Preview | Replacement Carrier Agreement |

TABLE OF CONTENTS


Title			Page
1.	Definitions			1
	1.1	Block of Business		1
	1.2	Business		1
	1.3	Closing		1
	1.4	Closing Date		1
	1.5	Nonrenewal Date		1
	1.6	Nonrenewal Period		1
	1.7	OCIC		2
	1.8	Prior Business		2
	1.9	Renewed Business		2
	1.10	Specified Period		2
	1.11	UEZ		2
2.	Renewal of OCNJs Business by PIC			2
3.	Consideration			4
	3.1	Payments by OCNJ		4
	3.2	Certain Potential Additional Payments by OCNJ and Dividend Restrictions on PIC		4
	3.3	Termination of Funding Obligations		5
4.	Closing			5
5.	Closing Deliveries			5
	5.1	Closing Deliveries by OCNJ		5
	5.2	Closing Deliveries by PIC and NAHC		6
	5.3	Form and Substance of Documents		6
6.	Representations and Warranties by OCNJ			6
	6.1	Corporate Organization		6
	6.2	Authorization; Enforceability		6
	6.3	No Violation		6
	6.4	Litigation		7
	6.5	Brokers		7
	6.6	Disclosure		7
7.	Representations and Warranties by PIC and NAHC			7
	7.1	Corporate Organization		7
	7.2	Authorization; Enforceability		7
	7.3	No Violation		8
	7.4	Litigation		8


Title			Page
	7.5	Brokers		8
	7.6	Financial Statements		8
	7.7	Reinsurance and Related Matters		9
	7.8	Disclosure		9
8.	Covenants of OCNJ			9
	8.1	Access, Information, Documents, Data and Information Services		9
	8.2	Consents and Approvals		10
	8.3	Confidential Information		10
9.	Covenants of PIC and NAHC			10
	9.1	No Dividends		10
	9.2	Withdrawal Plan		11
	9.3	Confidential Information		11
	9.4	Consents and Approvals		11
	9.5	Reinsurance and Related Matters		11
	9.6	Financial Statements		12
	9.7	Annual Data		12
	9.8	Investment Policy		12
	9.9	Use of Proceeds		12
	9.10	Access, Information and Documents		13
10.	Conditions Precedent to Obligations of OCNJ			13
	10.1	Performance of PIC and NAHC		13
	10.2	Regulatory Consents and Approvals		13
	10.3	Requirements Imposed by Regulatory Authorities		13
	10.4	Withdrawal		13
	10.5	Due Diligence		14
	10.6	Third Party Consents		14
	10.7	Board of Directors		14
	10.8	Fairness Opinion		14
	10.9	Employee Transition Agreement		14
	10.10	Subscription Agreement		14
	10.11	Non-Competition Agreement		14
11.	Conditions Precedent to Obligations of PIC and NAHC			14
	11.1	Performance of OCNJ		14
	11.2	Regulatory Consents and Approvals		14
	11.3	Requirements Imposed by Regulatory Authorities		15
	11.4	Due Diligence		15
	11.5	Third Party Consents		15
	11.6	Board of Directors		15
	11.7	Employee Transition Agreement		15
	11.8	Subscription Agreement		15
	11.9	Non-Competition Agreement		15


Title			Page
12.	Termination			15
	12.1	Termination Events		15
	12.2	Effect of Termination		15
13.	Survival of Representations and Warranties; Indemnification			16
	13.1	Survival of Representations and Warranties		16
	13.2	Indemnification Obligations of OCNJ		16
	13.3	Indemnification Obligations of PIC and NAHC		16
	13.4	Procedure for Indemnification Claims		17
	13.5	Right of Set-Off		19
14.	Disclosures			19
15.	Names			19
16.	Miscellaneous			19
	16.1	Assurance of Further Action		19
	16.2	Expenses		19
	16.3	Waiver		19
	16.4	Notices		20
	16.5	Entire Agreement		21
	16.6	Rights Under this Agreement; Nonassignability		21
	16.7	Governing Law		21
	16.8	Headings: References to Sections, Exhibits and Schedules		21
	16.9	Counterparts		22
LIST OF EXHIBITS AND SCHEDULES				24

iii

REPLACEMENT CARRIER AGREEMENT

THIS REPLACEMENT CARRIER AGREEMENT (this Agreement) is entered into this 18th day of December 2001, among Ohio Casualty of New Jersey, Inc., an Ohio domestic property and casualty insurance company (OCNJ), Proformance Insurance Company, a New Jersey domestic property and casualty insurance company (PIC), and National Atlantic Holdings Corp., a New Jersey corporation (NAHC);

WITNESSETH

WHEREAS, the parties desire to enter into a replacement carrier agreement pursuant to which OCNJ will transfer to PIC the obligations of OCNJ to offer renewals for all (100%) of the Business (as defined herein) as of the Nonrenewal Date (as defined herein) together with consideration and fees set forth herein;

NOW, THEREFORE, the parties hereto agree as follows:

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

1.1 Block of Business shall mean (a) all private passenger automobile business as included in the NAIC Annual Statement private passenger automobile liability and physical damage lines issued by PIC on or after the Closing Date which was produced by OCNJ Agents who are not appointed by PIC as of the Closing Date, (b) all Business which is renewed with PIC after the Closing Date which was produced by OCNJ Agents who were appointed by PIC prior to the Closing Date, and (c) all Business which is renewed with PIC after the Closing Date which was produced by Active Cancelled Agents or nonresident OCNJ agents who are appointed by PIC, regardless of when appointed by PIC.

1.2 Business shall mean OCNJs private passenger automobile business, including assigned risk, UEZ and any associated personal umbrella endorsements thereto, written in the State of New Jersey.

1.3 Closing shall mean the closing of the transactions contemplated by this Agreement.

1.4 Closing Date shall mean the latter of November 1, 2001 or the date on which all conditions to the obligations of the parties to close the transactions provided for in Sections 10 and 11 have been satisfied.

1.5 Nonrenewal Date shall mean the effective date set forth in the initial notice of nonrenewal of the Business, which shall be on or about 60 days after the Closing Date.

1.6 Nonrenewal Period shall mean the one year period commencing on the Nonrenewal Date and ending on the first anniversary of the Nonrenewal Date.

1.7 OCIC shall mean The Ohio Casualty Insurance Company, an Ohio domestic property and casualty insurance company, which is the parent corporation of OCNJ.

1.8 Prior Business shall mean the Business issued on or prior to the Nonrenewal Date and all endorsements issued by OCNJ on such Business prior to and during the Nonrenewal Period.

1.9 Renewed Business shall mean (a) the Business renewed or required to be renewed by PIC under this Agreement, and (b) any assignments from the PAIP (as defined in Section 2.1 below) after the Nonrenewal Date.

1.10 Specified Period shall mean the period beginning on the Nonrenewal Date and ending on December 31 of the second calendar year following the calendar year in which the Nonrenewal Date occurs.

1.11 UEZ shall mean urban enterprise zone policies issued as required by N.J.S.A. 17:33C-2, as implemented by N.J.A.C. 11:3-46.1 et seq.

2. Renewal of OCNJs Business by PIC. Upon the terms and conditions of this Agreement:

2.1 On the Closing Date, OCNJ shall cease issuing new private passenger automobile policies, including UEZ policies, and any associated personal umbrella endorsements thereon in New Jersey, and OCNJ shall not resume issuing new private passenger automobile policies in New Jersey until at least five (5) years after the Closing Date. However, after the Closing Date and during the Nonrenewal Period, OCNJ shall continue to issue endorsements in the ordinary course on the Business which has not yet been nonrenewed. Additionally, OCNJ shall continue to issue assigned risk policies distributed to OCNJ by the Governing Committee of the New Jersey Personal Automobile Insurance Plan (PAIP) pursuant to N.J.A.C. 11:3-2.11 and the PAIP Plan of Operation until the Nonrenewal Date, at which time PIC shall assume all obligations for all OCNJ assignments from the PAIP on or after the Nonrenewal Date.

2.2 As of the Nonrenewal Date, OCNJ shall cease renewing the Business in the State of New Jersey.

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