Document:

rsg_ex101-90121.htm

    Exhibit 10.1

     

    STOCK PURCHASE AND SALE
AGREEMENT

     

    THIS STOCK PURCHASE AND SALE AGREEMENT
(this “Agreement”) is made and entered into as of the 14th day of January, 2009,
by and among The Resourcing Solutions Group, Inc. or an affiliate thereof
(collectively or individually “Buyer”), and Clarendon National Insurance
Company, a New Jersey domiciled insurance company and wholly owned subsidiary of
Clarendon Insurance Group, Inc., a Delaware holding company, (collectively or
individually “Seller”).

     

    WITNESSETH:

     

    WHEREAS, Seller is the record and
beneficial owner of all of the issued and outstanding shares of capital stock of
Clarendon Select Insurance Company, a Florida stock insurance company (the
“Company”); and

     

    WHEREAS, Buyer desires to purchase from
Seller, and Seller desires to sell to Buyer, all of the issued and outstanding
shares of capital stock of the Company, on the terms and subject to the
conditions hereinafter set forth.

     

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

     

    ARTICLE
I

     

    SALE AND
PURCHASE

     

    1.1           Purchase and
Sale.  At the closing of this transaction (the “Closing”) and
subject to and upon the terms and conditions of this Agreement, Seller shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall purchase,
accept and acquire from Seller, one hundred sixty six thousand six hundred sixty
seven (166,667) shares of common stock of the Company, $18 par value per share
(the “Shares”), which Shares shall constitute all of the issued and outstanding
shares of capital stock of the Company.  Each certificate representing
the Shares shall be duly endorsed in blank or accompanied by a duly executed
stock power.

     

    1.2           Purchase
Price.

     

    (a)           The
total purchase price (the “Purchase Price”) for the Shares shall be (i)
$250,000, consisting of a $100,000 escrow deposit (the “Deposit”), which was
deposited upon execution and delivery of the Letter of Intent and will be
transferred to Seller at Closing and $150,000, which shall be paid to Seller at
the Closing, plus (ii) the Capital
and Surplus Amount of the Company, as defined below, determined as of the close
of business on the second Business Day immediately preceding the Closing Date
(the “Valuation Date”).  The “Capital and Surplus Amount” shall
consist of the fair market value (as determined pursuant to Section 1.2(c)
below) of the total assets of the Company.

    

    (b)           On
the day immediately prior to the Closing Date, Seller shall provide Buyer a
complete list and specific description of the assets which shall be held by the
Company upon Closing, and Seller warrants that such assets shall consist only of
U.S.  Treasury Bonds, Treasury Bills, Treasury Notes, money market
funds and cash.  Such description shall include a valuation as of the
Valuation Date of the fair market value of the assets so
described.  Buyer shall have an opportunity at its own expense to
verify such valuation and all information related thereto, concerning such
assets.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           The
fair market value of Treasury Bonds, Treasury Bills, Treasury Notes, and fixed
income assets of the Company shall be determined: (i) by reference to prices
reported by a recognized market quotations service commonly used by insurers to
establish the fair market value of investment securities, plus (ii) interest
accrued as of the Valuation Date attributable to such Treasury Bonds, Treasury
Bills, Treasury Notes, and fixed income assets; provided, however, that
interests in money market funds shall have a fair market value equal to their
face or par value; and provided further that assets which cannot be valued in
accordance with the above procedures will be valued at a fair market value as
otherwise reasonably determined by Buyer and Seller.

    

    (d)           On
the day immediately prior to the Closing Date, Seller shall present Buyer with a
statement of the Purchase Price which (after verification by Buyer of Seller’s
determination of the Capital and Surplus Amount such verification to occur by
12:00 noon on the day of Closing) shall be paid by Buyer, subject to a credit
for the Deposit paid by Buyer to Seller as provided above, by wire transfer, in
immediately available funds, to Seller’s account as specified by
Seller.

    

    1.3           Closing.  The
Closing shall take place at 10:00 a.m.  within 3 Business Days after
receipt by Buyer of all applicable governmental approvals (the “Closing Date”),
and any adjournment thereof, at the offices of Buyer in Charlotte, North
Carolina, or at such other date, time or place as the parties hereto may
mutually agree.  The parties will use commercially reasonable efforts
to have a  Closing Date no later than March 31, 2009.  If,
however, the Closing has not occurred on or before March 31, 2009, this
Agreement shall automatically be extended in accordance with Section
7.1(f).

     

    ARTICLE
II

     

    REPRESENTATIONS AND
WARRANTIES OF BUYER

     

    Buyer hereby represents and warrants to
Seller that:

     

    2.1           Organization.  Buyer
is a company duly organized by legislative charter, validly existing and in good
standing under the laws of Nevada, and has all requisite power and authority
(corporate and other) to enter into this Agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby.

     

    2.2           Authorization.  All
necessary and appropriate corporate action has been taken by Buyer with respect
to the execution and delivery of this Agreement and the performance of its
obligations hereunder, and this Agreement constitutes a valid and binding
obligation of Buyer enforceable against it in accordance with its terms, except
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other similar laws
now or hereafter in effect relating to creditors’ rights generally, (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding thereafter may be brought, (iii) as to matters which
may be deemed to be in contravention of public policy.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.3           Consents and
Approvals.  No notice, consent, approval, order or
authorization of, or registration, declaration or filing with, any Authority is
required in connection with Buyer’s execution and delivery of this Agreement or
its performance of the terms hereof, other than approval of the Office of
Insurance Regulation of the State of Florida and as set forth on Schedule 2.3.

     

    2.4.           Investment
Intent.  Buyer is acquiring the Shares solely for its own
account for investment, and not with a view to, or for resale in connection
with, the distribution thereof within the meaning of the Securities Act of 1933,
as amended.  Buyer acknowledges that the Shares are not registered
under the Securities Act of 1933 and may not be transferred or sold except
pursuant to an applicable exemption therefrom.

     

    2.5           Litigation.  There
is no claim, litigation, action, suit, proceeding, investigation or inquiry,
administrative or judicial, pending or, to the Knowledge of Buyer, threatened
against Buyer, at law or in equity, before any federal, state or local court or
regulatory agency, or other Authority, which, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect (as defined in Section
9.13) on Buyer or which seeks to prohibit, enjoin or otherwise challenge the
consummation of the transactions contemplated hereby.

     

    2.6           No
Conflicts.  Neither the execution and delivery of this
Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby will (i) conflict with or result in a breach of any
provision of the charter or bylaws of Buyer, (ii) violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with the giving of notice, the passage of time or otherwise, would
constitute a default) under, or entitle any party (with the giving of notice,
the passage of time or otherwise) to terminate, accelerate or cause a default
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Buyer under any of the
terms, conditions or provisions of any agreement, indenture, instrument, order,
judgment or decree binding on Buyer or its properties or assets, except for such
violations, conflicts, breaches, defaults, terminations, accelerations, liens,
security interests, charges or encumbrances which would not have a Material
Adverse Effect on Buyer or the Company, (iii) violate any judgment, order,
decree, stipulation, injunction or charge of any court, administrative agency or
commission or other Authority or instrumentality by which Buyer is bound, except
for such violations which would not have a Material Adverse Effect on Buyer, or
(iv) require any consent, approval, declaration, order or authorization of, or
registration or filing with, any third party, court or governmental body or
other agency, instrumentality or Authority by or with respect to Buyer in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, other than approval of the Office of
Insurance Regulation of the State of Florida and other applicable Authorities,
except where the failure to obtain any such consent, approval, declaration,
order or authorization or to make any such registration or filing would not have
a Material Adverse Effect on Buyer or the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.7           Transaction
Financing.  Buyer has on hand or readily available cash and
cash equivalents in an amount sufficient to enable it to purchase the Shares as
provided in Section 1.2.

     

    2.8           Brokers.  In
connection with the transactions contemplated by this Agreement, Buyer has not
employed nor will it employ any broker or finder and has not incurred and will
not incur any broker’s, finder’s or similar fees, commissions or
expenses.

     

    ARTICLE
III

     

    REPRESENTATIONS AND
WARRANTIES OF SELLER

     

    Seller represents and warrants to Buyer
that:

     

    3.1           Organization.  Seller
is a stock insurance corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey.  The Company is a
stock insurance corporation duly organized, validly existing and in good
standing under the laws of the State of Florida.  Seller and the
Company each have all requisite power and authority (corporate and other) and
licenses necessary to own, lease and operate their respective properties and
conduct their respective businesses as presently conducted.  The
Company is duly qualified to do business and is in good standing in each
jurisdiction listed on Schedule
3.1, is not qualified to do business in any other jurisdiction, and
neither the nature of the business conducted by it nor the property it owns,
leases or operates requires it to qualify to do business as a foreign
corporation in any other jurisdiction except where the failure to be so
qualified would not have a Material Adverse Effect on the
Company.  Seller has previously delivered to Buyer true, correct and
complete copies of the charter and bylaws of the Company.  The
corporate minute books of the Company accurately reflect, in all material
respects, all actions taken by the Board of Directors of the Company (and any
committees thereof) and its shareholders.

     

    3.2           Authorization.  All
necessary and appropriate corporate action has been taken by Seller with respect
to the execution and delivery of this Agreement and the performance of Seller’s
obligations hereunder.  This Agreement has been duly and validly
executed and delivered by Seller and constitutes the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with its terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other similar laws
now or hereafter in effect relating to creditors’ rights generally, (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding thereafter may be brought, (iii) as to matters which
may be deemed to be in contravention of public policy.

     

    3.3           Subsidiaries.  The
Company has no subsidiaries and does not otherwise control, directly or
indirectly, any equity interest in any corporation, association or business
entity.

     

    3.4           Capitalization and Security
Holders.  The authorized capital stock of the Company consists
solely of 166,667 shares of common stock, $18 par value per share, of which all
of the shares are issued and outstanding.  All of the outstanding
shares of common stock of the Company have been validly issued and are fully
paid and non-assessable.  Except for this Agreement and as otherwise
set forth on Schedule
3.4, (i) there are no outstanding subscriptions, options, warrants, puts,
calls, agreements, understandings, or other commitments or rights of any type
relating to the issuance, sale or transfer by the Company of any securities of
the Company, (ii) there are no outstanding securities which are convertible into
or exchangeable for any shares of capital stock of the Company; and (iii) the
Company has no obligation of any kind to issue any additional
securities.  None of the shares of Company capital stock outstanding
was issued in violation of the preemptive right of any person or any agreement
or law by which the Company at the time of issuance was bound.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.5           Share Ownership and
Authority.  Seller owns beneficially and of record all of the
issued and outstanding shares of capital stock of the Company, and Seller has
the full and unrestricted power to sell, assign, transfer and deliver the Shares
to Buyer in accordance with the terms of this Agreement.  At the
Closing, Seller will transfer and convey to Buyer, and Buyer will acquire, good,
valid and marketable title to the Shares, free and clear of any and all rights,
title, interest and claims of others, including without limitation all liens,
security interests, encumbrances, pledges, charges, claims, voting trusts and
restrictions on transfer of any nature whatsoever, except as set forth on Schedule 3.5 and except for
restrictions on transfer imposed by or pursuant to the securities laws of the
United States.

     

    3.6           Litigation.  Except
as set forth on Schedule
3.6, there is no claim, litigation, action, suit, proceeding,
investigation or inquiry, administrative or judicial, pending or, to the
Knowledge of the Company and Seller, threatened against the Company, at law or
in equity, before any federal, state or local court or regulatory agency, or
other Authority, and such claims, litigation, actions, suits, proceedings,
investigations or inquiries will not have, individually or in the aggregate, a
Material Adverse Effect on the Company.  There is no claim,
litigation, action, suit, proceeding, investigation or inquiry pending or, to
the Knowledge of the Company and Seller, threatened against Seller or any of
Seller’s assets or properties, officers or directors that questions the validity
of this Agreement or seeks to prohibit, enjoin or otherwise challenge the
consummation of the transactions contemplated hereby.

     

    3.7           No
Conflicts.  Except as set forth on Schedule 3.7 or otherwise in
this Agreement, neither the execution and delivery of this Agreement by Seller,
nor the consummation by Seller of the transactions contemplated hereby will (i)
conflict with or result in a breach of any provision of the charter or bylaws of
Seller or the Company, respectively, (ii) violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with the
giving of notice, the passage of time or otherwise, would constitute a default)
under, or entitle any party (with the giving of notice, the passage of time or
otherwise) to terminate, accelerate or cause a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under any of the terms, conditions or
provisions of any agreement, indenture, instrument, order, judgment or decree
binding on the Company or Seller or their respective properties or assets,
except for such violations, conflicts, breaches, defaults, terminations,
accelerations, liens, security interests, charges or encumbrances which would
not have a Material Adverse Effect on the Company, (iii) violate any judgment,
order, decree, stipulation, injunction or charge of any court, administrative
agency or commission, or other Authority or instrumentality by which Seller, the
Company or any of the Company’s assets is bound, except for such violations
which would not have a Material Adverse Effect on the Company, or (iv) require
any consent, approval, declaration, order or authorization of, or registration
or filing with, any third party, court or governmental body or other agency,
instrumentality or Authority by or with respect to Seller or the Company in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, other than approval of the Office of
Insurance Regulation of the State of Florida and other applicable insurance
Authorities, except where the failure to obtain any such consent, approval,
declaration, order or authorization or to make any such registration or filing
would not have a Material Adverse Effect on the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.8           Tax
Matters.

     

    (a)           Except
as set forth in Schedule
3.8(a), Seller, the Company and any affiliated, combined or unitary group
of which Seller or the Company is or was a member has in all respects (i)
correctly prepared and timely filed all returns, declarations, estimates,
reports, claims for refund, information returns and statements (“Tax Returns”)
required to be filed with respect to all federal, state, local and foreign
income (gross or net), gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, provincial (with the income
taxes), environmental (including taxes under Section 59A of the Code),
disability, social security, unemployment compensation, alternative, add-on,
minimum, estimated, stamp, excise, severance, occupation, property or other
taxes, customs duties, fees, together with any interest, penalties or other
additions (each a “Tax” and collectively, “Taxes”), (ii) timely and properly
paid all Taxes that are due and payable, (iii) established on its books and
records reserves that are adequate for the payment of all Taxes accrued but not
yet due and payable, and (iv) complied with all Laws relating to the withholding
and payment of all Taxes with respect to employees’ wages.  All Tax
Returns made were true, accurate and complete in all respects at the time of
filing, all Tax positions were adequately disclosed on such Tax Returns, and all
Tax assessments on the Tax Returns have been paid in full.  The
Florida Office of Insurance Regulation is currently engaged in a premium tax
audit for the year 2006.  The Company has not been subject to any
federal, state, local or foreign tax audit.

     

    (b)           There
are no actual or proposed Tax deficiencies, assessments, or adjustments for
Taxes with respect to Seller or the Company or any assets, property or
operations of Seller or the Company.  Except as set forth in Schedule 3.8(b), (i) there are
no liens for Taxes upon the assets of Seller or the Company, (ii) neither Seller
nor the Company has requested any extension of time within which to file any Tax
Return which has not since been filed, (iii) there are no waivers or consents
given by Seller or the Company regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns, (iv) no federal, state,
local or foreign audits or other administrative proceedings or court proceedings
are pending or, to the Knowledge of the Company and Seller, threatened against
Seller or the Company with regard to any Taxes or Tax Returns, and neither the
Company nor Seller has received any notice of such audit or proceeding, actual
or threatened and (v) no claim or notice of claim has been made or given at any
time by any taxing Authority in any jurisdiction in which the Company (or its
Affiliates) does not file Tax Returns indicating that the Company (or its
Affiliates) is or may be subject to taxation by such
jurisdiction.  The Company and its Affiliates do not have any
liability for Taxes of any other Person under the provisions of state, local or
foreign Law similar to Section 1502 of the Code, as a transferee or successor,
by contract, or otherwise.

     

    (c)           Neither
Seller nor the Company has made any election under Section 341(f) of the Code or
any corresponding provision of state, local or foreign tax
Law.  Neither Seller nor the Company is required to include in income
any adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method nor does Seller or the Company have any knowledge
that the Internal Revenue Service has proposed any such adjustment or change in
accounting method.  Neither Seller nor the Company, as a result of any
“closing agreement” as defined in Section 7121 of the Code (or any corresponding
provisions of any state, local or foreign tax law), is required to include any
item of income in or exclude any item of deduction from taxable
income.  Neither Seller nor the Company, as a result of any deferred
inter-company gain or any excess loss account, described in Section 1.1502 of
the Treasury Regulations concerning consolidated returns, is required to include
any item of income in taxable income.  Except as set forth on Schedule 3.8(c), Seller and
the Company have not been at any time during the past ten (10) years a member of
an affiliated group, as defined in Section 1504 of the Code, other than one of
which Seller was the common parent, or filed or been included in a combined,
consolidated or unitary income tax return other than one filed by
Seller.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           Seller
and the Company have not made any payments and are not obligated under any
contract to make any payments that will be nondeductible, in whole or in part,
under Section 280G or 162(m) of the Code.

     

    (e)           Seller
has filed a consolidated federal income tax return with the Company for the
taxable year immediately preceding the current taxable year, and Seller is
eligible to make an election under Section 338(h)(10) of the Code (and any
comparable election under any state, local or foreign tax law) with respect to
the Company.

     

    (f)           Schedule 3.8(f) contains a
true, accurate and complete list of all Tax sharing, Tax allocation, Tax
indemnification and similar agreements to which Seller or the Company is a party
or by which Seller or the Company is bound.  Seller further represents
and warrants to Buyer that the Tax Allocation Agreement, dated January 1, 2003
(the “Federal Income Tax Allocation and Settlement Policy”), by and among
Hannover Finance, Inc.  and its subsidiaries (including, at that time,
the Company) has been terminated as regards the Company and is of no further
force and effect as it pertains to the Company.

     

    3.9           Financial
Statements.  The statutory financial statements (including the
notes thereto) of the Company as of and for the years ended 2005, 2006 and 2007
(the “Annual Statements”) when prepared were prepared in conformity with
accounting practices prescribed or permitted by the Office of Insurance
Regulation of the State of Florida applied on a consistent basis and present
fairly, in all material respects, the admitted assets, liabilities and capital
and surplus of the Company at the dates stated therein on the basis of such
accounting practices and the statutory results of its operations for the periods
then ended.  The Quarterly Statements have been prepared in conformity
with SAP and present fairly, in all material respects, the admitted assets,
liabilities and capital and surplus of the Company at the dates stated therein
on the basis of such practices and the statutory results of its operations for
the periods then ended.  The books and records of the Company have
been and are being maintained in accordance with SAP.

     

    3.10           Reports.  Since
2005, the Company has filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed with (i) the Office of Insurance Regulation of the State of Florida
and (ii) any applicable state or foreign insurance or licensing Authorities,
except in each case where the failure to so file would not have a Material
Adverse Effect on the Company (all such reports and statements are collectively
referred to herein as the “Company Reports”).  As of their respective
dates, to the best knowledge the Company and Seller, the Company Reports
complied with the statutes, rules and regulations enforced or promulgated by the
Authority with which they were filed except where the failure to comply with
such statutes, rules and regulations would not have a Material Adverse Effect on
the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.11           Insurance;
Reinsurance.

    

    3.11.1       
Insurance. All
obligations for any insurance policies issued by the Company have been assumed
or transferred from the books of the Company to Clarendon National Insurance
Company (“National”) pursuant to a certain Quota Share Reinsurance Agreement,
effective as of May 1, 1997 (the “Reinsurance Agreement”), by and between the
Company and National, a copy of which has been provided to Buyer, which
Reinsurance Agreement has been filed and accepted by the Office of Insurance
Regulation of the State of Florida and is in full force and effect. Under the
Reinsurance Agreement, National agreed to accept and provide one hundred (100%)
percent quota share reinsurance on the Company’s net retained liability under
all policies, contracts and binders of insurance or reinsurance issued or
renewed after May 1, 1997. National also agreed to accept 100% of the Company’s
net retained liability for uncollectible reinsurance from third party reinsurers
of the Company. Seller and the Company are not in violation of or in default in
the performance, observance or fulfillment of any obligation, agreement,
covenant or condition contained in the Reinsurance Agreement. Seller and the
Company have not received any notice from National or from any other insurance
company or Authority that either the Company or Seller has not performed or
intends not to perform, observe or fulfill any of its obligations, agreements,
covenants or conditions under the Reinsurance Agreement. Since the effective
date of the Reinsurance Agreement, the Company and National have not amended,
waived or altered in any way any of the provisions of the Reinsurance
Agreement.

     

    3.11.2        Reinsurance.  Other
than the Reinsurance Agreement, the Company is  not a party to any
other reinsurance contract that is currently in effect and where risk was ceded
or assumed by the Company other than those listed on Exhibit 3.11.2, copies of
which are attached as part of such Exhibit.  As of the date hereof and
as of the Closing Date, the Company has not been notified and is not aware of
any defaults under or late (more than 30 days) or overdue payments under any of
the reinsurance agreements, treaties, quota share agreements, retrocessional
agreements, assumption agreements, and similar agreements and arrangements to
which the Company has been a party (other than the Reinsurance
Agreement).

     

    3.12           Regulatory
Agreements.  Except for any voluntary commitments undertaken by
the Company and Seller and approved by the Office of Insurance Regulation of the
State of Florida in connection with the sale of the Company by Seller, copies of
which are attached hereto as Exhibit 3.12, neither the
Company, Seller nor any of their respective officers or employees is subject to
or the recipient of any of the following (each a “Regulatory Agreement”): a
cease and desist or other order issued by, a written agreement, consent
agreement or memorandum of understanding with, a commitment letter or similar
undertaking to, an order or directive by, an extraordinary supervisory letter
from, or a board of director resolution adopted at the request of any Authority
that restricts the conduct of the business of the Company or of any direct or
indirect beneficial owner of the capital stock of the Company or that, in any
other manner, relates to the Company’s capital adequacy, its underwriting or
investment policies, its management, or its business.  To the
Knowledge of the Company and Seller, no Authority is considering issuing or
requesting any Regulatory Agreement.  There are no disciplinary
proceedings pending before or, to the Knowledge of the Company and Seller, being
contemplated by the Office of Insurance Regulation of the State of
Florida.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.13           Undisclosed
Liabilities.  There are no liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
of the Company that are required to be reflected, reserved against or disclosed
on a balance sheet prepared in accordance with SAP other than (a) liabilities
and obligations those reflected, reserved against or disclosed in the Annual
Statements or the Quarterly Statements and not heretofore paid or discharged,
(b) liabilities or obligations incurred in the ordinary course of business
consistent with past practice since the Most Recent Balance Sheet Date, or (c)
liabilities and obligations disclosed in Schedule 3.13.

     

    3.14           Absence of
Changes.  The Company’s last written policy expired October 31,
2007.  Since then the Company has only been engaged in actively
running off previously written business and managing its
investments.

     

    3.15           State Licenses; Compliance
with Law.

     

    (a)           The
Company possesses all State Insurance Licenses. Except as set forth on Schedule 3.15, each of the
State Insurance Licenses are, and shall be as of the Closing, in full force and
effect, and the Company has not received any notice of default or termination
with respect to any such State Insurance Licenses or, to the Knowledge of the
Company and Seller, any threatened cancellation or termination in connection
therewith.  To the Knowledge of the Company and Seller, none of the
State Insurance Licenses has been suspended by any insurance regulatory
Authority as a result of a lack of use thereof by the Company or
otherwise.  Other than as set forth on Schedule 3.15, the Company has
not received any notice of such suspension or, to the Knowledge of the Company
and Seller, any threatened suspension.  Seller has paid or caused the
Company to pay all current license fees required to maintain the State Insurance
Licenses in good standing in each applicable jurisdiction, and Seller and Buyer
hereby acknowledge and agree that there shall be no allocation of such fees
between the parties as of the Closing.

     

    (b)           The
Company has complied with, is not in violation of, and has not received any
notices of violation with respect to, any applicable Law that would have a
Material Adverse Effect on the Company.

     

    3.16           Intellectual
Property.  The Company does not own any trademarks, service
marks, copyrights or similar property rights.

     

    3.17           Personal and Real
Property.  Except as disclosed on Schedule 3.17, the Company has
good and marketable title to, and owns outright, all of its properties and
assets (including, but not limited to, the assets reflected in the Company’s
Most Recent Balance Sheet), except for (i) deposits with state regulatory
authorities as set forth in the 2007 Annual Statement of the Company filed with
the Office of Insurance Regulation of the State of Florida, and (ii) those
disposed of in the ordinary course of business, and none of such assets is
encumbered by any mortgage, lien, claim or encumbrance except such mortgages,
liens, claims or encumbrances as (a) are reflected on the Most Recent Balance
Sheet, (b) arise out of Taxes not yet due and payable, or (c) relate to
immaterial properties or assets or otherwise which could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.  All leases pursuant to which the Company leases any real or
personal property are valid and binding in accordance with their respective
terms, and there is not under any such lease any existing default by the
Company, event of default or event which, with notice or lapse of time or both,
would constitute a default.  All items of real or personal property
owned or used by the Company and material to its business have been properly
maintained and, to the Knowledge of the Company and Seller, are in good
operating order and repair.  There are no pending lawsuits or
condemnation, expropriation, eminent domain or similar proceedings affecting all
or any portion of any property listed on Schedule 3.17 or the value
thereof, and, to the Knowledge of the Company and Seller, no such lawsuits or
proceedings are contemplated.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.18           Environmental
Matters.  The Company is not subject to any liability (and has
not handled or disposed of any substance, arranged for the disposal of any
substance, or owned or operated any property or facility in any manner that
could reasonably be expected to form the basis for any future Environmental
Claim against the Company giving rise to any liability) for damage to the
atmosphere or any site, location or body of water (surface or subsurface) or for
any other reason under any Environmental Law.  No notice, citation,
summons or order has been received by the Company and no complaint has been
filed and no penalty has been assessed or, to the Knowledge of the Company and
Seller, threatened by any Authority or third party with respect to (i) any
alleged violation by the Company of any Environmental Law, (ii) any alleged
failure by the Company to have any Environmental Permit required under any
Environmental Law in connection with its business or (iii) any other
Environmental Claim to which the Company or any of its assets is, or reasonably
could be expected to be, subject.  Except as disclosed on Schedule 3.18, to the
Knowledge of the Company and Seller, no environmental inspection report has been
prepared by any Person concerning compliance with, or actual or potential
liability under, applicable Environmental Law with respect to the Company’s
business, operations, assets or properties or any property contiguous
thereto.

     

    3.19           Labor
Relations.

     

    (a)           The
Company has no employees, and there is no requirement with any person that
requires any lump sum payment following a change of control.

     

    (b)           Except
as disclosed on Schedule
3.19, there are no complaints, charges or claims against the Company
pending or, to the Knowledge of the Company and Seller, threatened to be brought
or filed with any Authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company, and the Company has not received
any notice of such complaint, charge or claim.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.20           Benefit Plans and
Agreements.  The Company has at no time had any employee,
profit sharing, stock option, stock purchase, pension, retirement, bonus,
severance or deferred compensation plan or arrangement or any other welfare or
benefit plan or any unfunded liabilities in respect of any such plan or
arrangement, and the Company is not and has not been a party to any employment
agreement, whether written or oral, with any person, nor is it or has it been a
party to any contract with any labor union.

     

    3.21           Insurance
Coverage.  Schedule 3.21 contains a
complete and correct list of all insurance policies maintained by Seller or its
Affiliates (other than the Company) which provide coverage for the Company or
its employees, officers or directors.  Schedule 3.21 further contains
a complete and correct list of all such insurance policies maintained by the
Company.  All such policies are in full force and effect and all
premiums which are due thereon have been paid.  Each insurance policy
listed on Schedule 3.21
maintained by Seller or its Affiliates as to the interests of the Company
will be canceled as of the Closing Date.  None of the insurance
policies listed on Schedule
3.21 maintained by the Company will be canceled as of the Closing
Date.

     

    3.22           List of Contracts and Other
Data.  Schedule 3.22 lists all
agreements, contracts and commitments to which the Company is a party or by
which its assets or business may be bound or affected, presently outstanding
(each a “Contract of the Company”).  Each of the Contracts of the
Company is in full force and effect, and neither the Company nor, to the
Knowledge of the Company, any party to such Contract of the Company is in
violation of or in default in the performance, observance or fulfillment of any
obligation, agreement, covenant or condition contained therein.  The
Company has not received any notice from any party to any Contract of the
Company that such party intends not to perform, observe or fulfill any its
obligations, agreements, covenants or conditions under such Contract of the
Company and, to the Knowledge of the Company and Seller, the Company has no
reason to believe that such party will be unable to perform, observe or fulfill
any its obligations, agreements, covenants or conditions under such Contract of
the Company.

     

    3.23           Brokers.  In
connection with the transactions contemplated by this Agreement, any broker,
finder’s or similar fees incurred from Merger & Acquisition Services, Inc.
and any other broker working on behalf of Seller will be borne by
Seller.

     

    3.24           Disclosure of all Material
Matters.  No statement of fact set forth in this Agreement
(including without limitation all information in the Annual Statements and the
Quarterly Statements and the other schedules, exhibits, and attachments hereto,
taken as a whole) is false or misleading in any respect, nor does this Agreement
(including without limitation all information in the Annual Statements and the
Quarterly Statements and the other schedules, exhibits, and attachments hereto,
taken as a whole) omit to state a material fact necessary in order to make the
statements made or information disclosed, in the light of the circumstances
under which they were made or disclosed, not misleading.

     

    ARTICLE
IV

     

    CONDITIONS PRECEDENT TO
OBLIGATIONS

     

    4.1           Conditions to Obligations of
Buyer.  Each and every obligation of Buyer to be performed
under this Agreement shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions (unless waived in writing by
Buyer):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)           Representations and
Warranties.  The representations and warranties set forth in
Article III of this Agreement shall have been true and correct in all material
respects (except representations and warranties qualified by materiality shall
be true and correct in all respects taking into account such qualification) on
and as of the Closing as though such representations and warranties were made as
of the Closing.

     

    (b)           Performance of
Agreement.  Seller and the Company shall have fully performed
and complied with the covenants, conditions and other obligations under this
Agreement which are to be performed or complied with by Seller or the Company at
or prior to the Closing, including, without limitation, all deliveries to be
made pursuant to Section 5.2 of this Agreement and all covenants to be performed
prior to the Closing pursuant to Article VI of this Agreement.

     

    (c)           Consents.  The
approval of the Office of Insurance Regulation of the State of Florida and all
other approvals identified on Schedule 2.3 shall have been
received, shall be in form and substance reasonably acceptable to Buyer and
without the imposition of any material consent or restriction not consented to
by Buyer, and shall be in full force and effect.

     

    (d)           No Material Adverse
Effect.  There shall not have been any Material Adverse Effect
in the business operations, assets, or financial position of the Company since
the date of this Agreement. Except as expressly authorized by this Agreement,
since the date of this Agreement, the Company shall have conducted its business,
operations, activities and practices only in the ordinary course of business
substantially consistent with past practice and shall not have taken any of the
actions specified in Section 6.9.

     

    (e)           No Adverse
Proceeding.  There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree, or similar order of, or any action,
suit, claim, arbitration, investigation, or other proceeding, pending, or as to
which Seller has received any notice of assertion or as to which Seller has a
reasonable basis to expect such notice of assertion, against the Seller which in
any manner challenges or seeks to restrain, enjoin, alter, materially delay or
otherwise prevent consummation of any of the transactions contemplated by this
Agreement.

     

    (f)           Certificate.  Seller
shall have delivered to Buyer at the Closing a certificate signed on its behalf
by its President or Vice President and Secretary or Assistant Secretary, dated
the date of the Closing, to the effect that the conditions set forth in
subsections (a), (b) and (d) and, to the Knowledge of such officers, (e), of
this Section 4.1 have been satisfied.  Seller shall also have
delivered to Buyer at the Closing a certificate signed by the President and
Chief Financial Officer of the Company, dated the date of the Closing, to the
effect that the condition set forth in subsection (a) of this Section 4.1 has
been satisfied insofar as it pertains to representations and warranties
regarding the Company.

     

    (g)           Insolvency
Laws.  No proceeding in which the Company or Seller shall be a
debtor, defendant or party seeking an order for its own relief or reorganization
shall have been brought or be pending by or against such Person under any
federal, state or foreign bankruptcy or insolvency Law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (h)           Change of
Laws.  From the date of this Agreement, there shall have
occurred no change in any Law that could reasonably be expected to have,
individually or in the aggregate with all such changes, a Material Adverse
Effect on the Company.

     

    (i)           Resignation of Officers and
Directors.  On or before the Closing Date, Seller shall obtain
resignations from all of the directors and officers of the Company in a form
reasonably satisfactory to Buyer, such resignations shall be effective as of the
Closing Date.  On the Closing Date, Seller shall deliver satisfactory
evidence of such resignations to Buyer.

     

    (j)           Assets and
Liabilities.  Seller shall have delivered to Buyer a Closing
Date Balance Sheet prepared for the Company.  The Closing Date Balance
Sheet shall reflect Treasury Bonds, Treasury Bills, Treasury Notes, money market
funds and cash reasonably acceptable to Buyer, and no liabilities of any kind or
nature unless otherwise agreed to in writing by Buyer at or prior to the
Closing.

     

    (k)           Statement of Purchase
Price.  Seller shall have delivered to Buyer
a  valuation of the fair market value of the assets of the Company and
a statement of the Purchase Price as provided in Section 1.2 of this
Agreement.

     

    (l)           Form of
Documents.  All instruments executed and delivered by Seller
and the Company prior to the Closing in connection with the transactions
contemplated herein shall be satisfactory in form and substance in the
reasonable opinion of Buyer.

     

    4.2           Conditions to Obligations of
Seller.  Each and every obligation of Seller to be performed
under this Agreement shall be subject to the satisfaction at or prior to the
Closing of the following conditions (unless waived in writing by
Seller):

     

    (a)           Representations and
Warranties.  The representations and warranties of Buyer set
forth in Article II of this Agreement shall have been true and correct in all
material respects (except representations and warranties qualified by
materiality shall be true and correct in all respects taking into account such
qualification) on and as of the Closing as though such representations and
warranties were made as of the Closing.

     

    (b)           Performance of
Agreement.  Buyer shall have fully performed and complied with
the covenants, conditions and other obligations under this Agreement which are
to be performed or complied with by Buyer at or prior to the Closing, including,
without limitation, all deliveries to be made pursuant to Section 5.3 of this
Agreement.

     

    (c)           Consents.  The
approval of the Office of Insurance Regulation of the State of Florida and all
other approvals identified on Schedule 2.3 shall have been
received, shall be in form and substance reasonably acceptable to Seller and
without the imposition of any material consent or restriction not consented to
by Seller, and shall be in full force and effect.

     

    (d)           No Adverse
Proceeding.  There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree, or similar order of, or any action,
suit, claim, arbitration, investigation, or other proceeding, pending, or as to
which Buyer has received any notice of assertion or as to which Buyer has a
reasonable basis to expect such notice of assertion, against the Buyer which in
any manner challenges or seeks to restrain, enjoin, alter, materially delay or
otherwise prevent consummation of any of the transactions contemplated by this
Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)           Certificate.  Buyer
shall have delivered to Seller at the Closing a certificate signed on its behalf
by its President or Vice President and Secretary or Assistant Secretary, dated
the date of the Closing, to the effect that the conditions set forth in
subsections (a) through (c) and, to the Knowledge of such officers, (d), of this
Section 4.2 have been satisfied.

     

    ARTICLE
V

     

    CLOSING

     

    5.1           Closing.  The
Closing shall occur on the Closing Date in accordance with the provisions
contained in Section 1.3 of this Agreement.

     

    5.2           Deliveries of Seller at
Closing.  At the Closing, Seller will deliver or cause to be
delivered to Buyer the following:

     

    (a)           a
certificate or certificates representing the Shares, which shall be registered
in the name of Buyer, or duly endorsed for transfer to Buyer or accompanied by
duly executed stock powers;

     

    (b)           the
certificates referred to in 4.1(f) of this Agreement;

     

    (c)           a
certificate issued by the Secretary of State of the State of Florida, as of a
date reasonably acceptable to Buyer, as to the legal existence and good standing
of the Company, together with a copy of the Company’s charter, certified by the
Secretary of State of the State of Florida, as of a date reasonably acceptable
to Buyer;

     

    (d)           certificates
issued by the Secretary of State of New Jersey, with respect to National, and
the Secretary of State of Delaware, with respect to Clarendon Insurance Group,
Inc., as of a date reasonably acceptable to Buyer, as to the legal existence and
good standing of each Seller;

     

    (e)           a
certificate issued by the Office of Insurance Regulation of the State of
Florida, as of a date reasonably acceptable to Buyer, that the Company is duly
licensed to conduct the business presently conducted by the
Company.

     

    (f)           a
certificate of the Secretary or an Assistant Secretary of Seller certifying as
to (i) the requisite corporate or other action authorizing the transactions
contemplated by this Agreement and (ii) the incumbency and signatures of the
officers of Seller executing this Agreement and the other agreements
contemplated hereby;

     

    (g)           the
Closing Date Balance Sheet;

     

    (h)           the
valuation of the fair market value of the assets of the Company and a statement
of the Purchase Price as provided in Section 1.2 of this Agreement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)           the
resignations of the existing officers and directors of the Company as provided
in Section 4.1(j) of this Agreement; and

     

    (j)           all
minute books, stock transfer books, stock certificate books, corporate
certificates, and corporate seals of the Company, and all billing records,
files, work papers, computer and electronic files, accounting and tax records,
and all other books and records of the Company in the possession, custody or
control of Seller or its Affiliates or their respective agents.

     

    5.3           Deliveries of Buyer at
Closing.  At the Closing, Buyer will deliver or cause to be
delivered to Seller the following:

     

    (a)           the
Purchase Price in the form specified in Section 1.2 of this Agreement, against
an appropriate receipt therefor;

     

    (b)           the
certificate referred to in Section 4.2(e) of this Agreement;

     

    (c)           a
certificate issued by the Secretary of State of the State of Nevada, as of a
date reasonably acceptable to Seller, as to the legal existence and good
standing of Buyer; and

     

    (d)           a
certificate of the Secretary or an Assistant Secretary of Buyer certifying as to
(i) the requisite corporate or other action authorizing the transactions
contemplated by this Agreement and (ii) the incumbency and signatures of the
officers of Buyer executing this Agreement and the other agreements contemplated
hereby.

     

    ARTICLE
VI

     

    COVENANTS

     

    A.           Tax
Matters.

    

    6.1           Definitions.  The
following terms shall have the following meanings for purposes of this
Agreement:

     

    “Affiliated Group” means an affiliated
group as that term is defined by Section 1504(a) of the Code.

     

    “Closing Date Balance Sheet” means a
pro forma statutory balance sheet of the Company prepared by Seller and
delivered to Buyer dated as of the Closing.

     

    “Code” means the Internal Revenue Code
of 1986, as amended.

     

    “Income Tax” means any Tax (other than
a Transfer Tax) which is, in whole or in part, based on or measured by net
income, gross income, gross receipts, premium, capital stock, excise,
alternative or add-on minimum taxes, and any corporate franchise Tax, including,
without limitation, premium Taxes as may be assessed by any taxing Authority
(together with any interest, penalties or additions to tax).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Miscellaneous Tax” shall mean any Tax
other than an Income Tax or a Transfer Tax.

     

    “Post-Closing Tax Period” shall mean
all taxable periods that begin on or after the day following the Closing Date
and the portion beginning on the day following the Closing Date of any taxable
period that includes (but does not begin on) the day following the Closing
Date.

     

    “Pre-Closing Tax Period” means all
taxable periods ending on or before the close of the Closing Date and the
portion ending at the close of the Closing Date of any taxable period that
includes (but does not end on) the Closing Date.

     

    

    “Straddle Period” means a taxable
period that includes but does not end on the Closing Date.

     

    “Transfer Tax” means all transfer,
conveyance, documentary, sales, use, value added, stamp, registration and other
similar Taxes and fees imposed by a taxing Authority or by an insurance
regulatory Authority (including any penalties, interest or additions to Taxes)
incurred in connection with this Agreement.

     

    “Treasury Regulations” means the final
and temporary Treasury Regulations promulgated under the Code.  Any
reference to a Treasury Regulation that is subsequently amended, modified,
recodified or otherwise superseded shall be deemed to be a reference to the
superseding Treasury Regulation(s) to the greatest extent possible so as to
achieve the result originally intended, if possible, under this
Agreement.

     

    6.2           Income
Taxes.

     

    (a)           Seller
shall include the income of the Company in Seller’s federal consolidated Income
Tax Returns for all taxable periods ending on or before the Closing Date, and
shall prepare or cause to be prepared in a manner consistent with past practice
and file or cause to be filed on a timely basis including extensions, all Tax
Returns of the Company for taxable periods ending on or before the Closing Date,
and shall pay all Taxes attributable to such Tax Returns.  Buyer shall
cause the Company to furnish Tax information to Seller for inclusion in such Tax
Returns in accordance with the Company’s past custom and practice.

     

    (b)           Buyer
shall prepare or cause to be prepared and file or cause to be filed on a timely
basis all Income Tax Returns with respect to the Company for taxable periods
ending after the Closing Date and shall (except as otherwise provided below) pay
all Income Taxes attributable to such Income Tax Returns, other than with
respect to portions of Straddle Periods ending on the Closing
Date.  Income Taxes attributable to the portion of any Straddle Period
that ends as of the close of the Closing Date (determined based upon a closing
of the books as of the close of the Closing Date) shall be the responsibility of
Seller, and, to the extent such amounts exceed credits available and actually
used on the Tax Return from pre-closing periods, or prepayments of such taxes
made by Seller or the Company prior to closing, Seller shall pay the amount of
such Straddle Period Taxes to Buyer upon thirty (30) days written notice from
Buyer (which notice shall include a copy of the relevant Straddle Period Income
Tax Return) unless Seller reasonably disputes such amount.  Buyer
shall pay Seller the value of any Tax credit used by Buyer to offset premium
Taxes on premiums written in any Post-Closing Tax Period to the extent that such
credits are attributable to payments made by or on behalf of the Company prior
to or on the Closing Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Notwithstanding
Section 6.5, if the Company is, under applicable Law, entitled to carry back any
Tax attribute arising in a Post-Closing Tax Period to a Pre-Closing Tax Period,
Seller shall cooperate at Buyer’s request (and at Buyer’s expense) in securing a
Tax refund and shall pay the amount received to Buyer within thirty (30) days
after Seller or any member of Seller’s Affiliated Group receives such refund in
cash or such refund is credited against the Tax liability of Seller or any
member of Seller’s Affiliated Group.  All other refunds with respect
to Income Tax Returns for any period ending on or before the Closing Date which
were not recorded on the Closing Balance Sheet shall be paid to Seller by Buyer
within thirty (30) days after Buyer or the Company receives such refund in cash
or such refund is credited against the Income Tax liability of Buyer or the
Company.  Notwithstanding the foregoing, Buyer shall have no right to
require Seller to carry back to Seller’s consolidated Tax Return the Company’s
losses, if any, in a Post-Closing Tax Period.

     

    (d)           If
Seller is responsible for filing an Income Tax Return which requires the
signature of an officer of the Company, Seller shall present a completed version
of such Income Tax Return for the signature of the officer and shall supply any
support for such Income Tax Return that the officer may reasonably
request.  The officer, after review, shall promptly sign the Income
Tax Return and deliver it to Seller unless such officer demonstrates a good
faith objection to so doing.  Seller shall use its best efforts to
make Income Tax Returns available for review as required under this section
sufficiently in advance of the due date for filing such Income Tax Returns to
provide Buyer a meaningful opportunity to analyze and comment on such Income Tax
Returns and have such Income Tax Returns modified before filing.

     

    (e)           “Close
of Books” shall mean Tax items related to a Straddle Period shall be apportioned
between the Pre-Closing Tax Period and the Post-Closing Tax Period based on
closing of the books and records of the Company (provided that (i) any Tax item
incurred by reason of the transaction occurring on or before the Closing Date as
contemplated by this Agreement shall be treated as occurring in a Pre-Closing
Period and (ii) depreciation, amortization and deletion for any Straddle Period
shall be apportioned on a daily pro-rata basis).  Notwithstanding
anything to the contrary in the preceding sentence, the parties agree that for
United States federal income Tax purposes, Tax items for any Straddle Period
shall be apportioned between Pre-Closing Tax Periods and Post-Closing Tax
Periods in accordance with Treasury Regulation Section 1.150276(b), which
regulations shall be reasonably interpreted by the parties in a manner intended
to achieve the method of apportionment described in the preceding
sentence.  Seller and Buyer will not exercise any option or election
(including any election to ratably allocate a Tax year’s items under Treasury
Regulation Section 1.1502-76(b)(2)(ii)) to allocate Tax items in a manner
inconsistent with this section.

     

    (f)           No
new elections with respect to Taxes, or any changes in current elections with
respect to Taxes, affecting the Company shall be made without the prior written
consent of Buyer, which consent may be withheld in Buyer’s sole
discretion.

     

    (g)           Seller
shall not, without the prior written consent of Buyer, which consent shall not
be unreasonably withheld or delayed, make or cause to be made any amended Tax
Return or claim for Tax refund for any Pre-Closing Tax Period, to the extent
such filing, if accepted, reasonably might change the Tax liability of Buyer or
the Company for any taxable period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.3           Transfer
Taxes.  All Transfer Taxes of the Company for the Pre-Closing
Tax Period and all Transfer Taxes imposed on Seller arising from the
transactions contemplated by this Agreement shall be paid by Seller when due,
and Seller shall, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such Transfer Taxes, and, if required by
applicable Law, Buyer shall, and shall cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.

     

    6.4           Miscellaneous
Taxes.  Buyer shall be responsible for filing all Tax Returns
relating to Miscellaneous Taxes of the Company required to be filed for taxable
periods ending after the Closing Date and for paying all such Miscellaneous
Taxes shown to be due on such Tax Returns (irrespective of whether such Taxes
relate to transactions or events occurring in the Pre-Closing Tax Period or
Post-Closing Tax Period).  Seller shall reimburse Buyer no later than
the date on which such Taxes are required to be paid for all such Taxes but only
to the extent the amount payable is attributable to the Pre-Closing Tax Period
(including transactions or events occurring during such period).  For
purposes of determining such Miscellaneous Taxes attributable to the period
through the Closing Date, (i) ad valorem Taxes (including, without limitation,
real and personal property Taxes) shall be accrued on a daily basis over the
fiscal period of the taxing Authority for which the Taxes are levied
irrespective of the lien or assessment date of such Taxes, (ii) privilege Taxes
not measured by sales, gross receipts, wages, expenses, or other similar
periodic measures shall be accrued on a daily basis over the period to which the
privilege relates, and (iii) Taxes on, or measured by, sales, gross receipts,
wages, expenses, or other similar periodic measures shall be accrued for the
period during which the sales, gross receipts, wages, expenses, or other
periodic measures are actually earned or accrued (based on an interim closing of
the books as of the close of the Closing Date).

     

    6.5           Tax Sharing and Similar
Agreements.  All Tax sharing, Tax allocation, Tax
indemnification and similar agreements with respect to or involving the Company
(other than this Agreement), and the Tax sharing, Tax allocation, Tax
indemnification and similar agreements set forth on Schedule 3.8(f) hereof, shall
be terminated as of the Closing Date and will have no further effect for any
taxable period and, after the Closing Date, the Company shall not be bound
thereby.  The Company shall not, after the Closing Date, have any
further liability under any such Tax sharing, Tax allocation, Tax
indemnification or similar agreements to Seller or Seller’s Affiliates or
otherwise.

     

    6.6           Tax
Indemnification.

     

    (a)           Seller
shall be liable for and shall indemnify and hold harmless Buyer, the Company,
and their respective directors, officers, stockholders, successors and assigns
from and against any losses, damages, expenses, liabilities, claims, Taxes,
assessments and judgments (including reasonable costs and attorneys’ fees and other expenses arising out of any
claim, or the defense or investigation thereof, made with respect to any of the
foregoing)(each a “Loss” and together, the “Losses”)
incurred or suffered by such Persons arising out of, based upon or resulting
from (i) any breach of Seller’s representations and warranties contained in
Section 3.8 of this Agreement, (ii) any breach of Seller’s covenants pertaining
to Taxes contained in this Article VI, (iii) any liability for Taxes of the
Company for any Pre-Closing Tax Period, and (iv) any liability for Taxes of
Seller or the Affiliated Group (including any liability imposed on the Company
under Section 1.1502-6 of the Treasury Regulations or any similar law or
regulation) imposed on the Company for any taxable period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Buyer
shall be liable for and shall indemnify and hold harmless Seller and its
directors, officers, stockholders, successors and assigns from and against any
Losses incurred or suffered by such Persons arising out of, based upon or
resulting from (i) any breach of Buyer’s covenants pertaining to Taxes contained
in this Article VI or (ii) any liability for Taxes of the Company for any
Post-Closing Tax Period.

     

    6.7           Cooperation and
Controversies.

     

    (a)           Seller
and Buyer shall reasonably cooperate, and shall cause their respective
Affiliates, agents, auditors, representatives, officers, and employees
reasonably to cooperate, in preparing and filing all Tax Returns (including
amended returns and claims for refunds), including maintaining and making
available to each other all records necessary in connection with Taxes and in
resolving all disputes and audits with respect to all taxable periods relating
to Taxes.

     

    (b)           In
the event of an audit or other examination by any Authority with respect to
Taxes for which Seller is responsible under this Agreement (in whole or in
part), Buyer shall notify Seller of such audit or examination and permit
representatives of Seller to participate in all relevant proceedings, at
Seller’s expense.  In the case of controversies relating to Income
Taxes for periods ending on or before the Closing Date, Seller may, at its
expense, assume control of such proceedings, but Buyer shall be entitled to
continue to monitor such proceedings at Buyer’s expense.  Seller shall
not have the right to settle or compromise such proceedings without the prior
written consent of Buyer, which consent may be withheld in Buyer’s sole
discretion, if the settlement or compromise would affect the Tax liability of
the Company after the Closing Date.  Seller shall have the right to
settle or compromise such proceedings without the prior written consent of Buyer
provided that the settlement or compromise would not affect the Tax liability of
the Company after the Closing Date.

     

    6.8           Survival.  The
Tax provisions of this Article VI shall survive the termination of this
Agreement.

     

    B.           Other
Matters.

     

    6.9           Conduct of Business of the
Company prior to the Closing.  Seller covenants and agrees that
on and after the date hereof and prior to the Closing, and except as otherwise
consented to or approved by Buyer in writing, Seller shall take all reasonable
efforts (excluding the payment of money) to cause the following:

     

    (a)           The
business, operations, activities and practices of the Company shall be conducted
only in the ordinary course of business and consistent with past
practice;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           The
Company shall not sell, lease, assign, transfer, pledge, mortgage, encumber or
otherwise dispose of any of its properties or assets other than (A) the sale of
insurance made in the ordinary course of business, (B) investment portfolio
transactions in the ordinary course of business, and (C) such other dispositions
which would not have a Material Adverse Effect on the Company;

     

    (c)           The
Company shall not merge or consolidate with any other person or entity or
acquire a material amount of assets of any other person or entity;

     

    (d)           No
change shall be made in the charter or bylaws of the Company;

     

    (e)           No
change shall be made in the number of shares of authorized or issued capital
stock of the Company; nor shall any option, warrant, call, right, commitment or
agreement of any character be granted or made by the Company relating to its
authorized or issued capital stock; nor shall the Company issue, grant or sell
any securities or obligations convertible into or exchangeable for shares of
capital stock of the Company;

     

    (f)           No
dividend shall be declared or paid or other distribution (whether in cash,
stock, property or any combination thereof) or payment declared or made in
respect of the capital stock of the Company, nor shall the Company purchase,
acquire or redeem or split, combine or reclassify any shares of its capital
stock;

     

    (g)           The
Company shall not (i) except in the ordinary course of business and consistent
with past practice, incur any indebtedness for trade debt incurred in addition
to any such indebtedness outstanding on the date of this Agreement, including
any renewals or extensions thereof; (ii) assume, guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other individual, firm or corporation
except in the ordinary course of the conduct of its insurance business
consistent with past practices and in an aggregate amount of less than $5,000 or
(iii) make any loans, advances or capital contributions to, or investments in,
any other individual, firm or corporation, except for investments in the
ordinary course of its insurance business;

     

    (h)           The
Company shall not materially change any method or principle of accounting in a
manner that is inconsistent with past practice except as a result of changes to
SAP and after prior written notice to Buyer;

     

    (i)           The
Company shall not fail to discharge or satisfy any mortgage, lien, claim or
encumbrance or fail to pay or satisfy any obligation or liability (whether
absolute, accrued, contingent or otherwise) arising from its operations when the
same shall become due and payable;

     

    (j)           The
Company shall not permit or allow any material property or asset to be subjected
to any mortgage, lien, claim or encumbrance except those mortgages, liens,
claims or encumbrances permitted under Section 3.17, or enter into any
conditional sale or other title retention agreement with respect to any material
property or asset;

     

    (k)           The
Company shall not make any payment to any shareholder of the Company or to any
of such shareholder’s Affiliates, or forgive any indebtedness due or owing from
the shareholder or such shareholder’s Affiliates to the Company; provided, however, that the
Company may reimburse Seller in the ordinary course of the conduct of its
insurance business and consistent with past practices for any fees and expenses
paid by Seller on behalf of the Company or with respect to the Reinsurance
Agreement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (l)           The
Company shall not enter into any agreement with any labor union or association
representing any employee, or grant any wage or salary increase or bonus, or
increase in any other manner direct or indirect compensation, for or to any of
its officers or employees;

     

    (m)           The
Company shall not enter into, amend, terminate or fail to renew any Material
Contract except in the ordinary course of business consistent with past
practices;

     

    (n)           The
Company shall not make any capital expenditures, capital additions or capital
improvements;

     

    (o)           The
Company shall not restructure or materially change its investment securities
portfolio through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported, other than as required to comply with the
requirements of Section 1.2(b) of this Agreement; and

     

    (p)           The
Company shall not enter into any agreement or commitment to do any of the
foregoing.

     

    6.10           Competing
Transactions.  Until termination of this Agreement as herein
provided, Seller shall not, and shall use all reasonable efforts to cause the
Company not to, directly or indirectly through any officer, director, agent,
employee, representative or otherwise, make, solicit, initiate or encourage the
submission of proposals or offers from any person (including any of its officers
or employees) relating to any re-capitalization, merger, consolidation or other
business combination involving the Company, any sale of all or a substantial
portion of the assets of the Company, or the sale of the Shares or any material
equity interest in the Company (any of the foregoing, a “Competing
Transaction”).  Further, until termination of this Agreement as herein
provided, Seller shall not, and shall use all reasonable efforts to cause the
Company not to, directly or indirectly, participate in any negotiations
regarding, furnish to any other person any information with respect to, or
otherwise cooperate, assist or participate in any effort or attempt by any third
party to propose or effect any Competing Transaction.  Without
limiting the scope of the immediately preceding sentences, Seller shall, during
the term of this Agreement, vote the Shares against (i) any Competing
Transaction, (ii) any action or agreement that would compete with, impede,
interfere with or attempt to discourage the transactions contemplated by this
Agreement or (iii) against any action or agreement that would result in a
material breach of this Agreement.

     

    6.11           Access to
Records.  From the date of this Agreement until the Closing,
Seller shall cause the Company to make available to Buyer and its authorized
representatives, including attorneys and accountants, (with the right to copy)
at reasonable times and under reasonable circumstances all of the Company’s
books, contracts, agreements, commitments, records and documents relating to the
Company’s business as reasonably requested by Buyer.  Buyer shall hold
in confidence all information so obtained and shall use such information only
for the purposes of implementing the transactions contemplated
hereby.  Buyer further covenants and agrees that, prior to the
consummation of the transactions contemplated herein, it shall not at any time,
and shall cause its agents, Affiliates and representatives not to at any time,
without the prior written consent of Seller, disclose any confidential
information regarding the operations of the Company or Seller to third
parties.  If the transactions contemplated hereby are not consummated,
Buyer shall return all data and other information to Seller or the Company and
continue to honor the foregoing confidentiality and nondisclosure
covenants.  Such obligation of confidentiality and nonuse shall not
extend to any (i) information which is shown to be or to have been generally
known to others engaged in the same trade or business as the Company; (ii)
information that is or shall be public knowledge through no act or omission by
Buyer or any of its directors, officers, employees, professional advisors, or
other representatives; (iii) information which is rightfully obtained by Buyer
from a third party that is under no contractual or other obligation of
confidentiality with respect to such information; or (iv) information which is
required to be disclosed pursuant to judicial or governmental
requirements.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.12           Regulatory
Approvals.  Buyer shall take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and use
commercially reasonable efforts, to obtain as promptly as practicable all
approvals, authorizations, and clearances of governmental and regulatory
authorities required of Buyer to consummate the transactions contemplated
hereby.

     

    6.13           Additional Financial
Statements.  For the periods ending on and after December 31,
2007 and prior to the Closing, the Company shall promptly furnish to Buyer (i)
copies of quarterly unaudited financial statements of the Company, and (ii)
copies of Quarterly Statements of the Company.  Such financial
statements will be complete and correct in all material respects, will present
fairly the financial condition of the Company and its results of operations as
at and for the respective periods then ended, and will be prepared in accordance
with SAP applied on a consistent basis with prior periods.

     

    6.14           Closing Date Balance
Sheet.  Seller shall provide Buyer with a draft of the Closing
Date Balance Sheet for the Company not less than one (1) day prior to the
Closing Date.

     

    6.15           Statement as to Purchase
Price.  Seller shall provide Buyer with a valuation of the fair
market value of the assets of the Company and a statement of the Purchase Price
at the times and in the manner provided in Section 1.2 of this
Agreement.

     

    6.16           Deposits.  Seller
agrees that following the Closing, Seller shall continue to take any further
actions as may be necessary to enable Buyer to convert any assets held on
deposit by the Company to Buyer’s control and ownership.

     

    6.17           Statutory
Examination.  In the event a statutory examination of the
financial condition of the Company (the “Statutory Examination”) occurs or
commences prior to the Closing Date, Seller hereby agrees to fully cooperate in
all respects with Buyer, the Company and the Office of Insurance Regulation of
the State of Florida and its agents in connection with such Statutory
Examination including, but not limited to, providing such information and
materials in the possession or control of Seller as may be requested from time
to time by the Office of Insurance Regulation of the State of
Florida.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.18           Reinsurance.  Notwithstanding
any provision in the Reinsurance Agreement or any other agreement to the
contrary, Seller shall maintain the Reinsurance Agreement in full force and
effect for so long as any insurance or reinsurance business written prior to the
Closing Date remains on the books and records of the Company and Clarendon
Insurance Group, Inc. shall take any steps that may be necessary to assure that
National pays all liabilities, claims and obligations as and when they become
due.

     

    6.19           Claims Servicing and
Payment.

     

    (a) From the Closing Date until the
extinguishment of all claims, lawsuits, or actions of any type (individually or
collectively “Claims”), judicial or otherwise, Seller shall abide the terms and
conditions of the Claims Administration Agreement attached on Schedule 6.19, which agreement
among other things requires National to make payments directly to the insured or
claimant, as the case may be, on Claims outstanding from business written prior
to the Closing Date.

     

    (b) Seller shall not amend the Claims
Administration Agreement without the express written consent of
Buyer.  Buyer agrees not to unreasonably withhold consent to amending
the Claims Administration Agreement provided the amendment does not result in
the Buyer being  less protected regarding the administration and
payment of claims that are being serviced by such claims service
provider.  If at any time from the Closing Date until all Claims from
business written prior to the Closing Date have been extinguished, the entity
servicing such Claims determines to end the contractual arrangement with
National, National agrees to become directly responsible for servicing as well
as paying any such Claims.

     

    6.20           Post-Closing Access to
Documents.  After the Closing, upon reasonable prior notice,
Buyer will, and will cause the Company to, afford to Seller and its designated
assignees reasonable access during normal business hours to the properties,
books, records, information and employees of the Company to facilitate (a)
compliance by Seller with any reporting, filing or governmental requirements,
(b) Seller’s pursuit of claims against third parties which relate to Seller’s
ownership of the Company, (c) Seller’s defense against third-party claims which
relate to Seller’s ownership of the Company, (d) compliance with any
investigation by any governmental authority, (e) access to information in
connection with any claim or dispute under this Agreement or (f) any other
reasonable business reason.

     

    6.21           Change of Name; Use of
Trademarks.

     

    (a)           Promptly
after the Closing, and in any event not later than ninety (90) days after the
Closing Date, Buyer will cause the Company to take all required actions to
effect a change of its legal name in each jurisdiction in which the Company is
licensed to transact business to a name that does not include the word
“Clarendon” or any variation thereof.  After the Closing, except as
expressly set forth in Section 6.21(b), Buyer, the Company and their respective
affiliates shall not use any letterhead, catalogues, brochures, advertising,
promotional or other materials which bear any trademark, service mark, trade
name or service name of the Seller or its affiliates or the name “Clarendon” or
any variation thereof, or which in any way identify, or suggest, any affiliation
between either Buyer or the Company or any of their respective affiliates on the
one hand and Seller or any of its affiliates on the other hand.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Effective
as of the Closing, Seller covenants not to sue or bring any claim against Buyer
or the Company for its use of the “Clarendon Select Insurance Company” name or
any slogan, logotype, design or trade dress associated therewith (collectively,
the “Company’s Marks”) solely in connection with the Company’s operations until
the earlier of (i) the receipt of written approval from the appropriate
governmental entities in all jurisdictions for which the Company holds a State
Insurance License as listed on Schedule 6.21 permitting the
use of the Company’s new corporate
name and (ii) the date that is one (1) year from the Closing
Date.  Upon termination of the period set forth in the immediately
preceding sentence, Buyer shall cease all use of the Company’s Marks and all
materials bearing the Company’s Marks (such materials to be returned to Seller
or destroyed).  Buyer acknowledges and agrees that Seller does not
make any express or implied representation or warranty with respect to the
Company’s Marks (including, without limitation, any representation or warranty
relating to non-infringement or misappropriation) and Buyer’s and the Company’s
use of the Company’s Marks is solely and exclusively at its own discretion and
risk.

     

    6.22           Dividend.  Notwithstanding
anything to the contrary in Section 6.9(f), subject to the approval of the
Office of Insurance Regulation of the State of Florida if required, Seller shall
cause the Company to transfer assets, by dividend or distribution, to Seller
(the “Dividend”) in amounts sufficient to reduce the remaining statutory capital
and surplus of the Company to $5,000,000.  After the Dividend, the
policyholder capital and surplus of the Company shall be not less than the
amount necessary to maintain the Company’s current State Insurance
Licenses.

     

    ARTICLE
VII

     

    TERMINATION

     

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

     

    (a)           by
the mutual written consent of Buyer and Seller;

     

    (b)           by
Seller if any of the representations or warranties of Buyer contained herein
shall be inaccurate or untrue in any material respect or if any obligation, term
or condition to be performed, kept or observed by Buyer hereunder has not been
performed, kept or observed in any material respect at or prior to the time
specified in this Agreement and such breach, noncompliance or nonperformance
shall not have been (i) cured or eliminated by Buyer within fifteen (15) days
following receipt of written notice thereof from Seller or (ii) waived by Seller
on or before the Closing Date (each a
“Buyer Default”);

     

    (c)           by
Buyer if any of the representations or warranties of Seller contained herein
shall be inaccurate or untrue in any material respect or if any obligation, term
or condition to be performed, kept or observed by Seller hereunder has not been
performed, kept or observed in any material respect at or prior to the time
specified in this Agreement and such breach, noncompliance or nonperformance
shall not have been (i) cured or eliminated by Seller within fifteen (15) days
following receipt of written notice thereof from Buyer or (ii) waived by Buyer
on or before the Closing Date (each a “Seller Default”);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)           by
either Buyer or Seller if any Authority whose approval is required for the
consummation of the transactions contemplated by this Agreement fails to grant
such approval in accordance with Section 4.1(c) and Section 4.2(c);

     

    (e)           by
either Buyer or Seller if any permanent injunction or other order of a court or
other competent Authority preventing the consummation of the transactions
contemplated by this Agreement shall have become final and non-appealable;
or

     

    (f)           by
either Buyer or Seller following written notice to the other if the Closing
shall not have occurred on or before (i) March 31, 2009 if the conditions set
forth in Section 4.1(c) and Section 4.2(c) have been satisfied prior to such
date or (ii) May 31, 2009 if the conditions set forth in Section 4.1(c) and
Section 4.2(c) have not been satisfied prior to March 31, 2009.

     

    7.2           Effect of
Termination.

     

    (a)           Upon
termination of this Agreement by Seller as the result of a Buyer Default, Seller
shall be entitled to retain the Deposit as liquidated damages and Seller shall
have no further claims against Buyer.

     

    (b)           Upon
termination of this Agreement by Buyer as the result of a Seller Default, Seller
shall immediately return the Deposit to Buyer, without prejudice to any claims
Buyer may have, at law or in equity, to proceed against Seller on account of
such Seller Default.

     

    (c)           Upon
termination of this Agreement in the event of a failure to obtain the approvals
required by Section 4.1(c) and Section 4.2(c), Seller shall immediately return
the Deposit to Buyer and neither party shall have any further claims against the
other party.

     

    (d)           Upon
termination of this Agreement upon the mutual written consent of Buyer and
Seller, or in the event any permanent injunction or other order of a court or
other competent Authority preventing the consummation of the transactions
contemplated by this Agreement shall have become final and non-appealable,
Seller shall immediately return the Deposit to Buyer and neither party shall
have any further claims against the other party.

     

    (e)           Upon
termination of this Agreement by operation of Section 7.1(f) hereof, Seller
shall immediately return the Deposit to Buyer, and neither party shall have any
further claims against the other party.

     

    7.3           Extensions and
Waiver.  At any time prior to the Closing Date, Buyer and
Seller may by mutual written agreement extend the time for performance of any of
the obligations or other acts of Buyer, Seller or the Company; waive any
untruths, inaccuracies or omissions in the representations and warranties of
Buyer or Seller contained herein or in any document delivered pursuant hereto;
waive compliance with any of the covenants or conditions precedent contained
herein; or extend the Closing Date.  Any agreement to any such
extension or waiver shall be valid only if set forth in an agreement in writing
and executed by each of Buyer and Seller.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
VIII

     

    INDEMNIFICATION AND
LIMITATIONS

     

    8.1           Indemnification by
Seller.

    

    (a)           Subject
to Sections 8.3 and 8.4 of this Agreement, Seller shall indemnify and hold
harmless Buyer, the Company, and their respective directors, officers,
stockholders, successors and assigns from and against any Losses incurred or
suffered by such Persons arising out of, based upon or resulting from any breach
by Seller of its representations, warranties or covenants contained in this
Agreement.

    

    (b)           In
addition to the indemnification obligations of Seller pursuant to this Section
8.1, and notwithstanding the limitations set forth in Sections 8.3 and 8.4,
Seller specifically agrees to indemnify and hold harmless Buyer, the Company,
and their respective directors, officers, stockholders, successors and assigns
from and against all Losses in connection with, arising from or relating
to:

    

    (i)           past
or in force insurance policies issued by the Company at any time prior to the
Closing;

    

    (ii)           the
Reinsurance Agreement or any of the risks, obligations and liabilities
transferred by the Company and assumed by Clarendon National Insurance Company
under the Reinsurance Agreement or any other reinsurance agreement;

    

    (iii)           Seller’s
Tax indemnification obligations under Section 6.6(a) of this Agreement;
and

    

    (iv)           any
claim against the Company by any employee, officer or director of the Company
during the period prior to the Closing.

    

    8.2           Indemnification by
Buyer.  Subject to Sections 8.3 and 8.4 of this Agreement,
Buyer shall indemnify and hold harmless Seller and its directors, officers,
stockholders, successors and assigns from and against any Losses incurred or
suffered by such Persons arising out of, based upon or resulting from (i) any
breach by Buyer of its representations, warranties or covenants contained in
this Agreement including, but not limited to, Buyer’s tax indemnification
obligations under Section 6.6(b) of this Agreement or (ii) the use of the name
“Clarendon” during the time between the Closing Date and the date that the
Company’s name is changed in accordance with Section 6.21.

    

    8.3           Survival.  Except
where otherwise expressly provided, and except for claims for indemnification
with respect to any Losses arising from fraud, willful misrepresentation or acts
of concealment by Seller or Buyer prior to the Closing Date, all representations
and warranties of the parties contained in this Agreement shall survive the
Closing Date and shall expire on the date eighteen (18) months after the Closing
Date.  Neither Buyer nor Seller may commence a claim for
indemnification with respect to any Losses under this Article VIII after
eighteen (18) months from the Closing Date.  Notwithstanding the
foregoing, any claim for indemnification which relates to Losses associated with
Taxes hereunder may be made by Buyer or Seller at any time prior to the
expiration of any applicable statute of limitations relating to the assessment
and collection of such Tax obligations.  In addition, any claim for
indemnification by Buyer which relates to Losses under Section 8.l(b) shall
survive the time limits set forth in this Section 8.3, subject to any applicable
statutes of limitation.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.4           Limitations on Liability for
Certain Losses.

    

    (a)           Except
for indemnification claims made by Buyer pursuant to Section 8.1(b), neither
Buyer nor Seller shall make any claim for indemnification (except with respect
to the matters described in Section 8.5) until the aggregate amount of such
Losses exceeds $10,000, in which case Seller or Buyer, as the case may be, shall
be liable for the full amount due.  At such time as either Buyer or
Seller seeks to recover Losses, the party seeking indemnification shall provide
the other party with information regarding the Loss, including, without
limitation, reasonable detail regarding the nature of the Loss and the amount,
or an estimate of the amount, of such Loss.

    

    (b)           Except
for indemnification claims made by Buyer pursuant to Section 8.1(b), neither
Buyer nor Seller shall be liable for indemnification payments in excess of the
Purchase Price for any claim for indemnification under Sections 8.1 or 8.2,
respectively.

    

    8.5           Additional Provisions
Regarding Certain Losses.  In the case of Losses in respect of
Taxes of the Company that result from a Timing Item (as defined below),
Buyer’s or Seller’s liability for indemnification otherwise
provided under this Agreement shall be limited only to interest, penalties and
the effect of Tax rate differences resulting from the Timing Item.  A
Timing Item is defined to mean any item (or related items) of Tax income, gain,
deduction, loss or credit, and all items entering into the computation thereof,
that has the effect of increasing (or decreasing) the liability of the Company
for Taxes in one year and in a related manner decreasing (or increasing) the
liability of the Company for Taxes in another year.

    

    8.6           Third Party
Actions.

    

    (a)           In
the event that any claim is made, suit is brought or tax audit or other
proceeding is instituted by a third party against any party entitled to
indemnification under this Article VIII (the “Indemnified Party”) which involves
or appears reasonably likely to involve a Loss (separately and collectively, a
“Claim”), the Indemnified Party will, promptly (but in any event within such
timeframe as to permit the party required to provide indemnification (the
“Indemnifying Party”) to fulfill its obligations under Section 8.6(b) below)
after receipt of notice of any such Claim for which indemnification may be
sought, notify (which notice shall describe such Claim in reasonable detail) the
Indemnifying Party of the commencement thereof.  The failure to so
notify the Indemnifying Party of the commencement of any such Claim will relieve
the Indemnifying Party from liability under this Article VIII only to the extent
that such failure materially adversely affects the ability of the Indemnifying
Party to defend its interests in connection with the Claim.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           The
Indemnifying Party (at its expense) shall have the right and be given the
opportunity to defend against each Claim by a third party.  If the
Indemnifying Party does not undertake the defense of any such Claim within a
reasonable period after receipt of notice of the same, the Indemnified Party
shall have the right to elect to undertake the defense of such Claim, subject to
the right of the Indemnifying Party to assume the defense at any time prior to
its final determination or settlement of the Claim.  The Indemnified
Party, however, shall continue to have the right, at its own expense, to monitor
the defense of such Claim.  The Indemnified Party shall not make any
settlement with respect to any Claim by a third party without prior written
consent of the Indemnifying Party.

    

    (c)           The
Indemnifying Party shall promptly reimburse the Indemnified Party for any costs,
fees or other expenses incurred by the Indemnified Party in defending against
any Claim by a third party pursuant to paragraph (b) above, provided that the
Indemnifying Party shall be ultimately liable only for those costs, fees, and
expenses reasonably incurred in defending such Claim.

    

    8.7           Subrogation.  The
Indemnifying Party shall be subrogated to any right or cause of action which the
Indemnified Party may have against any other person with respect to any matter
giving rise to a claim for indemnification hereunder, other than a claim in
respect of Taxes.

    

    8.8           Tax Treatment of
Payments.  All payments made pursuant to this Article VIII
shall be treated for tax purposes as adjustments to the Purchase
Price.

    

    8.9           Exclusive
Remedy.  This Article VIII shall provide the sole and exclusive
remedy for any and all Losses sustained or incurred by Buyer or the Company, or
by Seller, or their successors or assigns, absent fraud or willful misconduct on
the part of the party against whom damages are sought.

    

    ARTICLE
IX

     

    MISCELLANEOUS
PROVISIONS

     

    9.1           Notice.

     

    All notices, requests, demands and
other communications required or permitted under this Agreement, including,
without limitation, all notices required pursuant to Article VIII of this
Agreement, shall be deemed to have been duly given and made if in writing and
served either by personal delivery (which shall include delivery by Federal
Express or similar services) to the party for whom it is intended or by being
deposited postage prepaid, certified or registered mail, return receipt
requested (or such form of mail as may be substituted therefor by postal
authorities), in the United States mail, bearing the address shown in this
Agreement for, or such other address as may be designated in writing hereafter
by, such party:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
                

            	
              
                If to Seller:

              

            	
              Clarendon Insurance Group, Inc

            
	 	 	
              466 Lexington Avenue

            
	 	 	
              New York, NY 10017

            
	 	
               

            	 
	 	 	Attention:  Robert Redpath
	 	 	 
	 	
              With a copy
      to:   

            	Locke Lord Bissell & Liddell
  LLP
	 	 	401 9th Street N.W.
	 	 	Suite 400 South
	 	 	Washington, DC 20004
	 	 	 
	 	 	Attention:  William J. Kelty
	 	 	 
	 	
              If
      to Buyer:

            	
              The
      Resourcing Solutions Group, Inc.

            
	 	 	
              7621
      Little Avenue

            
	 	 	
              Suite
      101

            
	
               

            	 	
              Charlotte,
      NC 28226

            
	 	 	 
	 	 	Attention:  Mr. Gary A.
    Musselman
	 	 	
               

            
	 	
              With a copy
      to:   

            	Jorden Burt LLP
	 	 	1025 Thomas Jefferson Street,
N.W.
	 	 	Suite 400 East
	 	 	Washington D.C. 20007-5208
	 	 	 
	 	 	Attention:  Robert B. Shapiro,
      Esquire

    

     

    9.2           Entire
Agreement.  This Agreement and the schedules and exhibits
hereto embody the entire agreement and understanding of the parties with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements and understanding relative to said subject matter.

    

    9.3           Binding Effect;
Assignment.  This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
Buyer, its successors and assigns, and Seller, its successors and
assigns.  Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be transferred or assigned (by operation of law or
otherwise) by any party hereto without the prior written consent of the other
party, except that Buyer shall have the right to assign its rights hereunder and
to transfer and assign ownership of the Company or its assets and properties to
any directly or indirectly wholly-owned subsidiary of Buyer.  No such
transfer by Buyer shall operate in any way to modify or discharge any of the
obligations of Buyer contemplated by this Agreement.

    

    9.4           No Third-Party
Beneficiaries.  Subject to Section 9.3 hereof, nothing herein,
expressed or implied, is intended or shall be construed to confer upon or give
to any person, firm, corporation or legal entity, other than the parties hereto,
any rights, remedies or other benefits under or by reason of this
Agreement.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.5           Counterparts.  This
Agreement may be executed simultaneously in multiple counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.

    

    9.6           Captions.  The
article and section headings of this Agreement are inserted for convenience only
and shall not constitute a part of this Agreement in construing or interpreting
any provision hereof.

    

    9.7           Expenses and
Transactions.  Each of the parties hereto will bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.

    

    9.8           Waiver;
Consent.  This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than in accordance with
its terms), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto.

    

    9.9           Other and Further
Covenants.  The parties shall, in good faith, execute such
other and further instruments, assignments or documents as may be necessary for
the consummation of the transactions contemplated by this Agreement, and shall
assist and cooperate with each other in connection with these
activities.  Without limiting the generality of the foregoing, in the
event at any time after the Closing, any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties will
take such further action (including the execution and delivery of such further
instruments and documents) as the other party reasonably may request, all at the
sole cost and expense of the requesting party (unless the requesting party is
entitled to indemnification therefor under Article VIII hereof).  Upon
reasonable notice, Buyer and Seller shall furnish or cause to be furnished to
the other party and such other party’s agents access, during normal business
hours, to such information and assistance relating to the Company as is
reasonably necessary for financial reporting and accounting matters, insurance
regulatory reporting requirements, the preparation and filing of any Tax
Returns, reports or forms, or the defense of any Tax related claim or
assessment, provided that neither party shall be required to take any action
that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations.

    

    9.10           Gender.  Whenever
the context requires, words used in the singular shall be construed to mean or
include the plural and vice versa, and pronouns of any gender shall be deemed to
include and designate the masculine, feminine or neuter gender.

    

    9.11           Governing
Law.  This Agreement shall in all respects be construed in
accordance with and governed by the laws of the State of North Carolina, without
regard to any such laws relating to choice or conflict of laws.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.12           Public
Announcement.  Neither Buyer nor Seller shall, without the
prior written consent of the other, make any public announcement or any release
to trade publications or to the press or make any statement to any competitor,
customer or any other third party with respect to the transactions contemplated
herein, except such announcement, release or statement necessary in the opinion
of its counsel in order for Buyer or Seller or any of their respective
Affiliates to comply with applicable requirements of federal or state
law.

    

    9.13           Certain
Definitions.  In the context of this Agreement, the following
terms, when utilized in this Agreement and unless the context otherwise
requires, shall have the meanings indicated, which meaning shall be equally
applicable to both the singular and plural forms of such terms:

    

    “Affiliate” with respect to
any Person means any Person (a “Controlling Person”) which, directly or
indirectly, through one or more intermediaries, controls the subject Person or
any Person which is controlled by or is under common control with a Controlling
Person.  For the purposes of this definition, “control” (including the
correlative terms “controlling”, “controlled by” and “under common control
with”), with respect to any Person, means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or by contract
or otherwise.

    

    “Authority” means any
federal, state, local or foreign governmental or regulatory court, legislative
body, agency, commission, department, bureau, instrumentality or other
authority.

    

    ‘Business Day” means any day
other than a Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Law to close.

    

    “Environmental Claim” means
any civil, criminal or investigative action, suit, litigation, hearing,
communication (written or oral), demand, claim, citation, notice or notice of
violation, warning, consent decree, judgment or order by any Person alleging,
claiming, concerning or finding liability or potential liability (including,
without limitation, liability or potential liability for investigatory costs,
clean-up costs, governmental response or oversight costs, natural resources
damages, property damages, penalties, personal injuries, death or any other
damages or costs, including, without limitation, litigation and settlement costs
and consultants’ and attorneys’ fees) arising out of, based on or resulting
from, in whole or in part, (a) the actual or alleged presence, threatened
release, release, emission, disposal, storage, treatment, transportation,
generation, manufacture or use of any hazardous substance at or from any
location or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law or (c) under any Environmental
Law.

    

    “Environmental Law” means the
Federal Water Pollution Control Act, the Federal Resource Conservation and
Recovery Act of 1976, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, each as amended, and any other Law concerning pollution
or protection of the environment, natural resources or human health, including
any Law relating to emissions, discharges, releases or threatened releases of
any hazardous substance into ambient air, surface water, ground water or lands
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any hazardous
substance.  “Laws” for purposes of the
foregoing definition should be deemed to include, without limitation, nuisance,
trespass or “toxic tort,” so called.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Environmental Permit” means
any authorization, approval, registration or license or permit relating to the
Environmental Laws.

    

    “Knowledge of” as it relates to shall
mean, when used in reference to Buyer or its Affiliates, the actual knowledge,
after reasonable inquiry, of the directors and executive officers of Buyer,
excluding the non employee directors of Buyer and when used in reference to
Seller or its Affiliates, the actual knowledge, after reasonable inquiry, of
Patrick Fee, Anders Larsson, and Robert Redpath.

    

    “Law” means any law, statute,
rule or regulation, and any judgment, writ, decree, injunction, order or
requirement, of any Authority.

    

    “Material Adverse Effect”
means (i) with respect to the Company, a material adverse effect on the
properties, assets, liabilities, business, results of operations or condition
(financial or otherwise) of the Company, taken as a whole, and (ii) with respect
to Buyer or Seller, a material adverse effect on the ability of Buyer or Seller,
as applicable, to consummate the transactions contemplated hereby or to perform
its obligations set forth herein; provided, however, that a change in economic
conditions (such as a movement in interest rates or tax law changes) that
adversely affects the insurance industry in general shall not be deemed a
Material Adverse Effect.

    

    “Material Contract” means any
(i) agreement, contract or commitment, whether written or oral, which involves
or may involve payments or receipts of more than $25,000 in any single year or
$25,000 in the aggregate or which cannot be terminated without liability to the
Company upon less than 30 days’ written notice; (ii) agreements, understandings
and arrangements of any kind with any officer, director, employee or stockholder
of the Company; (iii) all effective powers of attorney granted by the Company to
any Person; (iv) all agreements, contracts or other arrangements to which the
Company is a guarantor, surety or endorser whether the Company’s obligations or
liabilities thereunder are actual, accrued, accruing or contingent; (v) any
contract, agreement, commitment, arrangement or understanding limiting the
freedom of the Company from competing in any line of business or with any
Person, from selling any products or services, from competing with or obtaining
products or services from any Person, or from soliciting any Person to become an
employee; (vi) any partnership or joint venture agreement with any Person; (vii)
agreements, instruments, arrangements or understandings which otherwise
reasonably could be expected to have a Material Adverse Effect on the Company;
and (viii) any commitments or other obligation or understanding to enter into
any of the foregoing.

    

    “Most Recent Balance Sheet”
means the Company’s unaudited balance sheet at September 30,2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Most Recent Balance Sheet
Date” is September 30, 2008

    

    “Person” means any natural
person, corporation, limited liability company, unincorporated organization,
partnership, limited partnership, limited liability partnership, association,
joint-stock company, joint venture, trust or government, or any agency or
political subdivision of any government.

    

    “Quarterly Statements” means
the Company’s quarterly financial statements, including the notes thereto, filed
with the Office of Insurance Regulation of the State of Florida for the
quarterly periods ended after December 31, 2007.

    

    “SAP” means the statutory
accounting practices prescribed or permitted by the Office of Insurance
Regulation of the State of Florida.

     

    “State Insurance Licenses”
means the approvals, authorizations, consents, licenses, orders, registrations
and permits of all Authorities required in connection with the operation of the
business of the Company as presently conducted.

     

    [The
balance of this page is intentionally left blank.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

     

    
      
        
          	
                  BUYER:

                	 	The
      Resourcing Solutions Group, Inc.	 
	 	 	 	 	 
	
                   

                	 	
                  By:
      

                	/s/ Gary
      A. Musselman	 
	 	 	 	Gary
      A. Musselman	 
	 	 	 	President/Chief
      Executive Officer	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
                  By:
      

                	/s/
      Frank A. Moody, II	 
	 	 	 	Frank
      A. Moody, II	 
	 	 	 	Chairmen
      of the Board of Directors	 

        

      

    

     

    

      
        	
                SELLER:

              	 	Clarendon
      National Insurance Company	 
	 	 	 	 	 
	
                  

              	 	
                By:
      

              	/s/ Patrick Fey	 
	 	 	Name:  
      	Patrick Fey	 
	 	 	Title:  
      	President	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	Clarendon
      Insurance Group, Inc.	 
	 	 	 	 	 
	 	 	
                By:
      

              	/s/ Anders Larson	 
	 	 	Name:  
      	Anders Larson	 
	 	 	Title:  
      	CFOHenry County Plywood Corporation: Exhibit 4.1 - Prepared by TNT
Filings Inc.

  

Exhibit
4.1

HENRY
COUNTY PLYWOOD CORPORATION

REGISTRATION
RIGHTS AGREEMENT

          REGISTRATION
RIGHTS AGREEMENT, dated as of January 15, 2009, between HENRY COUNTY PLYWOOD
CORPORATION, a Nevada corporation (the “Company”),
Michael Friess and Sanford Schwartz (collectively, the “Shareholders”).  

          NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the parties hereto agree as follows:

	
 

	
 

	
 

	
 

	
1.

	
Piggyback Registration. 

          (a)
The Company shall give the Shareholders at least 10 days’ prior written notice
of each filing by the Company of a registration statement (other than a
registration statement on Form S-4 or Form S-8 or on any successor forms
thereto) with the Securities Exchange Commission (the “Commission”) pursuant
to which the Company is registering shares of its Common Stock for sale by
itself or others for cash proceeds. If requested by the Shareholders in writing
within 20 days after receipt of any such notice, the Company shall, at the
Company’s sole expense (other than the underwriting discounts, if any, payable
in respect of the Shares sold by the Shareholders), register all or, at the
Shareholders’ option, any portion of the shares of common stock then held by
the Shareholders, including all shares of common stock issuable to the
Shareholders upon the exercise, conversion or exchange of other securities now
held by the Shareholders (the “Shares”), concurrently with the registration of such
other securities, all to the extent requisite to permit the public offering and
sale of the Shares through the securities exchange, if any, on which the Common
Stock is being sold or on the over-the-counter market, and will use its
commercially reasonable efforts through its officers, directors, auditors, and
counsel to cause such registration statement to become effective as promptly as
practicable. If the managing underwriter of any such offering shall determine
and advise the Company that, in its opinion, the distribution of all or a
portion of the Shares requested to be included in the registration concurrently
with the securities being registered by the Company would adversely affect the
distribution of such securities by the Company, then the Company will include
in such registration first, the securities that the Company proposes to sell
itself and second, the Shares requested to be included in such registration, to
the extent permitted by the managing underwriter.

          (b)
In the event of a registration pursuant to the provisions of this Agreement,
the Company shall use its reasonable commercial efforts to cause the Shares so
registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Shareholders may reasonably request;
provided, however, that the Company shall not be required to qualify to do
business in any state by reason of this Section 1(b) in which it is not
otherwise required to qualify to do business. 

          (c)
The Company shall keep effective any registration or qualification contemplated
by this Section 1 and shall from time to time amend or supplement each
applicable registration statement, preliminary prospectus, final prospectus,
application, document and communication until such time as all of the Shares
may be sold without volume restrictions pursuant to Rule 144, in each case as
determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Company’s transfer agent.

          (d)
In the event of a registration pursuant to the provisions of this Agreement,
the Company shall furnish to the Shareholders such reasonable number of copies
of the registration statement and of each amendment and supplement thereto (in
each case, including all exhibits), of each prospectus contained in such
registration statement and each supplement or amendment thereto (including each
preliminary prospectus), all of which shall conform to the requirements of the
Securities Act and the rules and regulations thereunder, and such other documents,
as the Shareholders may reasonably request to facilitate the disposition of the
Shares included in such registration.

          (e)
The Company shall notify the Shareholders promptly when such registration
statement has become effective or a supplement to any prospectus forming a part
of such registration statement has been filed.

          (f)
The Company shall advise the Shareholders promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement, or the initiation
or threatening of any proceeding for that purpose and promptly use its
reasonable best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued. 

          (g)
The Company shall promptly notify the Shareholders at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the reasonable request of
the Shareholders prepare and furnish to it such number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Shares or securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made. The Shareholders shall suspend all sales of the Shares upon
receipt of such notice from the Company and shall not re-commence sales until
it receives copies of any necessary amendment or supplement to such prospectus,
which shall be delivered to the Shareholders within 30 days of the date of such
notice from the Company.

          (h)
If requested by the underwriter for any underwritten offering of Shares, the
Company and the Shareholders will enter into an underwriting agreement with
such underwriter for such offering, which shall be reasonably satisfactory in
substance and form to the Company, the Company’s counsel and the Shareholders’
counsel, and the underwriter, and such agreement shall contain such
representations and warranties by the Company and the Shareholders and such
other terms and provisions as are customarily contained in an underwriting
agreement with respect to secondary distributions solely by selling
stockholders, including, without limitation, indemnities substantially to the
effect and to the extent provided in Section 2 of this Agreement.

          (i)
The Company agrees that until all the Shares have been sold under a
registration statement or pursuant to Rule 144 promulgated under the Securities
Act or other available exemption from Securities Act registration requirements,
it shall use its reasonable commercial efforts to keep current in filing all
reports, statements and other materials required to be filed with the
Commission to permit the Shareholders to sell the Shares under Rule 144. 

-2-

          (j)
the Shareholders hereby agrees not to offer, sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any of the
Company’s Common Stock held of record or beneficially owned by the Shareholders
(other than those included in the registration) which at the time of the
effective date of such registration statement may be sold or otherwise
transferred in reliance upon Rule 144 during the period of time (not to exceed
180 days) determined by the Board of Directors of the Company upon advice of
its managing underwriter, from and after the effective date of the registration
statement; provided that the obligations of the Shareholders under this Section
1(j) shall not apply unless each officer and director of the Company then
outstanding, in each case, who are not signatories to this Agreement, are bound
by similar restrictions. Such restriction shall not apply to shares registered
in such offering. In order to enforce this provision, the Company may impose
stop-transfer instructions with respect to such Shares until the end of such
period.

          (k)
However, nothing herein shall be construed to prohibit the Shareholders from
reselling all or part of the Shares in a private transaction or transactions
exempt from Securities Act registration under Section 4(1) thereof or
otherwise; provided, however, that any such transferee(s) shall have the same
registration rights and have the same obligations hereunder as the
Shareholders, and that the Shareholders and all such transferees together shall
share any resale limit imposed by an underwriter.

	
 

	
 

	
 

	
 

	
2.

	
Indemnification.

          (a)
Subject to the conditions set forth below, the Company agrees to indemnify and
hold harmless the Shareholders, his employees, agents, and counsel, and each
person, if any, who controls any such person within the meaning of Section 15
of the Securities Act or Section 20(a) of the Securities and Exchange Act of
1934, as amended (the “Exchange
Act”) from and against any and all loss, liability, charge,
claim, damage, and expense whatsoever (which shall include, for all purposes of
this Section 2, but not be limited to, attorneys’ fees and any and all
reasonable expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented) or any amendment or
supplement thereto, relating to the sale of any of the Shares or (B) in any
application or other document or communication (in this Section 2 collectively
called an “application”)
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
register or qualify any of the Shares under the securities or blue sky laws
thereof or filed with the Commission or any securities exchange; or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading, unless
(x) such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company with respect to the Shareholders
by or on behalf of the Shareholders expressly for inclusion in any registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be, or (y) such
loss, liability, charge, claim, damage or expense arises out of the
Shareholders’ failure to comply with the terms and provisions of this
Agreement, or (ii) any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement. The foregoing agreement
to indemnify shall be in addition to any liability the Company may otherwise
have, including liabilities arising under this Agreement.

-3-

          If
any action is brought against the Shareholders or any of his employees, agents,
or counsel, or any controlling persons of such person (an “indemnified party”)
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly notify
the Company in writing of the institution of such action (but the failure so to
notify shall not relieve the Company from any liability other than pursuant to
this Section 2(a)) and the Company shall promptly assume the defense of such
action, including the employment of counsel provided that the indemnified party
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall
be borne by the Company and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties. Anything
in this Section 2 to the contrary not withstanding, the Company shall not be liable
for any settlement of any such claim or action effected without its written
consent, which shall not be unreasonably withheld. The Company shall not,
without the prior written consent of each indemnified party that is not
released as described in this sentence, settle or compromise any action, or
permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respect of which indemnity may
be sought hereunder (whether or not any indemnified party is a party thereto)
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect
of such action. The Company agrees promptly to notify the Shareholders of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of any Shares or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Shares.

          (b)
The Shareholders agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Shares held by the Shareholders, each other
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the Company
to the Shareholders in Section 2(a) but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented) or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to
the Shareholders by or on behalf of the Shareholders, expressly for inclusion
in any such registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be. If any action shall be brought against the Company or any
other person so indemnified based on any such registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, and in respect of which indemnity may be sought against the
Shareholders pursuant to this Section 2(b), the Shareholders shall have the
rights and duties given to the Company, and the Company and each other person
so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 2(a).

          (c)
To provide for just and equitable contribution, if (i) an indemnified party
makes a claim for indemnification pursuant to Section 2(a) or 2(b) (subject to
the limitations thereof) but it

-4-

is found in a final judicial determination, not
subject to further appeal, that such indemnification may not be enforced in
such case, even though this Agreement expressly provides for indemnification in
such case, or (ii) any indemnified or indemnifying party seeks contribution
under the Securities Act, the Exchange Act or other wise, then the Company
(including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel) as one entity, and the Shareholders (including for this
purpose any contribution by or on behalf of an indemnified party) as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
the Shareholders in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission
shall be determined by, among other things, whether such statement, alleged
statement, omission or alleged omission relates to information supplied by the
Company or by the Shareholders, and the parties’ relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Company and the
Shareholders agree that it would be unjust and inequitable if the respective
obligations of the Company and the Shareholders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Shareholders and the
other indemnified parties were treated as one entity for such purpose) or by
any other method of allocation that does not reflect the equitable
considerations referred to in this Section 2(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 2(c)
each person, if any, who controls the Shareholders within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act and each
employee, agent, and counsel of the Shareholders or control person shall have
the same rights to contribution as the Shareholders and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such registration statement, each director of the Company, and
its or their respective counsel shall have the same rights to contribution as
the Company, subject to each case to the provisions of this Section 2(c).
Anything in this Section 2(c) to the contrary notwithstanding, no party shall
be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 2(c) is intended to
supersede any right to contribution under the Securities Act, the Exchange Act
or otherwise.

          3.
Miscellaneous.

          (a)
Remedies. In the event of a breach by the Company of its obligations
under this Agreement, the Shareholders, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.

          (b)
Agreements and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the Company and the Shareholders. 

          (c)
Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, or telecopies, initially to the address set forth in the preamble
to this Agreement, and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 3(c). All such notices

-5-

and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; two business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.

          (d)
Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties.

          (e)
Counterparts; Facsimile Execution. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Facsimile execution
and delivery of this Agreement is legal, valid and binding for all purposes.

          (f)
Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof. 

          (g)
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of law provisions. Each of the parties submits to the
jurisdiction of any state or federal court sitting in New York, in any action
or proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in
any such court. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with
respect thereto. Nothing in this Section, however, shall affect the right of
any party to bring any action or proceeding arising out of or relating to this
Agreement in any other court or to serve legal process in any other manner
permitted by law or at equity. Each party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.

          (h)
Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provisions in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

          (i)
Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this Agreement.

[signature page
follows]

-6-

          N
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to
be executed as of the date first written above

	
 

	
 

	
 

	
 

	
 

	
HENRY COUNTY PLYWOOD CORPORATION

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael Friess 

	
 

	
 

	
 

	 

	
 

	
 

	
Name: 

	
 

	
 

	
Title: 

	
 

	
 

	
 

	
 

	
 

	
/s/ Michael Friess

	
 

	
 

	 

	
 

	
 

	
Michael Friess

	
 

	
 

	
 

	
 

	
 

	
Address:

	
 

	
 

	
 

	
 

	
 

	
 

	
/s/ Sanford Schwartz 

	
 

	
 

	 

	
 

	
 

	
Sanford Schwartz

	
 

	
 

	
 

	
 

	
 

	
Address:

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