated by Article XI or the other provisions
      hereof.

     

    (b)    On
      or
      before the Closing, the Seller
      Parties
      will
      deliver to the Purchaser the following:

     

    (i)    The
      Bill
      of Sale and General Assignment Agreement, duly executed by the Seller Parties;
      

     

    (ii)   Schedule
      1.1(a);
      and

     

    (iii)        
      any
      other
      deliveries contemplated by Article X or the other provisions
      hereof.

     

    2.5.    *
      

     

    2.6.    *
      

     

    2.7.    Tax
      Allocation of Payments. To the extent permitted or required by Applicable
      Law, the payments set forth in Section 2.6 will be allocated among the
      Transferred Assets in accordance with Section 1060 of the Code and Treasury
      Regulation Section 1.1060-1T, which allocation will be prepared by the
      Seller Parties and delivered to the Purchaser within ninety (90) calendar days
      after the Closing. The Seller Parties and the Purchaser shall mutually agree
      (such agreement not to be unreasonably withheld) as to the allocation of such
      consideration among the Transferred Assets in accordance with Section 1060
      of the Code and Temp. Treas. Reg. Section 1.1060-1 (and any successors
      thereto). The Seller Parties and the Purchaser shall cooperate in the timely
      preparation of all the Seller Parties’ and the Purchaser’s Forms 8594, Asset
      Acquisition Statement, under Section 1060 of the Code, reflecting the
      Purchaser’s acquisition of the

     

    *
      Confidential Treatment Requested 

     

    
      
        
        

      

      
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    Transferred
      Assets. If the Purchaser disputes the allocation, the Purchaser and the Seller
      Parties will cooperate in good faith to resolve any such dispute. Should the
      parties fail to reach agreement within thirty (30) calendar days after the
      Seller Parties’ delivery of such allocation to the Purchaser, the determination
      of the allocation will be made by an accountant selected under the same criteria
      and procedure set forth in Section 2.6(h) above, whose decision will be in
      writing and will have the same binding effect upon the parties for all purposes
      as if such determination had been embodied in a final judgment, no longer
      subject to appeal, entered by a court of competent jurisdiction, and either
      party may petition a court having jurisdiction over the parties and the subject
      matter to reduce such determination to final judgment. The Purchaser and the
      Seller Parties will each prepare and file, with respect to the transactions
      contemplated by this Agreement, all necessary forms or reports required or
      permitted to be filed under federal, state or local Tax law in accordance with
      such allocation. The Seller Parties and the Purchaser each agree (i) to
      reflect the Transferred Assets on their respective books for Tax reporting
      purposes in accordance with the allocation, (ii) to file all Tax returns
      and determine all Taxes in accordance with and based upon the allocation, and
      (iii) not to take any position inconsistent with such allocation in any
      audit or judicial or administrative proceeding or otherwise, in each case unless
      otherwise provided by Applicable Law; provided, however, that the
      amount allocated by the Seller Parties may differ due to capitalization of
      costs
      incurred in connection with the transactions contemplated by this Agreement
      and
      the Ancillary Agreements.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES OF SELLER PARTIES

     

    The
      Seller Parties jointly and severally represent and warrant to the Purchaser
      that
      as of the Effective Date (or, if made as of a specified date, as of such
      date):

     

    3.1.    Corporate
      Existence and Power.
      Each of
      the Seller Parties (i) has been duly organized, is validly existing and is
      in good standing under the laws of its state of incorporation or domicile,
      (ii) has all corporate powers required to carry on its business as now
      conducted, (iii) has all governmental licenses, authorizations, permits,
      consents and approvals required to carry on its business as now conducted as
      it
      relates to the Insurance Contracts, and (iv) is duly qualified to do
      business as a foreign corporation and is in good standing in each jurisdiction
      where such qualification is necessary, or is duly licensed to do business and
      is
      in good standing in each jurisdiction where such licensing is necessary to
      conduct its business as it relates to the Insurance Contracts, as the case
      may
      be, except, in the case of each of clauses (ii) through (iv), as would not
      have a Material Adverse Effect. No Seller Party is in violation of any of the
      provisions of its charter or by-laws with respect to the conduct of its business
      as it relates to the Insurance Contracts.

     

    3.2.    Corporate
      Authority.
      The
      execution, delivery and performance by each of the Seller Parties of this
      Agreement and the Ancillary Agreements are within its powers and have been
      duly
      authorized by all necessary corporate action on the part of the Seller Parties.
      This Agreement constitutes, and when executed and delivered the Ancillary
      Agreements will constitute, valid and legally binding agreements, enforceable
      against each party thereto in accordance with its terms, subject to
      (i) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
      and other similar laws now or hereafter in effect relating to or affecting
      creditors’ rights generally and the rights of creditors of insurance companies
      generally, and (ii) general principles of equity (regardless of whether
      considered in a proceeding at law or in equity).

     

    
      
        
        

      

      
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    3.3.    Non-Contravention.
      The
      execution and delivery of, and performance by the Seller Parties of their
      obligations under, this Agreement and the Ancillary Agreements shall
      not:

     

    (a)    result
      in
      a breach of any provision of the articles of incorporation or by-laws of the
      Seller Parties; or

     

    (b)    result
      in
      a breach of any order, judgment or decree of any Governmental Authority to
      which
      any Seller Party is a party or by which any Seller Party is bound.

     

    3.4.    Compliance
      with Laws.
      The
      Seller Parties’ business as it relates to the Insurance Contracts has been
      conducted in all material respects in accordance with Applicable Law and there
      is no investigation, inquiry, order, decree or judgment of any Governmental
      Authority outstanding or, to the Knowledge of the Seller Parties, threatened
      against the Seller Parties which could have a Material Adverse
      Effect.

     

    3.5.    Liens
      and Encumbrances on Transferred Assets.
      The
      Seller Parties have good and marketable title to the Transferred Assets, free
      and clear of all Liens other than Permitted Liens, and at the Closing the
      Purchaser will acquire good title thereto, free and clear of all Liens other
      than Permitted Liens.

     

    3.6.    Litigation.
      Except
      for Litigation arising out of the Seller Parties’ business in the ordinary
      course of business, there are no Litigation proceedings pending or, to the
      Knowledge of the Seller Parties, threatened against the Seller Parties with
      respect to the Seller Parties’ business as it relates to the Insurance
      Contracts, except as would not reasonably be expected to have a Material Adverse
      Effect.

     

    3.7.    Consents
      and Approvals.
      Except
      as set forth in Schedule 3.7,
      the
      execution, delivery and performance by the Seller Parties of this Agreement
      and
      the Ancillary Agreements and the consummation of the transactions contemplated
      hereby and thereby in accordance with their terms do not require the Seller
      Parties to obtain any permit or any consent, approval or action of, make any
      filing with, or give any notice to, any Governmental Authority or any other
      Person.

     

    3.8.    *

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
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    3.9.    Rates,
      Rules and Forms.
      To the
      Knowledge of the Seller Parties, each of their Insurer Affiliates have filed
      all
      insurance forms and rates with the applicable regulatory authorities, as
      required by Applicable Law, and all such forms and rates have been approved
      by
      applicable regulatory authorities or have been not objected to by such
      authorities within the period provided for objection, as applicable, to enable
      them to issue the Insurance Contracts in all applicable jurisdictions of the
      United States, except where the failure to make such filings or to obtain such
      approvals or non-objection would not have a materially adverse effect on the
      relevant Insurance Contract.

     

    3.10.   Payment
      of Commissions.
      To the
      Knowledge of the Seller Parties, there are no pending material disputes with
      Producers relating to commissions payable with respect to the Insurance
      Contracts.

     

    3.11.   Employees.
      The
      Seller Parties have disclosed to the Purchaser the salaries, cost of benefits,
      and target bonuses for all of the employees in the Employee Group, as of the
      Effective Date.

     

    3.12.   Territorial
      Restrictions.
      The
      Seller Parties are not restricted by any contract with another Person from
      carrying on their business as it relates to the Insurance Contracts in any
      territory where their business as it relates to the Insurance Contracts is
      being
      carried on as of the date of this Agreement.

     

    3.13.   Brokers.
      There
      is no investment banker, non-insurance broker, finder or other intermediary
      which has been retained by or is authorized to act on behalf of the Seller
      Parties who might be entitled to any fee or commission upon consummation of
      the
      transactions contemplated by this Agreement, other than Cochran, Caronia &
Co., the fees of whom will be paid entirely by the Seller Parties.

     

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    The
      Purchaser represents and warrants to the Seller Parties that as of the Effective
      Date (or, if made as of a specified date, as of such date):

     

    4.1.    Corporate
      Existence and Power.
      The
      Purchaser (i) has been duly organized, is validly existing and is in good
      standing under the laws of its state of incorporation or domicile, (ii) has
      all corporate powers required to carry on its business as now conducted,
      (iii) has all governmental licenses, authorizations, permits, consents and
      approvals required to carry on its business as now conducted, and (iv) is
      duly qualified to do business as a foreign corporation and is in good standing
      in each jurisdiction where such qualification is necessary, or is duly licensed
      to do business and is in good standing in each jurisdiction where such licensing
      is necessary to conduct its business as now conducted, except, in the case
      of
      each of clauses (ii) through (iv), as would not have a material adverse effect
      on the ability of the Purchaser to perform any of its obligations under this
      Agreement or any Ancillary Agreement.

     

    
      
        
        

      

      
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    4.2.    Corporate
      Authority.
      The
      execution, delivery and performance by the Purchaser of this Agreement and
      the
      Ancillary Agreements are within its powers and have been duly authorized by
      all
      necessary corporate action on the part of the Purchaser. This Agreement
      constitutes, and when executed and delivered the Ancillary Agreements will
      constitute, valid and legally binding agreements, enforceable against each
      party
      thereto in accordance with its terms, subject to (i) bankruptcy,
      insolvency, reorganization, fraudulent transfer, moratorium and other similar
      laws now or hereafter in effect relating to or affecting creditors’ rights
      generally and the rights of creditors of insurance companies generally and
      (ii) general principles of equity (regardless of whether considered in a
      proceeding at law or in equity).

     

    4.3.    Non-Contravention.
      The
      execution and delivery of, and performance by the Purchaser of its obligations
      under this Agreement and the Ancillary Agreements, shall not:

     

    (a)    result
      in
      a breach of any provision of the articles of incorporation or by-laws of the
      Purchaser; or

     

    (b)    result
      in
      a breach of any order, judgment or decree of any Governmental Authority to
      which
      the Purchaser is a party or by which the Purchaser is bound.

     

    4.4.    Licenses.
      Except
      as set forth in Schedule 4.4,
      the
      Purchaser and its Insurer Affiliates have all material licenses, authorizations
      and permits necessary to enable them to write and issue the Covered Insurance
      Contracts in all jurisdictions of the United States, as contemplated by this
      Agreement, and to perform their obligations under this Agreement and the
      Ancillary Agreements. All such licenses, authorizations and permits are valid
      and in full force and effect and there is no proceeding or investigation pending
      or, to the Knowledge of the Purchaser, threatened, which would reasonably be
      expected to result in the revocation, amendment, failure to renew, limitation,
      modification, suspension or revocation of any such license, authorization or
      permit and, to the Knowledge of the Purchaser, there is no reasonable basis
      for
      the assertion of any such violation or the institution of any such proceeding
      or
      investigation.

     

    4.5.    Due
      Investigation.
      The
      Purchaser (i) has performed its own independent investigation, analysis and
      assessment of the Renewal Rights and the Transferred Assets, and that during
      the
      course of conducting such investigation, analysis and assessment, the Purchaser
      has asked such questions, examined such documents, materials, and information,
      and performed such other investigations, as it deemed appropriate in its own
      discretion, (ii) acknowledges that the Sellers Parties have made no
      representation or warranty (express or implied) as to the accuracy or
      completeness of any information (whether
      written or oral) transmitted or made available to the Purchaser
      or any of its Representatives, except those expressly set forth in this
      Agreement, (iii) acknowledges that it has not relied on the Seller Parties’
or their Representatives’ opinions or underwriting and actuarial criteria and
      analyses, and (iv) has reached its own independent judgments to enter into
      and close this Agreement and the Ancillary Agreements based upon its own
      independent judgments and underwriting and actuarial criteria and analyses.
      Nothing in the foregoing shall be deemed to operate as a waiver or release
      by
      the Purchaser of the Seller Parties from any representation, warranty, covenant
      or agreement expressly contained in this Agreement.

     

    
      
        
        

      

      
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    4.6.    Consents
      and Approvals.
      Except
      as set forth in Schedule 4.6,
      the
      execution, delivery and performance by the Purchaser of this Agreement and
      the
      Ancillary Agreements and the consummation of the transactions contemplated
      hereby and thereby in accordance with their terms do not require the Purchaser
      to obtain any permit or any consent, approval or action of, make any filing
      with, or give any notice to, any Governmental Authority or any other
      Person.

     

    4.7.    Brokers.
      There
      is no investment banker, non-insurance broker, finder or other intermediary
      which has been retained by or is authorized to act on behalf of the Purchaser
      who might be entitled to any fee or commission upon consummation of the
      transactions contemplated by this Agreement.

     

    ARTICLE
      V

    INSURANCE
      CONTRACTS AND PRODUCERS

     

    5.1.    No
      Representations On Market Reaction.
      Notwithstanding anything contained herein to the contrary, the Purchaser
      acknowledges and agrees that, except as expressly set forth in Article III
      hereof, no representation or warranty (express or implied) or covenant, or
      except as expressly set forth in Article XIII hereof, no indemnity, is made
      herein, or has been made, by any of the Seller Parties, their Affiliates, or
      their respective Representatives, that:

     

    (a)    any
      Producer, Policyholder, customer, client, or vendor relationships of the Seller
      Parties or any of their Affiliates, or any other business relationships of
      the
      Seller Parties or any of their Affiliates or other service providers, will
      or
      are likely to continue to do business with the Purchaser, its Affiliates and/or
      the Purchaser Primary Insurer in the same manner as such business has been
      conducted historically with the Seller Parties and their Affiliates, whether
      as
      a result of the transactions contemplated by this Agreement or
      otherwise;

     

    (b)    the
      general reaction in the marketplace of third parties (including Producers,
      Policyholders, customers, clients and business prospects) to the sale of the
      Renewal Rights and the Transferred Assets to the Purchaser hereunder will be
      favorable; and

     

    (c)    any
      employee in the Employee Group will become a Transferred Employee.

     

    5.2.    No
      Infringement on Producer Rights.
      Notwithstanding anything contained herein to the contrary, the Purchaser
      acknowledges and agrees that none of the Seller Parties or any of their
      Affiliates has the power or ability to require any Policyholder or Producer
      to
      renew, cancel or rewrite any Insurance Contract(s) with the Purchaser, its
      Affiliates or the Purchaser Primary Insurer upon expiration or otherwise.
      Nothing contained in this Agreement shall impair any rights that the Producers
      have to renewal rights or expirations with respect to the Insurance Contracts
      by
      Applicable Law or contract.

     

    
      
        
        

      

      
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    5.3.    Authority
      of the Seller Parties to Nonrenew and Withdraw.
      Nothing
      in this Agreement or in any Ancillary Agreement shall be deemed to prohibit
      or
      otherwise restrict the Seller Parties or any of their Affiliates from issuing
      any notice of non-renewal or cancellation required or permitted under Applicable
      Law and the terms of the Insurance Contracts with respect to any Insurance
      Contract, making any filings with Governmental Authorities with respect to
      the
      Insurance Contracts, including filings to withdraw, in whole or in part, from
      any line, type or class of business represented by the Insurance Contracts,
      or
      ceding any risk under the Insurance Contracts to any Person(s); provided,
      however,
      unless
      required by Applicable Law or any Governmental Authority, the Seller Parties
      agree that during the period from the Effective Date through the end of the
      Transition Period they will not, without the prior written consent of the
      Purchaser, effectuate a partial or complete withdrawal from any lines, types
      or
      classes of business represented by the Insurance Contracts in any jurisdiction
      in which an Insurance Contract was issued (for the avoidance of any doubt,
      such
      jurisdiction shall not include California, North Carolina or
      Colorado).

     

    5.4.    No
      Limitations on the Seller Parties Operations.
      Nothing
      in this Agreement shall limit in any way the Seller Parties’ and their
      respective Affiliates’ ability to reinsure, merge, sell, acquire, consolidate,
      restructure, or reorganize, or take any actions similar to or in furtherance
      of
      the foregoing.

     

    ARTICLE
      VI

    COVENANTS
      OF EACH OF THE PARTIES

     

    6.1.    Covenants
      of the Seller Parties. 

     

    (a)    Cooperation
      to Effect Transfer of the Renewal Rights.
      During
      the period from the Effective Date through the Closing Date, the Seller Parties
      shall:

     

    (i)    as
      reasonably requested by the Purchaser, make available key employees in the
      Employee Group for meetings and conference calls among the Seller Parties,
      the
      Purchaser and Producers to make introductions and encourage Producers to enter
      into contractual arrangements (from and after the Closing Date) with the
      Purchaser, the Purchaser’s Insurer Affiliates and/or the Purchaser Primary
      Insurer; provided,
      however,
      that
      such meetings and conference calls shall not be unreasonably disruptive to
      the
      Seller Parties’ business; and

     

    (ii)   make
      available employees in the Employee Group reasonably requested by the Purchaser,
      to assist the Purchaser, the Purchaser’s Insurer Affiliates, and the Purchaser
      Primary Insurer in preparing and making form and rate filings in all
      jurisdictions of the United States required for the Purchaser, the Purchaser
      Insurer Affiliates and/or the Purchaser Primary Insurer to issue Covered
      Insurance Contracts from and after the Closing Date, as provided herein and
      not
      unreasonably disruptive to the Seller Parties’ business.

     

    
      
        
        

      

      
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    Purchaser
      agrees to pay the actual costs incurred by Seller Parties in accordance with
      the
      foregoing.

     

    (b)    Access
      to Books and Records For Replacement of Insurance Contracts.
      In
      connection with the transfer hereunder of the Renewal Rights to the Purchaser,
      and for the purpose of identifying which of the Insurance Contracts the
      Purchaser anticipates it will be offering renewal quotes prior to or upon the
      expiration, cancellation or anniversary thereof, the Seller Parties covenant
      and
      agree, from and after the Closing and through the Renewal Period, upon
      reasonable prior notice, during regular business hours, and at the offices
      of
      the Seller Parties or their designees, to provide, to the extent permitted
      by
      Applicable Law and contractual obligations with third parties, to the Purchaser
      reasonable access to the originals or copies of all books and records relating
      to the Insurance Contracts, including the items identified on Schedule
      6.1(b),
      in each
      case to the extent relating to the Insurance Contracts; provided,
      however,
      that
      the Purchaser shall not, and will not permit any of its Affiliates or the
      Purchaser Primary Insurer or any of their respective Representatives, to use
      any
      of the items referred to in this Section 6.1(b), including any information
      relating to Policyholders, Producers, and/or the Insurance Contracts, in a
      manner that would (i) cause the Seller Parties or their Affiliates to be in
      breach of any contract with any Person or Applicable Law, and (ii) be in
      violation of any Applicable Law including any applicable state or federal
      privacy laws. Notwithstanding anything contained herein to the contrary, the
      Seller Parties are not required to, and will not, provide access to, or
      otherwise deliver, any e-mail files of the Seller Parties and/or of their
      respective Affiliates to the Purchaser and/or its Affiliates. The Seller Parties
      shall have no liability for the data provided to the Purchaser under this
      Section 6.1(b). For the avoidance of any doubt, the Purchaser shall be
      given access to the books and records relating to the Insurance Contracts,
      as
      provided herein, but all such books and records shall at all times be under
      the
      control of, and be solely owned by, the Seller Parties.

     

    6.2.    Covenants
      of the Purchaser. 

     

    (a)    Transfer
      of the Renewal Rights.
      In
      connection with the transfer hereunder of the Renewal Rights to the Purchaser,
      the Purchaser covenants and agrees, from and after the Closing Date,
      that:

     

    (i)    Subject
      to the Purchaser’s, its Insurer Affiliates’ and/or the Purchaser Primary
      Insurer’s underwriting guidelines, the Purchaser shall use commercially
      reasonable efforts to quote, write and issue, and/or cause to be quoted, written
      or issued, the Covered Insurance Contracts, as provided herein, and effect
      the
      orderly transition of the Insurance Contracts that become Covered Insurance
      Contracts to approved or authorized policy forms and rates of the Purchaser,
      the
      Purchaser’s Insurer Affiliates and/or the Purchaser Primary Insurer in
      accordance with Applicable Law and the terms of the Insurance Contracts, this
      Agreement and the Ancillary Agreements. In so quoting, writing, issuing and
      servicing the Covered Insurance Contracts, the Purchaser shall, and shall cause
      its Affiliates and the Purchaser Primary Insurer, to use commercially reasonable
      efforts to preserve and promote the present relationships with all Producers
      and
      Policyholders;

     

    
      
        
        

      

      
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    (ii)   The
      Purchaser shall use commercially reasonable efforts to possess, secure, and
      maintain, and cause its Insurer Affiliates and the Purchaser Primary Insurer
      to
      possess, secure, and maintain, in full force and effect, (x) all material
      licenses, authorizations and permits, and (y) all approved insurance forms
      and rates, necessary for the Purchaser, its Insurer Affiliates, and the
      Purchaser Primary Insurer to write, issue, renew and service the Covered
      Insurance Contracts, as contemplated herein, in each jurisdiction in which
      the
      Purchaser, its Insurer Affiliates, and the Purchaser Primary Insurer are
      required by Applicable Law to possess such license, authorization, permit,
      forms
      and rates in order to write, issue, renew and service the Covered Insurance
      Contracts, as provided herein;

     

    (iii)         
      The
      Purchaser agrees that it may not change or add any Purchaser Primary Insurer
      without the prior written approval of the Seller Parties, which approval shall
      not be unreasonably withheld. Should any Purchaser Primary Insurer no longer
      (i)
      possess, in full force and effect, all material licenses, authorizations and
      permits and/or all approved insurance forms and rates necessary for it to write,
      issue, renew and service the Covered Insurance Contracts, as contemplated
      herein, or (ii) have an A. M. Best insurer financial strength rating of at
      least
“A-” or a Standard & Poor’s insurer financial strength rating of at least
“A-”, the Purchaser shall use its commercially reasonable efforts to replace as
      expeditiously as possible the Purchaser Primary Insurer with a Purchaser Primary
      Insurer, reasonably acceptable to the Seller Parties, which has such ratings
      and
      such necessary licenses, authorizations, permits, forms and rates;
      and

     

    (iv)   The
      Purchaser, during the Renewal Period, shall use commercially reasonable efforts,
      directly or indirectly, to collect all Covered Premium in accordance with the
      collection policies and procedures of the Seller Parties existing as of the
      Closing Date or as otherwise agreed to by the parties.

     

    ARTICLE
      VII

    COVENANTS
      OF SELLER PARTIES AND PURCHASER

     

    7.1.    Governmental
      Authority Approvals.
      From
      and after the Effective Date, the Seller Parties and the Purchaser will
      cooperate and use commercially reasonable efforts to promptly give and make
      all
      notices and filings with any Governmental Authorities, or any other Person,
      required in connection with the consummation of the transactions contemplated
      by
      this Agreement and the Ancillary Agreements, including those set forth in
Schedule 3.7
      and
Schedule 4.6.
      The
      Seller Parties and the Purchaser will each furnish to the other such necessary
      information and reasonable assistance as the other may request in connection
      with the preparation of such filings or submissions to any Governmental
      Authority. The Seller Parties and the Purchaser will each keep the other
      apprised of the status of matters relating to the completion of the transactions
      contemplated by this Agreement and the Ancillary Agreements, including promptly
      furnishing the other with copies of notices or other communications received
      by
      the Seller Parties, on the one hand, and the Purchaser, on the other, as
      applicable, from any Governmental Authority with respect to the approval or
      consent required in connection with the consummation of the transactions
      contemplated by this Agreement and the Ancillary Agreements.

     

    
      
        
        

      

      
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    7.2.    Compliance
      With Law.
      Following the Closing, the Seller Parties, the Purchaser and their respective
      Affiliates will each comply with all Applicable Laws relating to their conduct
      in performing their respective obligations under this Agreement and under the
      Ancillary Agreements.

     

    7.3.    Expenses.
      Except
      as otherwise specifically provided in this Agreement or any Ancillary Agreement,
      the parties to this Agreement will bear their respective expenses incurred
      in
      connection with the preparation, execution and performance of this Agreement
      and
      any Ancillary Agreement and the consummation of the transactions contemplated
      hereby and thereby.

     

    7.4.    Use
      of
      Names. 

     

    (a)    Except
      as
      contemplated by this Agreement or any of the Ancillary Agreements, neither
      party
      to this Agreement shall have any right to use, nor shall any such party use,
      any
      corporate name or acronym of the other party hereto or any of its Affiliates
      in
      any jurisdiction, or any other name, term or identification that suggests,
      simulates or is otherwise confusing due to its similarity to the
      foregoing.

     

    (b)    The
      parties hereto acknowledge and agree that any damage caused to a party hereto
      or
      any of its Affiliates by reason of a material breach by the other party or
      any
      of its Affiliates of this Section 7.4 would cause irreparable harm that
      could not be adequately compensated for in monetary damages alone; therefore,
      each party agrees that, in addition to any other remedies, at law or otherwise,
      the non-breaching party and any of its Affiliates shall be entitled to an
      injunction issued by a court of competent jurisdiction restraining and enjoining
      any violation by the other party or any of its Affiliates of this
      Section 7.4.

     

    7.5.    Public
      Announcements and Disclosure.
      Except
      with the prior written approval of the other party, which consent shall not
      be
      unreasonably withheld, none of the Seller Parties nor the Purchaser shall,
      directly or indirectly, disclose to the public or to any third party any
      information concerning this Agreement and/or the transactions contemplated
      hereby, other than disclosures to financial, legal and other advisors and to
      Governmental Authorities or, in the reasonable opinion of legal counsel,
      otherwise required by Applicable Law.

    
       

      
        
          
          

        

        
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    7.6.    Confidentiality.
      Each
      party hereto will not disclose to any Person (other than its Affiliates and
      Representatives in furtherance of this Agreement), and will not use for any
      purpose not contemplated by this Agreement, and will use commercially reasonable
      efforts to cause its Affiliates and Representatives (the Purchaser Primary
      Insurer is hereby deemed a Representative of the Purchaser) to do the same,
      except with the prior written consent of the other party or unless
      (i) compelled to disclose by judicial or administrative process (including
      in connection with obtaining the necessary approvals of this Agreement or the
      Ancillary Agreements and the transactions contemplated hereby or thereby of
      Governmental Authorities) or by other requirements of Applicable Law, or
      (ii) disclosed in an action or proceeding brought by a party hereto in
      pursuit of its rights or in the exercise of its remedies hereunder, all
      documents and information concerning the other party or any of its Affiliates,
      including all information relating to Producers and Policyholders, furnished
      to
      it by the other party or such other party’s Representatives in connection with
      this Agreement or any Ancillary Agreement or the transactions contemplated
      hereby or thereby, except to the extent that such documents or information
      can
      be shown to have been (a) previously known by the party receiving such
      documents or information, (b) in the public domain (either prior to or
      after the furnishing of such documents or information hereunder) through no
      fault of such receiving party, or (c) later acquired by the receiving party
      from another source if the receiving party is not aware that such source is
      under an obligation or duty to another party hereto to keep such documents
      and
      information confidential; provided that following the Closing the foregoing
      restrictions will not apply to the Purchaser’s use of documents and information
      relating exclusively to the Renewal Rights or Transferred Assets furnished
      by
      the Seller Parties hereunder.

     

    7.7.    Further
      Assurances.
      The
      Seller
      Parties and the Purchaser shall use commercially reasonable efforts to take,
      or
      cause to be taken, all actions or do, or cause to be done, all things or execute
      any documents necessary, proper or advisable to consummate and make effective
      the transactions contemplated by this Agreement and the Ancillary Agreements,
      subject to their respective terms; provided,
      however,
      that any such additional documents must be reasonably satisfactory to each
      of
      the parties and not impose upon either party any material liability, risk or
      obligation not contemplated by this Agreement or the Ancillary
      Agreements.

     

    ARTICLE
      VIII

    EMPLOYEE
      MATTERS

     

    8.1.    Offers
      of Employment.
      On or
      before the Closing Date, the Purchaser shall extend an offer of employment
      to be
      effective as of the Closing Date to all employees of the Seller Parties that
      are
      identified in Schedule 8.1
      (collectively, the “Employee
      Group”).
      The
      Purchaser shall co-ordinate with the Seller Parties as to the timing of making
      such offers of employment so as not to unreasonably disrupt the Seller Parties’
business prior to the Closing Date. Each offer of employment by the Purchaser
      will be no less than the Base Compensation each such employee receives from
      the
      Seller Parties (an “Offer
      of Employment”).
      Those
      Seller Party employees who accept the Purchaser’s Offer of Employment on or
      before the Closing Date, are referred to, as of the date of such acceptance,
      as
“Transferred
      Employees.”
      Employment of Transferred Employees with the Purchaser or an Affiliate of the
      Purchaser will be effective as of the Closing Date. The employees, whether
      or
      not in the Employee Group, of the Seller Parties and/or any of their Affiliates
      who are not Transferred Employees will be referred to as “Non-Transferred
      Employees.”

     

    
      
        
        

      

      
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    8.2.    Employee
      Benefits.
      The
      Purchaser will provide, or will cause to be provided, to Transferred Employees
      employee benefits determined by the Purchaser. Without limiting the foregoing,
      the Purchaser agrees that any pre-existing condition or waiting periods in
      its
      applicable welfare plans shall be waived with respect to the Transferred
      Employees. No assets of any employee benefit plan maintained by the Seller
      Parties will be transferred to the Purchaser or any Affiliate of the Purchaser,
      and any liabilities related to or arising out of such plans will remain with
      the
      Seller Parties. The Purchaser’s qualified and non-qualified retirement savings
      plans, health and welfare benefit plans, including but not limited to vacation
      plans, will recognize the Transferred Employees’ service with the Seller Parties
      for purposes of eligibility and vesting.

     

    8.3.    Non-Transferred
      Employees.
      The
      Seller Parties will retain and be responsible for all compensation, benefit,
      severance and employment related obligations and liabilities relating to each
      Non-Transferred Employee. The Seller Parties will retain and be responsible
      for
      all compensation, benefit and employment related obligations and liabilities
      relating to each Transferred Employee in respect of any period prior to such
      Transferred Employee’s Transfer Date. The Purchaser or an Affiliate of the
      Purchaser will be solely liable for all compensation, benefit, severance, and
      employment related obligations and liabilities relating to the employment of
      each Transferred Employee by the Purchaser or such Affiliate arising after
      the
      Transfer Date.

     

    8.4.    Transferred
      Employees Cooperation.
      From
      and after the Closing Date, the Purchaser shall use commercially reasonable
      efforts to cause the Transferred Employees, including Transferred Employees
      that
      are specifically identified by the Seller Parties or that the Seller Parties,
      in
      light of the functions previously performed by such employees, reasonably
      believe may have knowledge of the specific matter(s) in question, to cooperate
      with and provide assistance to the Seller Parties and/or any of its Affiliates,
      at the expense of the Seller Parties, at times and locations as reasonably
      requested by the Seller Parties, (i) in the defense of any Litigation,
      arbitration, claim, complaint, audit, proceeding, or investigation (whether
      threatened existing, initiated or contemplated prior to, on or after the Closing
      Date) arising out of any event that occurred on or prior to the Closing Date,
      including matters involving the Seller Parties and/or any of their Affiliates
      or
      to which they are or may become a party, or are or may become otherwise bound
      or
      directly or indirectly affected or as to which the Seller Parties and/or any
      of
      their Affiliates have or may come to have a direct or indirect interest
      (including any indirect economic interest derived by virtue of contractual
      relationships), in each case which involved or could reasonably be expected
      to
      involve facts or circumstances with which any such Transferred Employees were
      involved or acquainted as a director, officer or employee or advisor of the
      Seller Parties and/or any of their Affiliates, or as to which they have or
      could
      reasonably be expected to have any knowledge and/or otherwise relating to or
      arising out of the business of the Seller Parties, (ii) in connection with
      any other transaction or matter that involved or involves or may involve facts
      or circumstances with which any such Transferred Employees were involved or
      acquainted with as a director, officer or employee or advisor of any of the
      Seller Parties and/or any of their Affiliates, or as to which such Transferred
      Employee has or could reasonably be expected to have knowledge, including any
      Tax matter relating to the business of the Seller Parties, and (iii) in
      fulfilling such other reasonable requests as may be made by the Seller Parties
      in connection with the business of the Seller Parties.

     

    
      
        
        

      

      
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    8.5.    No
      Solicitation of Transferred Employees.
      The
      Seller Parties covenant and agree that until the expiration of the Renewal
      Period, neither they nor any of their Affiliates shall, and the Seller Parties
      shall cause their respective Affiliates not to, directly or indirectly, solicit
      or hire any Transferred Employees at any time during their employment by the
      Purchaser without the written consent of the Purchaser; provided,
      however,
      the
      Seller Parties shall not be precluded from hiring any Purchaser employee who
      (i) responds to any public advertisement; (ii) contacts the Seller
      Parties on his or her own initiative regarding employment; (iii) has been
      terminated by the Purchaser or its Affiliates prior to commencement of
      employment discussions; or (iv) is presented by an employee search firm,
      provided that such firm was not directed to target employees of the
      Purchaser.

     

    8.6.    No
      Solicitation of Non-Transferred Employees.
      The
      Purchaser covenants and agrees that until the expiration of the Renewal Period,
      without the prior written consent of the Seller Parties, neither Purchaser
      nor
      any of its Affiliates shall, and the Purchaser shall cause its Affiliates not
      to, directly or indirectly, solicit or hire any Non-Transferred Employees at
      any
      time during their employment by the Seller Parties or an Affiliate of the Seller
      Parties; provided,
      however,
      neither
      the Purchaser nor its Affiliates shall be precluded from hiring any Seller
      Parties employee who (i) responds to any public advertisement; (ii) contacts
      the
      Purchaser on his or her own initiative regarding employment; (iii) has been
      terminated by the Seller Parties or its Affiliates prior to commencement of
      employment discussions; or (iv) is presented by an employee search firm,
      provided that such firm was not directed to target employees of the Seller
      Parties. 

     

    ARTICLE
      IX

    NON-SOLICITATION
      OF PRODUCERS

     

    9.1.    Non-Solicitation.
      The
      Seller Parties hereby covenant and agree that from and after the Closing Date
      and through the Renewal Period, none of the Seller Parties or their Affiliates
      shall, directly or indirectly, solicit, enter into any new business relationship
      with, or write any new insurance business through any (i) Producer, or (ii)
      agent, broker or other producer through which a Covered Insurance Contract
      was
      written and for which the Seller Parties received an Override Payment, except
      to
      the extent required by Applicable Law or a policyholder, the terms of the
      Insurance Contracts or of any existing agreement with a Producer, or as
      contemplated by this Agreement; provided,
      however,
      that
      the foregoing shall not prevent:

     

    (i)    the
      Seller Parties and/or any of their respective Affiliates from the ongoing
      administration and run-off of the Insurance Contracts; or

     

    
      
        
        

      

      
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    (ii)    the
      Seller Parties and/or any of their respective Affiliates from engaging in any
      other business as exists on or after the Closing Date, other than through the
      Producers; 

     

    provided however,
      that
      nothing in this Section 9.1 shall be applicable to any purchaser or its
      Affiliates (other than the Seller Parties and their respective Affiliates
      existing immediately prior to such purchase) of any of the assets, securities
      or
      business of the Seller Parties or any of their respective Affiliates; and
provided further,
      however,
      that
      notwithstanding anything contained herein to the contrary, upon a change in
      control of Alea North America Insurance Company (“ANAIC”)
      (as
      defined under the New York Insurance Code and regulations), (x) if the change
      in
      control of ANAIC occurs within two (2) years immediately following the Closing
      Date, this Section 9.1 shall only be applicable to ANAIC until the end of such
      two (2) year period, and (y) if the change in control of ANAIC occurs after
      such
      two (2) year period, this Section 9.1 shall no longer apply to
      ANAIC.

     

    ARTICLE
      X

    CONDITIONS
      PRECEDENT TO THE OBLIGATION OF

    PURCHASER
      TO CLOSE

     

    The
      obligations of the Purchaser under this Agreement are subject to the
      satisfaction on or prior to the Closing Date of the following conditions, any
      one or more of which may be waived by the Purchaser in writing:

     

    10.1.    Representations,
      Warranties and Covenants.
      (a) the Seller Parties shall have performed in all material respects all of
      their obligations under this Agreement required to be performed by them on
      or
      prior to the Closing Date; (b) the representations and warranties of the
      Seller Parties contained in this Agreement shall be true, complete and correct
      on the Effective Date and as of the Closing Date as if made at and as of the
      Closing Date, except that any such representations and warranties that are
      given
      as of a particular date and relate solely to a particular date or period shall
      be true and correct as of such date or period, and except where the failure
      to
      be true and correct (without regard to any materiality qualifiers or exceptions
      therein) would not reasonably be expected to be, individually or in the
      aggregate, a Material Adverse Effect; and (c) the Purchaser shall have
      received a certificate signed by an appropriate executive officer of the Seller
      Parties to the effect that the foregoing conditions have been
      satisfied.

     

    10.2.    Approvals.
      All
      filings with Governmental Authorities and other Persons required to consummate
      the transactions contemplated in this Agreement and the Ancillary Agreements
      shall have been made and all required approvals shall have been obtained and
      shall be in full force and effect and without conditions or limitations that
      are
      unacceptable to the Purchaser in the Purchaser’s reasonable judgment. All
      waiting periods under any federal or state statute or regulation shall have
      expired or been terminated.

     

    10.3.    Closing
      Deliveries.
      All of
      the closing deliveries of the Seller Parties under Section 2.4(b) shall
      have been delivered to the Purchaser.

     

    
      
        
        

      

      
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    10.4.    Injunction
      and Litigation.
      There
      shall be no effective injunction, writ, preliminary restraining order or any
      other order of any nature issued by a Governmental Authority or any pending
      Litigation that seeks to prohibit or enjoin, the consummation of the
      transactions contemplated in this Agreement or the Ancillary
      Agreements.

     

    10.5.    Purchaser
      Primary Insurer.
      The
      Seller Parties shall have indicated their acceptance of the Purchaser Primary
      Insurer presented by the Purchaser.

     

    10.6.    Release
      of Transferred Employees From Non-Compete.
      The
      Seller Parties shall have released the Transferred Employees from all
      non-compete restrictions by and between the Seller Parties or its Affiliates
      and
      each of the Transferred Employees.

     

    10.7.    Other
      Documents.
      The
      Seller Parties shall have delivered to the Purchaser (a) a copy of the
      resolutions (in form and substance reasonably satisfactory to the Purchaser)
      duly adopted by the board of directors of each of the Seller Parties authorizing
      the execution, delivery and performance of this Agreement or the Ancillary
      Agreements by the Seller Parties, certified (in form and substance reasonably
      satisfactory to the Purchaser) by the Secretary or an Assistant Secretary of
      the
      Seller Parties; (b) certificates (in form and substance reasonably
      satisfactory to the Purchaser) of the Secretary or an Assistant Secretary of
      the
      Seller Parties as to the incumbency and signatures of the officers of the Seller
      Parties executing this Agreement and the Ancillary Agreements, and (c) such
      other documents, certificates or records as the Purchaser or its counsel may
      reasonably request.

     

    ARTICLE
      XI

     

    CONDITIONS
      PRECEDENT TO THE OBLIGATION OF

    SELLER
      PARTIES TO CLOSE

     

    The
      obligations of the Seller Parties under this Agreement are subject to the
      satisfaction on or prior to the Closing Date of the following conditions, any
      one or more of which may be waived by the Seller Parties in
      writing:

     

    11.1.    Representations,
      Warranties and Covenants.
      (a) The Purchaser shall have performed in all material respects all of its
      obligations under this Agreement required to be performed by it on or prior
      to
      the Closing Date; (b) the representations and warranties of the Purchaser
      contained in this Agreement shall be true, complete and correct on the Effective
      Date and as of the Closing Date as if made at and as of the Closing Date, except
      that any such representations and warranties that are given as of a particular
      date and relate solely to a particular date or period shall be true and correct
      as of such date or period, and except where the failure to be true and correct
      (without regard to any materiality qualifiers or exceptions therein) would
      not
      reasonably be expected to have, individually or in the aggregate, a material
      adverse effect on the ability of the Purchaser to perform any of its obligations
      under this Agreement or the Ancillary Agreements or to consummate the
      transactions contemplated hereby or thereby; and (c) the Seller Parties
      shall have received a certificate signed by an appropriate executive officer
      of
      the Purchaser to the effect that the foregoing conditions have been
      satisfied.

     

    
      
        
        

      

      
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    11.2.    Approvals.
      All
      filings with Governmental Authorities and other Persons required to consummate
      the transactions contemplated in this Agreement and the Ancillary Agreements
      shall have been made and all required approvals shall have been obtained and
      shall be in full force and effect and without conditions or limitations that
      are
      unacceptable to the Seller Parties in the Seller Parties’ reasonable judgment.
      All waiting periods under any federal or state statute or regulation shall
      have
      expired or been terminated.

     

    11.3.    Closing
      Deliveries.
      All of
      the closing deliveries of the Purchaser under Section 2.4(a) shall have
      been delivered to the Seller Parties.

     

    11.4.    Payment
      to the Seller Parties.
      The
      Purchaser shall have paid the Seller Parties the Initial Payment in accordance
      with Section 2.6.

     

    11.5.    Injunction
      and Litigation.
      There
      shall be no effective injunction, writ, preliminary restraining order or any
      other order of any nature issued by a Governmental Authority or any pending
      Litigation that seeks to prohibit or enjoin, the consummation of the
      transactions contemplated in this Agreement or the Related
      Agreements.

     

    11.6.    Purchaser
      Primary Insurer.
      The
      Purchaser shall have presented a Purchaser Primary Insurer, reasonably
      acceptable to the Seller Parties.

     

    11.7.    Insurer
      Rating.
      Purchaser, its Insurer Affiliates and the Purchaser Primary Insurer shall have
      an A. M. Best insurer financial strength rating of at least “A-” or a Standard
& Poor’s insurer financial strength rating of at least “A-”. 

     

    11.8.    *

     

    11.9.    Other
      Documents.
      The
      Purchaser shall have delivered to the Seller Parties: (a) a copy of the
      resolution (in form and substance reasonably satisfactory to the Seller Parties)
      duly adopted by the board of directors of the Purchaser authorizing the
      execution, delivery and performance of this Agreement and the Ancillary
      Agreements by the Purchaser, certified (in form and substance reasonably
      satisfactory to the Seller Parties) by the Secretary or an Assistant Secretary
      of the Purchaser; (b) certificates (in form and substance reasonably
      satisfactory to the Seller Parties) of the Secretary or an Assistant Secretary
      of the Purchaser as to the incumbency and signatures of the officers of the
      Purchaser executing this Agreement and the Ancillary Agreements, and
      (c) such other documents, certificates or records as the Seller Parties or
      their counsel may reasonably request.

     

    ARTICLE
      XII

    TERMINATION
      PRIOR TO CLOSING

     

    12.1.    Termination
      of Agreement.
      This
      Agreement may be terminated at any time prior to the Closing as
      follows:

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
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    (a)    by
      the
      Seller Parties or the Purchaser, by written notice to the other party, if there
      shall be any order, writ, injunction or decree of any Governmental Authority
      binding on the Seller Parties or the Purchaser which prohibits or restrains
      the
      Seller Parties or the Purchaser from consummating the transactions contemplated
      in this Agreement or the Ancillary Agreements; provided,
      however,
      that
      the Seller Parties and the Purchaser, as the case may be, shall have used
      commercially reasonable efforts to have any such order, writ, injunction or
      decree lifted and the order, writ, injunction or decree is not lifted by the
      Termination Date;

     

    (b)    by
      the
      Seller Parties or the Purchaser, by written notice to the other party, if the
      Closing has not been consummated on or prior to the Termination Date, unless
      the
      absence of such occurrence is or will be due to the failure of the party seeking
      to terminate this Agreement to materially perform each of its obligations under
      this Agreement required to be performed by it at or prior to the
      Closing;

     

    (c)    by
      the
      Purchaser, by written notice to the Seller Parties, if a breach of any
      representation, warranty, covenant or agreement on the part of the Seller
      Parties set forth in this Agreement shall have occurred which would cause any
      of
      the conditions set forth in Article X not to be satisfied, and such breach
      is
      incapable of being cured or, if capable of being cured, shall not have been
      cured within thirty (30) calendar days following receipt by the Seller Parties
      of notice of such breach from the Purchaser;

     

    (d)    by
      the
      Seller Parties, by written notice to the Purchaser, if a breach of any
      representation, warranty, covenant or agreement on the part of the Purchaser
      set
      forth in this Agreement shall have occurred which would cause any of the
      conditions set forth in Article XI not to be satisfied, and such breach is
      incapable of being cured or, if capable of being cured, shall not have been
      cured within thirty (30) calendar days following receipt by the Purchaser of
      notice of such breach from the Seller Parties; or

     

    (e)    at
      any
      time prior to the Closing by mutual written consent of the Seller Parties and
      the Purchaser.

     

    12.2.    Survival
      Upon Termination.
      If this
      Agreement is terminated pursuant to Section 12.1 hereof, this Agreement
      will become null and void and of no force and effect (other than with respect
      to
      Section 7.6 and Section 12.3 which shall survive any termination of this
      Agreement), provided that, in the event of such a termination because of any
      breach, the breaching party will be liable to the other party for all actual
      damages (determined and calculated on a direct, dollar-for-dollar basis) arising
      directly from such breach. In no event will any party be entitled to
      consequential, indirect, punitive or treble damages, including damages for
      lost
      profits, following a termination of this Agreement pursuant to Section 12.1
      hereof.

     

    12.3.    *

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
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    ARTICLE
      XIII

    SURVIVAL;
      INDEMNIFICATION

     

    13.1.    Survival.
      All
      representations and warranties made by the Seller Parties and the Purchaser
      in
      Articles III and IV of this Agreement, respectively, and in any document,
      certificate, schedule or instrument delivered or executed in connection
      herewith shall survive for a period of eighteen (18) months after the Closing
      Date, whereupon they shall expire, and all claims for breach of said
      representations and warranties will be deemed waived unless the non-breaching
      party notifies the breaching party of the matters constituting the breach prior
      to the expiration of said eighteen (18) month period. All covenants,
      undertakings and agreements contained in this Agreement or any document,
      certificate, schedule or instrument delivered or executed in connection
      herewith to be performed or complied with after the Closing Date shall survive
      for the period expressly stated in this Agreement for such covenant, undertaking
      or agreement or, if none, the period of the applicable statute of
      limitations.

     

    13.2.    Indemnification. 

     

    (a)    Subject
      to Section 13.1, the Seller Parties shall jointly and severally, indemnify
      the Purchaser and its Affiliates, and its and their respective shareholders,
      subsidiaries, officers, directors, employees, successors and permitted assigns,
      against and agree to hold each of them harmless from any and all damage, loss,
      liability and expense (including reasonable attorneys’ fees and reasonable
      expenses of investigation in connection with any action, suit or proceeding)
      (collectively, “Damages”),
      incurred or suffered by the Purchaser or any of its Affiliates, arising out
      of:

     

    (i)    any
      breach of any representation or warranty, or any breach, nonfulfillment or
      default in the performance of any covenant or agreement, made by the Seller
      Parties in this Agreement; 

     

    (ii)   any
      claim
      by any present or former employee of a Seller Party or an Affiliate thereof,
      including the Transferred Employees, which arises under federal, state or local
      statute (including Title VII of the Civil Rights Act of 1964, the Civil Rights
      Act of 1991, the Age Discrimination in Employment Act of 1990, the Equal Pay
      Act, the Americans with Disabilities Act of 1990, ERISA and all other statutes
      regulating the terms and conditions of employment), regulation or ordinance,
      under the common law or in equity (including any claims for wrongful discharge
      or otherwise), or under any employee benefit plan or program of the Seller
      Parties or any of their respective Affiliates, or under any policy, agreement,
      understanding or promise, written or oral, formal or informal, between a Seller
      Party or an Affiliate thereof and such present or former employee, which, in
      all
      cases, arose solely out of any action, event or omission that occurred (or,
      in
      the case of omissions, failed to occur) prior to the Closing;

     

    (iii)   the
      operation of the business of the Seller Parties by the Seller Parties or their
      respective Affiliates prior to the Closing; and

     

    
      
        
        

      

      
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    (iv)   the
      enforcement of their rights under this Section 13.2(a).

     

    Notwithstanding
      the foregoing, the Seller Parties shall not be liable under the foregoing
      clauses (i), (ii) or (iii) of this Section 13.2(a) unless the total
      aggregate amount of Damages with respect to all such claims or matters relating
      to said clauses referred to in this Section 13.2(a) exceeds $100,000, and,
      in such case, only to the extent of such excess (the “Seller
      Parties Indemnity Deductible”).
      The
      maximum amount of the Seller Parties’ collective and aggregate liability under
      the foregoing clauses (i), (ii), (iii), and (iv) of this Section 13.2(a)
      shall in no event exceed the Total Consideration Payable (the “Seller
      Parties Indemnity Cap”).
      Notwithstanding the foregoing, if the Seller Parties’ liability under clauses
      (i), (ii), (iii), and (iv) of this Section 13.2(a) exceeds the aggregate
      payments received by the Seller Parties pursuant to Section 2.6 at the time
      the indemnification claim is payable (the difference between the undisputed
      indemnification obligation and the aggregate payments received by the Seller
      Parties being the “Excess
      Amount”),
      then
      the Seller Parties shall only have to pay at such time an indemnification amount
      up to the aggregate payments received by the Seller Parties pursuant to
      Section 2.6 and the Purchaser shall be solely and exclusively entitled to
      prospectively offset amounts due the Seller Parties pursuant to Sections 2.6,
      if
      any, against the Excess Amount.

     

    (b)    Subject
      to Section 13.1, the Purchaser shall indemnify the Seller Parties and their
      Affiliates, and their respective shareholders, subsidiaries, officers,
      directors, employees, successors and permitted assigns, against and agrees
      to
      hold each of them harmless from any and all Damages, incurred or suffered by
      the
      Seller Parties or any of their respective Affiliates, arising out of:

     

    (i)    any
      breach of any representation, warranty or certification, or any breach,
      nonfulfillment or default in the performance of any covenant or agreement,
      made
      by the Purchaser in this Agreement;

     

    (ii)    any
      Liability under or relating to any Covered Insurance Contract;

     

    (iii)    any
      action (or failure to act) by the Purchaser or its Affiliates in violation
      of
      Applicable Law with respect to the hiring or terms of employment of any person
      who is in the Employee Group;

     

    (iv)    any
      claim
      by any person in the Employee Group, including Transferred Employees which
      arises under federal, state or local statute (including Title VII of the Civil
      Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in
      Employment Act of 1990, the Equal Pay Act, the Americans with Disabilities
      Act
      of 1990, ERISA and all other statutes regulating the terms and conditions of
      employment), regulation or ordinance, under the common law or in equity
      (including any claims for wrongful discharge or otherwise), or under any
      employee benefit plan or program of the Purchaser or any Affiliate of the
      Purchaser, or under any policy, agreement, understanding or promise, written
      or
      oral, formal or informal, between the Purchaser or an Affiliate thereof and
      such
      Transferred Employee, which, in all cases, arose out of any action, event or
      omission that occurred (or, in the case of omissions, failed to occur) following
      the Closing, or the failure of the Purchaser or any Affiliate of the Purchaser
      to offer employment to such person in accordance with Section 8.1;

     

    
      
        
        

      

      
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    (v)    any
      act,
      error or omission of the Purchaser, any Purchaser Insurer Affiliate or the
      Purchaser Primary Insurer, or any of their respective Affiliates or
      Representatives, relating to, or arising under, this Agreement or any of the
      Covered Insurance Contracts; and 

     

    (vi)    the
      enforcement of its rights under this Section 13.2(b).

     

    Notwithstanding
      the foregoing, the Purchaser shall not be liable under the foregoing clauses
      (i)
      (ii), (iii), (iv) or (v) of this Section 13.2(b) for any breach of a
      representation or warranty unless the total aggregate amount of Damages with
      respect to all breaches of representations and warranties referred to in this
      Section 13.2(b) exceeds $100,000, and, in such case, only to the extent of
      such excess (the “Purchaser
      Indemnity Deductible”).
      The
      maximum amount of the Purchaser’s collective and aggregate liability under the
      foregoing clauses (i), (ii), (iii), (iv), (v), and (vi) of this
      Section 13.2(b) shall in no event exceed the total aggregate payments
      received by, plus
      any
      payments otherwise due and payable to, the Seller Parties pursuant to
      Section 2.6 (the “Purchaser
      Indemnity Cap”).
      Notwithstanding the foregoing, should any claim, or portion thereof, for Damages
      made by the Seller Parties hereunder remain unpaid as a result of the
      immediately preceding sentence, such unpaid portion of the claim may
      nevertheless be resubmitted to the Purchaser at any time, notwithstanding
      Section 13.1, for payment upon receipt by the Seller Parties of additional
      payments pursuant to Section 2.6 or at any time such additional payments
      pursuant to Section 2.6 are past due and payable to the Seller Parties, and
      the
      Purchaser shall pay such claim upon demand.

     

    (c)    For
      the
      avoidance of doubt and notwithstanding anything contained herein to the
      contrary, the Seller Parties Indemnity Deductible, the Seller Parties Indemnity
      Cap, the Purchaser Indemnity Deductible, and the Purchaser Indemnity Cap shall
      not apply to any indemnification payments made for Damages under the terms
      of
      any of the Ancillary Agreements, should they contain any indemnification
      obligations between the parties thereto, it being the intention and agreement
      of
      the parties that all indemnification claims with respect to, or arising under,
      the Ancillary Agreements shall be governed solely and exclusively by the terms
      of the Ancillary Agreements, to the extent applicable.

     

    (d)    All
      indemnification payments payable hereunder shall be reduced by the amount of
      insurance proceeds received by, or any Tax benefits inuring to the benefit
      of,
      the Indemnified Party (as defined below) as a result of the loss for which
      the
      Indemnified Party is seeking reimbursement.

     

    (e)    The
      parties hereto shall make mutually available to each other all relevant
      information in their possession relating to any Damages claimed hereunder
      (except to the extent that such action would result in loss of attorney-client
      privilege as to any material matter) and shall cooperate with each other in
      the
      defense thereof.

     

    
      
        
        

      

      
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    13.3.    Procedures
      for Third Party Claims.

     

    (a)    The
      party
      seeking indemnification under Section 13.2 (the “Indemnified
      Party”)
      agrees
      to give prompt notice (in accordance with Section 14.11) to the party
      against whom indemnity is sought (the “Indemnifying
      Party”)
      of the
      assertion of any third party claim, or the commencement of any suit, action
      or
      proceeding in respect of which indemnity may be sought under Section 13.2
      (the “Third
      Party Claims”).
      Such
      notice referred to in the preceding sentence shall state the relevant facts
      and
      include therewith relevant documents and a statement in reasonable detail as
      to
      the basis for the indemnification sought. The failure by any Indemnified Party
      so to notify the Indemnifying Party shall not relieve any Indemnifying Party
      from any Liability which it may have to such Indemnified Party with respect
      to
      any claim made pursuant to this Section 13.3, except to the extent such
      failure shall actually prejudice an Indemnifying Party. In the event of the
      assertion of any claim or the commencement of any suit, action or proceeding
      in
      respect of which indemnity would be sought by the Indemnified Party but for
      the
      fact that the notice of such claim, suit, action or proceeding was sent to
      the
      Indemnifying Party, the Indemnifying Party shall give prompt notice to the
      Indemnified Party of such claim, suit, action or proceeding.

     

    (b)    Upon
      receipt of notice from the Indemnified Party pursuant to Section 13.3(a),
      the Indemnifying Party will have the right to, subject to the provisions of
      Section 13.3, assume the defense and control of such Third Party Claims. In
      the event the Indemnifying Party assumes the defense of a Third Party Claim,
      the
      Indemnified Party shall have the right but not the obligation to participate
      in
      the defense of such Third Party Claim with its own counsel and at its own
      expense (provided that the Indemnifying Party shall pay the reasonable
      attorneys’ fees of the Indemnified Party if (i) the employment of separate
      counsel shall have been authorized in writing by such Indemnifying Party in
      connection with the defense of such Third Party Claim, (ii) the
      Indemnifying Party shall not have employed counsel reasonably satisfactory
      to
      the Indemnified Party to defend such Third Party Claim, (iii) the
      Indemnified Party shall have reasonably concluded, upon advice of the
      Indemnified Party’s counsel, that there may be material defenses available to
      such Indemnified Party that are different from or additional to those available
      to the Indemnifying Party, (iv) the Indemnifying Party’s counsel shall have
      advised the Indemnifying Party in writing, with a copy delivered to the
      Indemnified Party, that there is a conflict of interest that could make it
      inappropriate under applicable standards of professional conduct to have common
      counsel, or (v) such Third Party Claim shall seek injunctive or equitable
      relief that if granted would materially interfere with the conduct of the
      business of the Indemnified Party) and the Indemnifying Party will cooperate
      with the Indemnified Party. Any election by an Indemnifying Party not to assume
      the defense of a Third Party Claim must be received by the Indemnified Party
      reasonably promptly following its receipt of the Indemnified Party’s notice
      delivered pursuant to Section 13.3(a). If the Indemnifying Party elects to
      assume the defense of a Third Party Claim, the Indemnifying Party shall select
      counsel reasonably acceptable to the Indemnified Party; shall take all steps
      necessary in the defense or settlement of such Third Party Claim; and shall
      at
      all times diligently and promptly pursue the resolution of such Third Party
      Claim. The Indemnified Party shall, and shall cause each of its Affiliates
      and
      Representatives to, cooperate fully with the Indemnifying Party in the defense
      of any Third Party Claim defended by the Indemnifying Party.

     

    
      
        
        

      

      
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    (c)    The
      Indemnifying Party shall be authorized to consent to a settlement of, or the
      entry of any judgment arising from, any Third Party Claim as to which the
      Indemnifying Party has assumed the defense in accordance with the terms of
      Section 13.3, without the consent of any Indemnified Party, but only to the
      extent that such settlement or entry of judgment (i) provides solely for
      the payment of money by the Indemnifying Party or imposes an obligation of
      confidentiality, and (ii) provides a complete release of any Indemnified
      Party potentially affected by such Third Party Claim from all matters that
      were
      or could have been asserted in connection with such claims. Except as provided
      in the foregoing sentence, settlement or consent to entry of judgment shall
      require the prior approval of the Indemnified Party, such approval not to be
      unreasonably withheld, delayed or conditioned.

     

    13.4.    Procedures
      for Direct Claims.
      In the
      event any Indemnified Party shall have a claim for indemnity against any
      Indemnifying Party that does not involve a Third Party Claim, the Indemnified
      Party shall deliver written notice of such claim to the Indemnifying Party.
      Such
      notice referred to in the preceding sentence shall state the relevant facts
      and
      include therewith relevant documents and a statement in reasonable detail as
      to
      the basis for the indemnification sought. The failure by any Indemnified Party
      so to notify the Indemnifying Party shall not relieve the Indemnifying Party
      from any liability that it may have to such Indemnified Party with respect
      to
      any claim made pursuant to Section 13.2, it being understood that notices
      for claims in respect of a breach of a representation or warranty must be
      delivered prior to the expiration of the survival period for such representation
      or warranty.

     

    13.5.    Exclusive
      Remedy.
      The
      parties hereto expressly acknowledge and agree that (i) except as otherwise
      expressly provided in this Agreement, the provisions of this Article XIII shall
      be the sole and exclusive remedy for Damages caused as a result of any breach
      of
      any representation or warranty, or any breach, nonfulfillment or default in
      the
      performance of any covenant or agreement, contained in this Agreement, other
      than claims based on fraud, and the parties shall not be entitled to a
      rescission of this Agreement or any Ancillary Agreement or to any further
      indemnification or other rights or claims, all of which the parties hereby
      waive, and (ii) except as otherwise expressly provided in this Agreement,
      no Indemnifying Party shall be liable under this Agreement for consequential,
      indirect, punitive or treble Damages in connection with any action, suit or
      proceeding brought by the Purchaser against one or more Seller Parties or by
      one
      or more Seller Parties against the Purchaser, or for any Damages based on either
      the reduced current or future profitability or earnings of the Renewal Rights
      or
      Damages based on a multiple of such profitability, earnings or other factor,
      or
      reduction therein (it being understood that all Damages will for purposes of
      this Article XIII be determined and calculated on a direct, dollar-for-dollar
      basis), or for other Damages not provided for in this Article XIII. Any
      liability for indemnification under this Agreement will be determined without
      duplication of recovery by reason of the state of facts giving rise to such
      liability constituting a breach of more than one representation, warranty,
      covenant or agreement.

     

    
      
        
        

      

      
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    13.6.    Specific
      Performance.
      It is
      agreed that any party hereto shall be entitled to an injunction or injunctions
      to prevent breaches of this Agreement and to enforce specifically the terms
      and
      provisions hereof, this being in addition to any other remedy to which they
      are
      entitled hereunder or otherwise.

     

    ARTICLE
      XIV

    TRANSITION
      PERIOD

     

    14.1.    Sublease. 

     

    (a)    From
      and
      after the Effective Date and at the Purchaser’s sole option, the parties shall
      use their commercially reasonable efforts to (i) obtain any required written
      consent of the landlord (the
      “Main
      Landlord”)
      of
      the
      Sub-Leased Premises (as defined below) to the Sublease Agreement; and (ii)
      execute and deliver the Sublease Agreement, in each case as of the Closing
      Date
      or no later than ninety (90) calendar days following the Closing Date.

     

    (b)    In
      the
      event that the parties are unable to execute and deliver the Sublease Agreement,
      with the Main Landlord’s written consent, as of the Closing Date, the Seller
      Parties shall, for a period not exceeding ninety (90) calendar days from the
      Closing Date (the “Transition
      Period”),
      permit the Transferred Employees to use and occupy a portion of the Seller
      Parties’ facilities, as identified in the Sublease Agreement, including all
      fixtures and improvements of the Seller Parties thereat (the “Sub-Leased
      Premises”).
      The
      Purchaser shall use the Sub-Leased Premises for office use only in accordance
      with business decorum as per prior practice and with all applicable leases
      and
      Applicable Law.

     

    (c)    The
      Seller Parties and the Purchaser agree that during the Transition Period, the
      Purchaser shall reimburse the Seller Parties on a pro rata basis (based on
      the
      square footage of the Sub-Leased Premises), for each full or partial month
      the
      Purchaser utilizes or otherwise occupies the Sub-Leased Premises, for all
      applicable rent, charges, fees and other overhead costs for use and occupancy
      of
      the Sub-Leased Premises incurred by the Seller Parties and/or its Affiliates,
      such amount to be paid to the Seller Parties within ten (10) Business Days
      of
      receipt by the Purchaser of an invoice therefor. The Purchaser shall maintain
      insurance coverage on the Sub-Leased Premises during the Transition Period,
      with
      terms and amounts of coverage to be commercially reasonable or as otherwise
      required in the Sublease Agreement and naming the Seller Parties as an
      additional named insured or loss payee, as applicable. If the parties have
      not
      executed and delivered the Sublease Agreement, with the Main Landlord’s written
      consent, prior to the expiration of the Transition Period, the Purchaser must
      vacate the Sub-Leased Premises no later than the end of the Transition Period.
      Upon vacating the Sub-Leased Premises, the Purchaser shall not be entitled
      to
      remove any fixtures or property and shall leave the Sub-Leased Premises in
      as
      good a condition as it was prior to the Transition Period.

     

    
      
        
        

      

      
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          31
          -

        
          

        

      

      
        
        

      

    

     

    (d)    The
      Purchaser shall indemnify and hold the Main Landlord of the Sub-Leased Premises
      and the Seller Parties and their Affiliates, and their respective shareholders,
      subsidiaries, officers, directors, employees, successors and permitted assigns,
      harmless from any and all Damages arising from (i)
      the
actions
      of the Purchaser or its Affiliates, or any of their respective guests or
      Representatives (including the Transferred Employees), with regard to
      their
      conduct
      of business in, or use or occupancy of, the Sub-Leased Premises; (ii) any
      accidents, damages or injuries to persons or property occurring in, on or about
      the Sub-Leased Premises, other than accidents, damages or injuries caused by
      the
      Seller Parties or Main Landlord or their respective officers, employees, agents
      or contractors; or (iii) any breach or default under the Seller Parties’ lease
      agreement with Main Landlord resulting from the Transferred
      Employees use and occupancy of the Sub-Leased Premises.
      

     

    14.2.    Embedded
      IP Rights.
      The
      Purchaser acknowledges that various items of computer hardware, telephone
      systems, storage media and other systems, equipment and goods included in the
      Transferred Assets may be delivered by the Seller Parties to the Purchaser
      with
      software, scripts, or other programming loaded on, embedded in or otherwise
      associated therewith (“Embedded
      IP Rights”).
      The
      Embedded IP Rights shall include physical copies of the data, source code,
      development documentation, and software listed on Schedule 14.2. The Purchaser
      acknowledges that the Seller Parties may delete any data not relating to the
      operation of the Seller Parties’ business as it relates to the Insurance
      Contracts (and any e-mail files of the Seller Parties and/or of their respective
      Affiliates, whether or not related to the Insurance Contracts) from the
      Transferred Assets prior to delivery thereof. The parties agree that solely
      to
      the extent that the Seller Parties own or otherwise have the right to grant
      rights in any Embedded IP Rights, the Seller Parties grant effective as of
      the
      Closing Date and upon delivery of the same to Purchaser, a nonexclusive,
      perpetual, royalty-free, worldwide license to Purchaser to use such Embedded
      IP
      Rights. Notwithstanding the foregoing, Purchaser acknowledges that the Seller
      Parties do not own or otherwise hold the right to grant the foregoing license
      with respect to all of the Embedded IP Rights and the Purchaser accordingly
      agrees that (i) the Purchaser is solely responsible, at Purchaser’s sole cost,
      for determining what licenses, permissions or consents that are required to
      be
      obtained from third parties to permit the Purchaser to utilize any Embedded
      IP
      Rights delivered with or in connection with any Transferred Assets, (ii) the
      Purchaser shall, prior to copying, operating or otherwise utilizing any Embedded
      IP Rights, secure, at Purchaser’s sole cost, all licenses, permissions or
      consents required from any third party in order to take such actions without
      infringing upon any third party’s intellectual property rights, and (iii) the
      Purchaser shall indemnify the Seller Parties and their Affiliates, and their
      respective shareholders, subsidiaries, officers, directors, employees,
      successors and permitted assigns, against and agrees to hold each of them
      harmless from any and all Damages, incurred or suffered by the Seller Parties
      or
      any of their respective Affiliates, arising out of the Purchaser’s failure to
      comply with the requirements of this Section 14.2 or its use of any Embedded
      IP
      Rights. To the extent that the Purchaser advises the Seller Parties that the
      Purchaser needs to communicate with third party licensors of Embedded IP Rights
      associated with any Transferred Assets, the Seller Parties shall authorize
      such
      third party vendors to communicate directly with the Purchaser concerning the
      licenses held by the Seller Parties solely with respect to such Embedded IP
      Rights associated with such Transferred Assets.

     

    
      
        
        

      

      
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    14.3.    Temporary
      Access to Seller Parties’ Systems.
      For a
      period of ninety (90) calendar days following the Closing Date, the Seller
      Parties will make available to the Purchaser and its employees access to the
      computer and software systems reasonably relating to the Insurance Contracts
      and/or the Embedded IP Rights (the “Available
      Systems”)
      solely
      on a transitional basis. The Purchaser acknowledges that the Seller Parties
      are
      not required to, and will not, provide access hereunder to the Purchaser to
      any
      systems or data that are (i) not part of the Available Systems, and (ii) e-mail
      files or archives. The Seller Parties shall have the sole right to determine
      the
      method and manner by which access to the Available Systems is granted to the
      Purchaser, provided that it shall act in good faith in making such
      determinations. The Purchaser agrees to comply with, and cause its employees
      to
      comply with, all security measures that the Seller Parties may in their sole
      discretion determine to be appropriate to prevent unauthorized access to or
      use
      of the Available Systems or any data stored or processed on such Available
      Systems. The Purchaser acknowledges that the Seller Parties do not own or
      otherwise hold the right to grant the foregoing access with respect to all
      of
      the operating systems, software, scripts, or other programming to which the
      Purchaser will be given access pursuant to this Section 14.3 (the “Accessed
      Software”)
      and
      the Purchaser accordingly agrees that (i) the Purchaser is solely responsible,
      at Purchaser’s sole cost, for determining what permissions or consents that are
      required to be obtained from third parties to permit the Purchaser to utilize
      the Accessed Software, (ii) the Purchaser shall, prior to accessing, operating
      or otherwise utilizing any Accessed Software, secure, at Purchaser’s sole cost,
      all permissions or consents required from any third party in order to take
      such
      actions without infringing upon any third party’s intellectual property rights,
      and (iii) the Purchaser shall indemnify the Seller Parties and their Affiliates,
      and their respective shareholders, subsidiaries, officers, directors, employees,
      successors and permitted assigns, against and agrees to hold each of them
      harmless from any and all Damages, incurred or suffered by the Seller Parties
      or
      any of their respective Affiliates, arising out of the Purchaser’s failure to
      comply with the requirements of this Section 14.3 or its use of any Accessed
      Software. To the extent that the Purchaser advises the Seller Parties that
      the
      Purchaser needs to communicate with third party licensors of Accessed Software,
      the Seller Parties shall authorize such third party vendors to communicate
      directly with the Purchaser concerning the licenses held by the Seller Parties
      solely with respect to such Accessed Software in the context of this Section
      14.3.

     

    14.4.    Disclaimer.
      The
      parties agree that any computer software or other intellectual property included
      in the Transferred Assets or otherwise transferred or made available hereunder
      (including any Embedded IP Rights or Accessed Software) to the Purchaser is
      provided with all fault, and the entire risk as to satisfactory quality,
      results, performance, reliability, functionality, accuracy, and effort is
      assumed by the Purchaser. The Purchaser acknowledges that it is responsible
      for
      evaluating the interoperability of the hardware and software included in the
      Transferred Assets or otherwise transferred or made available
      hereunder to
      the
      Purchaser with the Purchaser’s systems (including the evaluation of the
      interoperability of the Available Systems with the Purchaser's systems) or
      with
      any modifications made by the Purchaser. The configuration of any computer
      software and other intellectual property included in the Transferred Assets
      or
      otherwise transferred or made available hereunder
      to the Purchaser, and completion of any work in progress with respect thereto,
      is solely the risk and liability of the Purchaser, and the Seller Parties make
      no representation, warranty, or covenant with respect thereto.

     

    
      
        
        

      

      
        -
          33
          -

        
          

        

      

      
        
        

      

    

     

    14.5.    Transition
      Team.
      The
      Purchaser and the Seller Parties shall each appoint a two-person transition
      team
      which shall regularly communicate with the other party for purposes of
      diligently carrying out the provisions of this Article XIV, and which shall
      be
      authorized to act on behalf of their respective party as to matters pertaining
      to this Article XIV. Effective upon the Closing Date, such transition team
      shall
      be as set forth in Schedule
      14.5
      hereto,
      to be delivered at or prior to the Closing Date. Each party shall notify the
      other in writing as to the name, address and telephone number of any replacement
      for its designated transition team. 

     

    ARTICLE
      XV

    MISCELLANEOUS
      PROVISIONS

     

    15.1.    Entire
      Agreement.
      This
      Agreement, including all Schedules and Exhibits attached hereto, constitute
      the
      entire contract between the parties and there are no understandings other than
      as expressed in this Agreement or any Ancillary Agreement. All Schedules and
      Exhibits attached hereto are expressly incorporated into and made a part of
      this
      Agreement as fully as though completely set forth herein in full. In the event
      of any conflict between the provisions of this Agreement and any
      Schedule or Exhibit, the provisions of this Agreement will control.
      Capitalized terms used in the Schedules and Exhibits shall have the meanings
      assigned to them in this Agreement. The Section references referred to in
      the Schedules are to sections of this Agreement, unless otherwise expressly
      indicated. Any amendment or modification hereto shall be null and void unless
      made by amendment to this Agreement, and signed by the parties affected by
      such
      amendment.

     

    15.2.    Assignment;
      Binding Effect.
      No
      party hereto shall transfer, delegate, subcontract, or assign any of its rights
      or obligations under this Agreement without first obtaining the written consent
      of the other parties; provided,
      however,
      that
      (i) the Purchaser may assign its rights to offer, quote, solicit, issue, write
      and/or bind the Covered Insurance Contracts to its Insurer Affiliates or the
      Purchaser Primary Insurer, as expressly provided herein (no such assignment
      shall relieve, in whole or in part, the Purchaser from any liabilities or
      obligations that it has assumed hereunder or under any of the Ancillary
      Agreements), and (ii) the Seller Parties may assign their rights to receive
      Override Payments under Section 2.6 to any Person with prior notice to, but
      without obtaining the consent of, the Purchaser. Any purported assignment,
      delegation, subcontracting, or transfer in violation of this Section 15.2
      shall be void.

     

    15.3.    No
      Third-Party Beneficiaries.
      Nothing
      in this Agreement, except as expressly set forth in Article XIII with respect
      to
      the indemnification of the parties’ Affiliates and their respective
      shareholders, subsidiaries, officers, directors and employees, and in any of
      the
      Ancillary Agreements is intended or shall be construed to give any Person
      (including the Purchaser Primary Insurer), other than the signatory parties
      hereto, any legal or equitable right, remedy or claim under or in respect of
      this Agreement or any Ancillary Agreement or any provision contained
      herein.

     

    
      
        
        

      

      
        -
          34
          -

        
          

        

      

      
        
        

      

    

     

    15.4.    Invalidity.
      Unless
      the invalidity or unenforceability of any provision or portion thereof
      frustrates the intent of the parties or the purpose of this Agreement or the
      Ancillary Agreements, such invalidity or unenforceability shall not affect
      the
      validity or enforceability of the other provisions or portions thereof and where
      possible, the provisions of this Agreement shall be interpreted so as to sustain
      their legality and enforceability and for that purpose the provisions of this
      Agreement shall be read as if they cover only the specific situation to which
      they are being applied. The invalidity or unenforceability of any provision
      of
      this Agreement in a specific situation shall not affect the validity or
      enforceability of that provision in other situations or of other provisions
      of
      this Agreement. In the event that such provision shall be declared unenforceable
      by a court of competent jurisdiction, such provision or portion thereof, to
      the
      extent declared unenforceable, shall be stricken. However, in the event any
      such
      provision or portion thereof shall be declared unenforceable due to its scope,
      breadth or duration, then it shall be modified to the scope, breadth or duration
      permitted by Applicable Law and shall continue to the be fully enforceable
      as so
      modified.

     

    15.5.    Governing
      Law.
      This
      Agreement shall be deemed to have been made under and governed by the laws
      of
      New York, without regard to conflicts or choice of law rules.

     

    15.6.    Jurisdiction.
      Each of
      the parties hereto irrevocably and unconditionally submits to the exclusive
      jurisdiction of The United States District Court for the Southern District
      of
      New York or, if such court does not have jurisdiction, the State Courts of
      the
      State of New York for purposes of enforcing this Agreement. In any such action,
      suit or other proceeding, each of the parties hereto irrevocably and
      unconditionally waives and agrees not to assert by way of motion, as a defense
      or otherwise any claims that it is not subject to the jurisdiction of the above
      court, that such action or suit is brought in an inconvenient forum or that
      the
      venue of such action, suit or other proceeding is improper. Each of the parties
      hereto also agrees that any final and unappealable judgment against a party
      hereto in connection with any action, suit or other proceeding shall be
      conclusive and binding on such party and that such award or judgment may be
      enforced in any court of competent jurisdiction, either within or outside of
      the
      United States. A certified or exemplified copy of such award or judgment shall
      be conclusive evidence of the fact and amount of such award or judgment. Without
      limiting the foregoing, each party agrees that service of process on such party
      by written notice as provided in Section 14.11 shall be deemed effective
      service of process on such party.

     

    15.7.    Waiver
      of Jury Trial.
      Each of
      the Parties hereto hereby irrevocably waives any and all right to trial by
      jury
      in any legal proceeding arising out of or related to this Agreement, the
      Ancillary Agreements or the transactions contemplated hereby or thereby. The
      waivers in this Section 15.7 and in Section 15.6 have been made with
      the advice of counsel and with a full understanding of the legal consequences
      thereof and shall survive the termination of this Agreement.

     

    
      
        
        

      

      
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          35
          -

        
          

        

      

      
        
        

      

    

     

    15.8.    Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument. This Agreement shall become effective when one or more counterparts
      have been signed by each party hereto and delivered to the other parties
      hereto.

     

    15.9.    Headings.
      The
      headings in this Agreement are for the convenience of reference only and shall
      not affect its interpretations.

     

    15.10.   Communications.
      The
      parties shall jointly agree upon press releases and agent communications to
      be
      distributed with respect to the transactions contemplated under this Agreement,
      except as may be required by Applicable Law or by obligations pursuant to any
      listing agreement with the New York Stock Exchange.

     

    15.11.   Notices.
      All
      notices and other communications under this Agreement shall be in writing and
      shall be delivered personally, sent by facsimile transmission or sent by
      overnight courier or certified, registered or express mail, postage prepaid.
      Any
      such notice or other communication shall be deemed given: (i) upon actual
      delivery if presented personally or sent by facsimile transmission,
      (ii) one (1) Business Day following delivery to an overnight courier, or
      (iii) three (3) Business Days following deposit in the United States mail,
      if sent by certified, registered or express mail, postage prepaid, in each
      case
      to the following addresses:

     

     

    
      	 	
              (i)

            	 	
              If to the Purchaser:

               

              AmTrust
                Financial Services, Inc.

              59
                Maiden Lane, 6th
                fl

              New
                York, NY 10038

              Attn: Stephen
                Ungar, Esq.

              Facsimile
                No.: (212) 220-7130

              E-mail:
                sungar@amtrustgroup.com

            
	 	 
	 	
              With
                concurrent copies, which shall not constitute notice,
                to:

            
	 	 
	 	 	 	
              Edwards
                Angell Palmer & Dodge LLP

              750
                Lexington Avenue

              New
                York, NY 10022

              Attention:
                Geoffrey Etherington, Esq.

              Facsimile
                No.: (212) 308-4844

            

    

     

    
      
        
        

      

      
        -
          36
          -

        
          

        

      

      
        
        

      

    

        

    
      
        	 	
                (ii)

              	 	
                
                   If
                    to the Seller Parties:

                   

                  Laura
                    A. Santirocco

                  Senior
                    Vice President & Group General Counsel

                  Alea
                    Group

                  55
                    Capital Boulevard

                  Corporate
                    Ridge

                  Rocky
                    Hill, CT 06067

                  Facsimile
                    No.: (860) 258-6575

                  E-mail:
                    laura.santirocco@aleagroup.com

                

              
	 	 
	 	
                With
                  concurrent copies, which shall not constitute notice,
                  to:

              
	 	 
	 	 	 	
                
                  Jon
                    Biasetti, Esq.

                  Lord,
                    Bissell & Brook LLP

                  115
                    S. LaSalle Street

                  Chicago,
                    IL 60603

                  Facsimile
                    No.: (312) 896-6566

                  E-mail:
                    jbiasetti@lordbissell.com

                

              

      

    

    
    

    15.12.   Waiver
      of Compliance.
      Any
      waiver of any failure to comply with any obligation, covenant, agreement or
      condition under this Agreement must be in writing and signed by the parties.
      Any
      waiver or failure to insist upon strict compliance with any obligation,
      covenant, agreement or condition shall not operate as a waiver of, or estoppel
      with respect to, any subsequent or other failure.

     

    INTENTIONALLY
      LEFT BLANK

     

    
      
        
        

      

      
        -
          37
          -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
      duly
      authorized officers of the Purchaser and the Seller Parties as of the Effective
      Date.

     

     

    
      	 	
              AMTRUST
                FINANCIAL SERVICES, INC. 

               

              By:
                ________________________________

              Name: 

              Title:

            
	 	
               

            
	 	
              ALEA
                NORTH AMERICA COMPANY

               

              By:_________________________________

              Name:

              Title:

            
	 	 
	 	
              ALEA
                NORTH AMERICA INSURANCE COMPANY

               

              By:_________________________________

              Name:

              Title:

            

    

     

    
      
        
        

      

      
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    EXHIBIT
      A

     

    *
      

     

    

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    TRANSFERRED
      ASSETS

     

    1.
      Laptops/Desktops

     

    
      	 	
              Those
                laptops and desktops being used by the Transferred Employees as of
                the
                Closing Date.

            

    

     

    2.
      SAP
      License

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    *

    

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    *

     

     

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      E

     

    SUBLEASE
      AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      F

     

    BILL
      OF SALE AND GENERAL ASSIGNMENT AGREEMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    BILL
      OF SALE

     

    By
      and
      Between

     

    ALEA
      NORTH AMERICA COMPANY

     

    and

     

    ALEA
      NORTH AMERICA INSURANCE COMPANY

     

    in
      favor
      of

     

    AMTRUST
      FINANCIAL SERVICES, INC.

     

     

    

    Dated
      as
      of ________, 2005

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    BILL
      OF SALE

     

    THIS
      BILL
      OF SALE (this “Bill
      of Sale”)
      is
      dated as of _______, 2005, by and between Alea North America Company, a Delaware
      business corporation, and Alea North America Insurance Company, a New York
      property and casualty insurance company (individually and collectively, as
      applicable, the “Seller
      Parties”)
      in
      favor of AmTrust
      Financial Services, Inc.,
      a
      Delaware corporation (“Purchaser”).

     

    WITNESSETH:

     

    WHEREAS,
      the Seller Parties and the Purchaser are parties to a Renewal Rights and Asset
      Purchase Agreement dated as of [____________], 2005 (the “Agreement”),
      pursuant to which, among other things, the Seller Parties will sell, and the
      Purchaser will purchase, the Renewal Rights and the Transferred Assets, upon
      the
      terms and subject to the conditions set forth in the Agreement.

     

    NOW,
      THEREFORE, in consideration of the foregoing premises and the mutual promises,
      covenants and agreements contained herein and in the Agreement, and for other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    Section
      1.    Definitions.
      Capitalized terms used herein and not defined herein have the respective
      meanings assigned to them in the Agreement.

     

    Section
      2.    Sale
      of Transferred Assets to Purchaser.
      The
      Seller Parties hereby sell, assign, transfer and deliver to the Purchaser and
      its successors and assigns forever all of the Seller Parties’ right, title and
      interest in and to the Transferred Assets listed on Schedule
      A
      hereto.

     

    TO
      HAVE
      AND TO HOLD such Transferred Assets unto Purchaser and its successors and
      assigns forever.

     

    Section
      3.    Additional
      Actions.
      The
      Seller Parties and the Purchaser shall promptly execute, deliver, record or
      file
      any and all other releases, affidavits, waivers or other documents, and take
      any
      and all additional actions, which the Purchaser may reasonably request in order
      to implement the provisions of this Bill of Sale.

     

    Section
      4.    Representations
      and Warranties.
      Neither
      the Seller Parties nor the Purchaser make any representation or warranty
      hereunder with respect to the Transferred Assets other than those expressly
      set
      forth in the Agreement. This Bill of Sale is not intended to create any
      obligation of the Seller Parties or the Purchaser other than the obligations
      expressly stated in the Agreement.

     

    Section
      5.    No
      Third Party Beneficiaries.
      This
      Bill of Sale is for the sole and exclusive benefit of the Purchaser, the Seller
      Parties and their respective successors and assigns and nothing herein is
      intended or shall be construed to confer upon any Person other than the
      Purchaser, the Seller Parties or their respective successors and assigns any
      right, remedy or claim under or by reason of this Bill of Sale or any term,
      covenant or condition hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      6.    Amendment.
      This
      Bill of Sale may only be amended or modified by a written instrument executed
      by
      all of the parties hereto. This Bill of Sale shall inure to the benefit of
      and
      be binding upon the Purchaser, Seller Parties and their respective successors
      and assigns.

     

    Section
      7.    Governing
      Law.
      THIS
      BILL OF SALE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS
      OF
      LAWS THEREOF.

     

    IN
      WITNESS WHEREOF, the undersigned have caused this Bill of Sale to be duly
      executed on its behalf as of the date first written above.

     

     

    
      	 	
              Alea
                North America Company

               

              By:

               

              Name:

               

              Title:

            
	     	
               

                   

            
	 	
              Alea
                North America Insurance Company

               

              By:

               

              Name:

               

              Title:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A

     

    

     

    
      	
              1.

            	
              Laptops/Desktops

              
                Those
                  laptops and desktops used by the Transferred Employees as of the
                  Closing
                  Date.

              

            

    

     

    
      	
              2.

            	
              SAP
                License 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 1.1(a)

     

     

    *

    

     

    *
      Confidential Treatment Requested 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1.1(b)

     

     

     

    *
      

     

     

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 2.5

     

     

     

    *
      

     

     

    

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3.7

     

    SELLER
      PARTIES REGULATORY APPROVALS 

    AND/OR
      OTHER CONSENTS

     

    1.    The
      sale
      and transfer of the Transferred Assets and Renewal Rights and certain Ancillary
      Agreements require review and “non-objection” of the New York Insurance
      Department.

     

    2.    The
      transaction contemplated by this Agreement requires the prior approval of the
      Board of Directors of each of the Seller Parties and of Alea Group Holdings
      (Bermuda) Ltd.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE 3.8(a)

     

     

     

    *

     

     

    

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3.8(b)

     

     

     

    *
      

     

     

    

     

    *
      Confidential Treatment Requested 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 3.8(c)

     

     

     

     

    *

     

    
 

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      3.8(d)

     

     

    *

     

    

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 4.4

     

    JURISDICTIONS
      WHERE PURCHASER IS NOT LICENSED

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 4.6

     

    PURCHASER
      REGULATORY APPROVALS AND/OR OTHER CONSENTS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 6.1(b)

     

    CERTAIN
      BOOKS AND RECORDS

     

    1.  
      underwriting and actuarial pricing models (hard paper copies and copies of
      any
      software).

     

    2.  
      active underwriting account files (not including e-mail files) and corresponding
      loss run/claims data. 

     

    3.  
      rate, rule and form filings.

     

    4.  
      template form of agency, MAA, TPA, broker, producer, reinsurance and any other
      core operating contracts. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    SCHEDULE 8.1

     

     

     

    *
      

     

    

    

     

    *
      Confidential Treatment Requested

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE 14.2

     

    DELIVERED
      SOFTWARE AND DOCUMENTATION

     

    The
      source code, development documentation, and software:

     

    o
Operational
      Data Store

     

    o
Underwriting
      Workstation - (partially implemented)

     

    o
Electronic
      Data Exchange - (partially implemented)

     

    o Collateral
      Management System
      (monitoring and reporting database) 

     

    o
The
      AAR Client Portal SharePoint site
      (partially implemented)

     

    o
Account
      Management System “AMS”
(Underwriting)

     

    o
Claim
      Management and Audit
      Databases

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE 14.5

     

    TRANSITION
      TEAM

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]