Exhibit 10.2

COMMERCIAL LINES
STOCK AND ASSET PURCHASE AGREEMENT
BETWEEN
ACP RE, LTD
AND
AMTRUST FINANCIAL SERVICES, INC.
DATED AS OF JANUARY 3, 2014

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TABLE OF CONTENTS

Page

ARTICLE I
DEFINITIONS
2

Section 1.1
Definitions
2

 
 
 
ARTICLE II
PURCHASE OF THE SHARES AND ASSETS
7

Section 2.1
Purchase and Sale
7

Section 2.2
Closing
7

Section 2.3
Payment of Purchase Price and Delivery of Shares and Purchased Assets
8

Section 2.4
Seller's Transaction Closing Date Deliveries
8

Section 2.5
Buyer's Transaction Closing Date Deliveries
8

Section 2.6
Estimated Closing Balance Sheet; Final Closing Balance Sheet
9

Section 2.7
Adjustment to Purchase Price
11

Section 2.8
Payment and Interest
11

 
 
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
11

Section 3.1
Organization, Standing and Corporate Power
11

Section 3.2
Capital Structure; Certain Indebtedness
11

Section 3.3
Authority
12

Section 3.4
Noncontravention; Consents
12

Section 3.5
Brokers
13

Section 3.6
Litigation
13

Section 3.7
No Other Representations and Warranties
13

Section 3.8
Merger Agreement Representations, Warranties and Covenants
13

 
 
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
14

Section 4.1
Organization, Standing and Corporate Power
14

Section 4.2
Authority
14

Section 4.3
Noncontravention; Consents
14

Section 4.4
Purchase Not for Distribution
15

Section 4.5
Litigation
15

Section 4.6
Brokers
15

 
 
 
ARTICLE V
COVENANTS
15

Section 5.1
Commercially Reasonable Efforts
15

Section 5.2
Consents, Approvals and Filings
15

Section 5.3
Public Announcements
16

Section 5.4
Further Assurances
16

Section 5.5
Notice of Events
16

Section 5.6
Merger Agreement
17

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TABLE OF CONTENTS
(continued)
Page

Section 5.7
Transition Services
17

Section 5.8
Option to Acquire Assets
18

 
 
 
ARTICLE VI
EMPLOYEE MATTERS
19

Section 6.1
Transferred Employees
19

Section 6.2
No Third Party Beneficiary Rights
19

 
 
 
ARTICLE VII
CONDITIONS PRECEDENT
19

Section 7.1
Conditions to Each Party's Obligations
19

Section 7.2
Conditions to Obligations of Buyer
20

Section 7.3
Conditions to Obligations of Seller
21

Section 7.4
Frustration of Closing Conditions
21

 
 
 
ARTICLE VIII
INDEMNIFICATION
21

Section 8.1
Obligation to Indemnify
21

Section 8.2
Indemnification Procedures
22

Section 8.3
Tax Treatment; Tax Indemnification
24

 
 
 
ARTICLE IX
TERMINATION PRIOR TO CLOSING
24

Section 9.1
Termination of Agreement
24

Section 9.2
Effect of Termination
24

 
 
 
ARTICLE X
GENERAL PROVISIONS
25

Section 10.1
No Survival of Representations, Warranties, Covenants and Agreements
25

Section 10.2
Fees and Expenses
25

Section 10.3
Notices
25

Section 10.4
Interpretation
26

Section 10.5
Entire Agreement; Third-Party Beneficiaries
26

Section 10.6
Governing Law
26

Section 10.7
Assignment
27

Section 10.8
Dispute Resolution; Enforcement
27

Section 10.9
Waiver of Jury Trial
27

Section 10.10
Severability; Amendment and Waiver
28

Section 10.11
Counterparts
28

Section 10.12
Commercially Reasonable Efforts
28

Section 10.13
Specific Enforcement
28

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EXHIBITS
Exhibit A
List of Companies

Exhibit B
Commercial Lines Bill of Sale and General Assignment and Assumption Agreement

Exhibit C
Commercial Lines Reinsurance Agreement

Exhibit D
Loss Portfolio Transfer Agreement

DISCLOSURE SCHEDULE
Section
Description

Section 3.2
Capital Structure; Certain Indebtedness

Section 3.4
Noncontravention; Consents

Section 4.3
Noncontravention; Consents

Section 7.1(d)
Consents

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COMMERCIAL LINES
STOCK AND ASSET PURCHASE AGREEMENT
This COMMERCIAL LINES STOCK AND ASSET PURCHASE AGREEMENT, dated as of January 3,
2014 (this “Agreement”), among ACP Re, Ltd (“Seller”), a Bermuda corporation,
and AmTrust Financial Services, Inc. (“Buyer”), a Delaware corporation.
WHEREAS, Seller, Buyer and National General Holdings Corp., a Delaware
corporation (“National General”) are jointly entering into a series of related
agreements for the purpose of acquiring Tower Group International, Ltd.
(“Tower”), a Bermuda insurance holding company which transacts commercial and
personal lines insurance business in the United States through fifteen (15)
insurance company Subsidiaries, including the Companies which are the subject of
this Agreement;
WHEREAS, pursuant to their joint acquisition of Tower, Buyer is acquiring
Tower’s Commercial Lines Business, National General is acquiring Tower’s
Personal Lines Business and Seller is acquiring the run-off of Tower’s
pre-Cut-Through Business through this Agreement, the Merger Agreement and
Personal Lines Purchase Agreement, each as described herein, which, in order to
effectuate the joint acquisition of Tower, are conditioned on the execution,
delivery and closing of each other agreement;
WHEREAS, Seller, pursuant to that certain Merger Agreement among Seller, Merger
Sub and Tower dated as of this date (the “Merger Agreement”) is acquiring Tower
and its Subsidiaries, including, indirectly, all of the issued and outstanding
shares of capital stock of the companies as set forth on Exhibit A (the
“Companies”), through the merger of Merger Sub with and into Tower with Tower
surviving such merger (the “Merger”) and Buyer and National General are
acquiring, respectively, the Commercial Lines Business and Personal Lines
Business of Tower and its Affiliates through this Agreement and the related
Personal Lines Purchase Agreement; and
WHEREAS, in accordance with Buyer’s, Seller’s and National General’s joint
acquisition of Tower, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller or its applicable Subsidiary, the Shares and the Purchased
Assets pursuant to the Commercial Lines Bill of Sale and General Assignment and
Assumption Agreement, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained in this Agreement, and of the mutual benefits
to be derived from this Agreement, the parties agree as follows:
ARTICLE I

DEFINITIONS

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Section 1.1    Definitions. For purposes of this Agreement, the following terms
shall have the respective meanings set forth below:
“Affiliate” of any Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first Person. For purposes of this definition,
“control” (including its correlative meanings “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of the power to
direct or cause the direction of management or policies (whether through
ownership or securities or partnership or other ownership interests, by contract
or otherwise).
“Aggregate Surplus” means the total aggregate Surplus of the Companies on the
Transaction Closing Date.
“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.
“Applicable Law” means any domestic or foreign federal, state or local statute,
law, ordinance or code, or any written rules, regulations or administrative
interpretations issued by any Governmental Entity pursuant to any of the
foregoing, and any order, writ, injunction, directive, judgment or decree of a
court of competent jurisdiction applicable to the parties hereto.
“Applicable Rate” means the prime rate of interest reported from time to time in
The Wall Street Journal.
“Books and Records” means all customer lists, policy information, contracts,
administrative manuals, sales records, underwriting records, financial records,
compliance records prepared for or filed with regulators of Tower or its
Affiliates, tax records and all other documents and information related to the
operation of the Commercial Lines Business, each in the possession or control of
the Seller or its Affiliates, whether or not stored in hardcopy form or on
electronic, magnetic or optical media (to the extent not subject to licensing
restrictions). Books and Records shall not include Seller’s organizational
documents, minute books, stock ledgers, tax returns (including working papers
with respect to the Seller).
“Business Day” means any day other than a Saturday, Sunday or other day on which
banking institutions in New York are required or authorized by law or executive
order to be closed.
“Buyer” has the meaning set forth in the introductory paragraph of this
Agreement.
“Buyer Transition Service” has the meaning set forth in Section 5.7(b).

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“Commercial Lines Business” means all insurance contracts, policies,
certificates, binders, slips, covers or other agreements of insurance, including
all supplements, riders, endorsements, renewals and extensions (other than
Personal Lines Business) issued by a Company.
“Commercial Lines Bill of Sale and General Assignment and Assumption Agreement”
means the Commercial Lines Bill of Sale and General Assignment and Assumption
Agreement dated as of the Transaction Closing Date among the Seller, Affiliates
of Tower acquired by Seller and the Buyer in the form annexed as Exhibit B.
“Commercial Lines Cut-Through QSA” means that certain Commercial Lines
Cut-Through Quota Share Reinsurance Agreement dated as of the date hereof among
Technology Insurance Company, Inc. and certain Tower Affiliates, whereby
Technology Insurance Company, Inc. is reinsuring certain commercial lines new
policies relating to the Commercial Lines Business.
“Commercial Lines Reinsurance Agreement” means that certain Commercial Lines
Quota Share Reinsurance Agreement dated as of the Transaction Closing Date among
Technology Insurance Company, Inc. and the Personal Lines Companies in the form
of Exhibit C attached hereto.
“Company” or “Companies” has the meaning set forth in the Recitals.
“Company Material Adverse Effect” means any Material Adverse Effect (as defined
in the Merger Agreement).
“Cut-Through Business” means the Commercial Lines Business and Personal Lines
Business reinsured by, respectively, Affiliates of Buyer and Affiliates of
National General pursuant to the Commercial Lines Cut-Through QSA and Personal
Lines Cut-Through QSA between Tower and Affiliates of Seller and Tower and
Affiliates of National General.
“Disclosure Schedule” means the Disclosure Schedule delivered in connection
with, and constituting a part of, this Agreement.
“Effective Time” has the meaning set forth in Section 2.2.
“Estimated Closing Balance Sheet” has the meaning set forth in Section 2.6(a).
“Estimated Purchase Price” shall mean the estimated Aggregate Surplus as of the
Transaction Closing Date.
“Final Closing Balance Sheet” has the meaning set forth in Section 2.6(c).
“Governmental Entity” has the meaning set forth in Section 3.4.

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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
“Indemnified Party” has the meaning set forth in Section 8.2(a).
“Indemnifying Party” has the meaning set forth in Section 8.2(a).
“Insurance Regulators” means all Governmental Entities regulating the business
of insurance under Applicable Laws.
“Liens” has the meaning set forth in Section 3.2.
“Losses” means any and all liabilities, claims, obligations, losses, costs,
disbursements, penalties, fines, expenses (including reasonable attorneys’,
accountants’ and other out-of-pocket professional fees and expenses incurred in
the investigation, collection, prosecution or defense or any claims, whether or
not involving any third party) and damages, but excluding lost profits or any
punitive, exemplary, consequential or similar damages (other than lost profits
or any punitive, exemplary, consequential or similar damages actually paid to a
third party in a Third Party Claim).
“LPT Agreement” means that certain Loss Portfolio Transfer Agreement dated as of
the Transaction Closing Date between CastlePoint Reinsurance Company, Ltd. Or
Tower Reinsurance, Ltd., as agreed to by the parties, and Affiliates of Tower in
the form of Exhibit D attached hereto whereby CastlePoint Reinsurance Company,
Ltd. or Tower Reinsurance, Ltd. will reinsure the loss reserves of the Companies
as of the Transaction Closing Date, but not unearned premium reserves of the of
the Companies.
“Merger Agreement” has the meaning set forth in the Recitals.
“Merger Sub” means the subsidiary of ACP Re that will merge with Tower pursuant
to the Merger Agreement.
“National General” has the meaning set forth in the Recitals.
“Outside Accountants” has the meaning set forth in Section 2.6(d)(i).
“Parent Material Adverse Effect” means any Parent Material Adverse Effect (as
defined in the Merger Agreement).
“Permitted Liens” means (a) Liens for Taxes or assessments and similar charges,
which either are (i) not delinquent or (ii) being contested in good faith and by
any appropriate action or proceeding, and adequate reserves (as determined in
accordance with SAP) have been established on the Seller’s books with respect
thereto, (b) Liens to secure, landlords, sublandlords, licensors, sublicensors
or licensees under real estate leases, licenses or other rental or lease
agreements, (c) deposits or pledges made in connection with, or to secure
payment of, utilities or similar services, workers’ compensation, unemployment
insurance, pension or other social security, governmental

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insurance and governmental benefits mandated under Applicable Laws, or to secure
the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return of money bonds and
similar obligations, (d) mechanics’, materialmen’s or contractors’ Liens or any
similar statutory Lien for amounts not yet due and payable and incurred in the
ordinary course of business, (e) zoning, entitlement, building and other similar
restrictions which are not violated by the current conduct of the Commercial
Lines Business, (f) purchase money Liens in any property acquired by the
Companies in the ordinary course of business and (g) easements, covenants,
rights of way or other encumbrances or restrictions, if any, that do not impair
the use of the assets to which they relate.
“Person” means an individual, corporation, partnership (limited or general),
joint venture, limited liability company, association, trust, unincorporated
organization or other entity.
“Personal Lines Business” has the meaning set forth in the Personal Lines
Purchase Agreement.
“Personal Lines Companies” means the Subsidiaries of Tower acquired by National
General pursuant to the Personal Lines Purchase Agreement.
“Personal Lines Cut-Through QSA” means that certain Personal Lines Cut-Through
Quota Share Reinsurance Agreement dated as of the date hereof among Integon
National Insurance Company and certain Tower Affiliates, whereby Integon
National Insurance Company is reinsuring certain personal lines new policies
relating to the Personal Lines Business.
“Personal Lines Purchase Agreement” means that certain Personal Lines Stock
Purchase Agreement dated of even date herewith by and between ACP Re and
National General, whereby National General is purchasing all of the capital
stock of certain Subsidiaries of Tower and the renewal rights and certain other
assets related to the Personal Lines Business of the Companies.
“Pre-Closing Month End” means the last day of the last full month ending prior
to the Transaction Closing Date.
“Post-Closing Purchased Assets” has the meaning set forth in Section 5.8(a).
“Preliminary Closing Balance Sheet” has the meaning set forth in Section 2.6(b).
“Purchased Assets” means the Renewal Rights and assets listed on Exhibit A to
the Commercial Lines Bill of Sale and General Assignment and Assumption
Agreement.
“Purchase Price” has the meaning set forth in Section 2.1.
“Purchase Price Calculations” has the meaning set forth in Section 2.6(b).

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“Regulatory Approvals” means all approvals, consents and authorizations of the
transactions contemplated by this Agreement required under applicable state
insurance or insurance holding company laws, including without limitation all
approvals, consents and authorizations required by the New York Department of
Financial Services, the Illinois Department of Insurance, the Massachusetts
Division of Insurance, the Florida Office of Insurance Regulation, the New
Jersey Department of Banking and Insurance, the Maine Bureau of Insurance and
any other state insurance regulator whose approval is required to consummate any
of the transactions contemplated by this Agreement.
“Renewal Rights” means the right from and after the Transaction Closing to renew
or replace all insurance contracts issued by Tower or its Affiliates (other than
the Companies) as part of the Commercial Lines Business prior to the Closing
Date, including all of (i) Tower or its Affiliates’ (other than the Companies)
right to produce such insurance contracts with respect to policyholders, if any,
(ii) the expiration data relating to such insurance contracts, (iii) all Books
and Records pertaining to such insurance contracts and policyholders, (iv) the
policyholder and producer lists owned or used by Tower or the Affiliates of
Tower (other than the Companies) in the conduct of the Commercial Lines
Business, and (v) the relationships that Tower or the Affiliates of Tower (other
than the Companies) enjoy with each of the producers. For the avoidance of
doubt, the Buyer acknowledges and agrees that the Seller does not have the power
or ability to require any policyholder or producer to write or renew any
policies following the Transaction Closing Date, upon expiration or otherwise.
“SAP” means, with respect to any Company or Subsidiary, the applicable statutory
accounting principles (or local equivalents in the applicable jurisdiction)
prescribed by the applicable Insurance Regulator under Applicable Law.
“Securities Act” has the meaning set forth in Section 4.4.
“Seller” has the meaning set forth in the introductory paragraph of this
Agreement.
“Seller Transition Service” has the meaning set forth in Section 5.7(a).
“Shares” means the capital stock of the Companies.
“Subsidiary” of any Person means another Person 50% or more of the total
combined voting power of all classes of capital stock or other voting interests
of which, or 50% or more of the equity securities of which, is owned directly or
indirectly by such first Person.
“Surplus” means as of any date the surplus of each of the Companies determined
in accordance with SAP (in the manner reflected in line 36 of the “Liabilities,
Surplus and Other Funds” page of each of the Companies’ unaudited statutory
Quarterly Statement); provided that the Surplus as of the Closing Date shall be
determined after

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giving effect to the transactions contemplated by the LPT Agreement and the
final determination of the loss reserves transferred thereunder.
“Taxes” means all federal, state, local and foreign taxes of any kind, including
those on or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, value added, property or windfall profits taxes, or
similar fees, assessments or charges of any kind whatsoever (whether payable
directly or by withholding and whether or not requiring the filing of a tax
return), together with any interest and any penalties, additions to tax or
additional amounts imposed thereon by any Taxing Authority, domestic or foreign.
“Taxing Authority” means any Governmental Entity or other Person responsible for
and having jurisdiction over, the administration of Taxes.
“Third Party Claim” has the meaning set forth in Section 8.2(a).
“Tower” has the meaning set forth in the Recitals.
“Transaction Closing” has the meaning set forth in Section 2.2.
“Transaction Closing Date” has the meaning set forth in Section 2.2.
“Transaction Documents” means this Agreement, the Commercial Lines Bill of Sale
and General Assignment and Assumption Agreement, the LPT Agreement and the
Commercial Lines Reinsurance Agreement.
“Transition Services Agreement” has the meaning set forth in Section 5.7(c) .
“Unresolved Changes” has the meaning set forth in Section 2.6(d)(i).
“Wire Transfer” means a payment in immediately available funds by wire transfer
in lawful money of the United States of America to such account or accounts as
shall have been designated by notice to the paying party.

ARTICLE II    

PURCHASE OF THE SHARES AND ASSETS
Section 2.1    Purchase and Sale. Upon the terms and subject to the conditions
of this Agreement, at the Transaction Closing, Seller shall cause all its
applicable Subsidiaries directly owning the Shares to sell all of the Shares to
Buyer and all its applicable Subsidiaries directly owning the Purchased Assets
to sell, transfer, assign, convey and deliver to Buyer the Purchased Assets, and
Buyer shall purchase all of the Shares and Purchased Assets from Seller or such
Subsidiaries, free and clear of all Liens, except for Permitted Liens only with
respect to the Purchased Assets, for an aggregate amount (the “Purchase Price”)
equal to the Aggregate

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Surplus. The Purchase Price shall be allocated among the Shares pro rata based
upon the Surplus of the respective Company.
Section 2.2    Closing. Unless this Agreement shall have been terminated
pursuant to Section 9.1, and subject to the satisfaction or waiver of each of
the conditions set forth in Article VII, the closing of the purchase and sale of
the Shares and Purchased Assets (the “Transaction Closing”) shall take place at
10:00 a.m. on the “Closing Date” (as defined in the Merger Agreement), at the
same location as the “Closing” (as defined in the Merger Agreement). The
effective date and time of the Transaction Closing are herein referred to as the
“Transaction Closing Date.” All of the contemplated transactions under this
Agreement shall be deemed to be consummated as of 11:59:59 p.m. Eastern Time on
the Transaction Closing Date (the “Effective Time”) and all actions taken at
Transaction Closing shall be deemed to have occurred simultaneously and shall be
deemed effective as of the dates and times specified in this Agreement.
Section 2.3    Payment of Purchase Price and Delivery of Shares and Purchased
Assets. At the Transaction Closing:
(a)    Buyer shall pay to Seller the Estimated Purchase Price by Wire Transfer;
and
(b)    Seller shall cause its Subsidiaries directly owning the Shares to deliver
to Buyer the Shares, duly endorsed in blank or with stock powers or other proper
instruments of assignment duly endorsed in blank, in proper form for transfer,
with all appropriate stock transfer tax stamps affixed.
Section 2.4    Seller’s Transaction Closing Date Deliveries. Subject to
fulfillment or waiver (where permissible) of the conditions set forth in Article
VII, at the Transaction Closing, Seller shall deliver to Buyer all of the
following:
(a)    FIRPTA Certificate. Unless the Seller is a foreign person, a
certification from Seller and signed by a responsible officer of Seller, as
contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations,
certifying that Seller is not a foreign person.
(b)    Stock Certificates. The stock certificates representing the Shares,
accompanied by stock powers duly executed in blank, or other proper instruments
of assignment duly endorsed in blank, by Seller’s Subsidiaries directly owning
such Shares in respect of the Shares of each Company.
(c)    Transaction Documents. A copy of each Transaction Document (other than
this Agreement) executed by Seller and any of its Affiliates prior to giving
effect to this Agreement and the Personal Lines Purchase Agreement.

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Section 2.5    Buyer’s Transaction Closing Date Deliveries. Subject to
fulfillment or waiver (where permissible) of the conditions set forth in Article
VII, at the Transaction Closing, Buyer shall deliver to Seller all of the
following:
(a)    Transaction Documents. A copy of each Transaction Document (other than
this Agreement) executed by Buyer.
(b)    Purchase Price. Payment by Wire Transfer for the of the Estimated
Purchase Price.
Section 2.6    Estimated Closing Balance Sheet; Final Closing Balance Sheet.
(a)    At least five (5) Business Days prior to the Transaction Closing Date,
Seller shall deliver to Buyer a pro forma balance sheet of the Companies as of
the Pre-Closing Month End determined on a combined basis in accordance with SAP
that shall include a calculation of the Estimated Purchase Price (the “Estimated
Closing Balance Sheet”).
(b)    Not later than ninety (90) days after the Transaction Closing Date, Buyer
shall cause the combined balance sheet of the Companies to be prepared as of the
close of business on the Transaction Closing Date in accordance with SAP, and
shall deliver such balance sheet to Seller (the “Preliminary Closing Balance
Sheet”), which balance sheet shall include Buyer’s calculation of the Aggregate
Surplus as of the Transaction Closing Date (the “Purchase Price Calculations”).
(c)    If, within sixty (60) days following its receipt of the Preliminary
Closing Balance Sheet, Seller does not dispute the Preliminary Closing Balance
Sheet or the Purchase Price Calculations, the Preliminary Closing Balance Sheet
shall be deemed to be the combined balance sheet of the Companies as of the
close of business on the Transaction Closing Date (the “Final Closing Balance
Sheet”) and the final Purchase Price shall equal the Aggregate Surplus set forth
in the Purchase Price Calculations.
(d)    In the event Seller has any dispute with regard to the Preliminary
Closing Balance Sheet or the Purchase Price Calculations, such dispute shall be
resolved in the manner described in this Section 2.6. Seller shall notify Buyer
in writing of such dispute within sixty (60) days after Seller’s receipt of the
Preliminary Closing Balance Sheet, which notice shall specify in reasonable
detail the nature of the dispute.
(i)
During the forty-five (45) day period following Buyer’s receipt of such notice,
Buyer and Seller shall attempt to resolve such dispute and to determine the
final calculation of the Purchase Price.

(ii)
If, at the end of the forty-five (45) day period specified in subsection (d)(i)
above, Buyer and Seller shall have failed to reach

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a written agreement with respect to all or a portion of such dispute (those
items that remain in dispute at the end of such period referred to as the
“Unresolved Changes”), the matter shall be referred to a nationally recognized
accounting firm (the “Outside Accountants”) jointly selected by Seller and Buyer
for review and resolution of any and all matters (but only such matters) which
remain in dispute. Buyer and Seller shall instruct their respective accountants
to select the Outside Accountants in good faith within ten (10) days. If Buyer’s
and Seller’s accountants shall not have agreed upon the Outside Accountants
within such ten (10) day period, within an additional five (5) days, they shall
each designate an Outside Accountant who has not performed work in the last two
(2) years for either Seller or Buyer and with experience in the property and
casualty insurance business and the Outside Accountants shall be selected by lot
from those two accounting firms. If only one of Seller’s or Buyer’s accountants
shall so designate a name of an accounting firm for selection by lot, such
accounting firm so designated shall be the Outside Accountants.
(iii)
Each party hereto agrees to execute, if requested by the Outside Accountants, a
reasonable engagement letter. All fees and expenses relating to the work, if
any, to be performed by the Outside Accountants shall be borne pro rata by
Seller and Buyer in inverse proportion to the allocation of the dollar amount of
the Unresolved Changes, in the aggregate, between Buyer and Seller made by the
Outside Accountants such that the party with whom the Outside Accountants agree
more closely pays a lesser proportion of the fees and expenses. The Outside
Accountants shall act as an arbitrator to determine, based solely on the
provisions of this Agreement and the presentations by Seller and Buyer, or
representatives thereof, and not by independent review, only the resolution of
the Unresolved Changes. The Outside Accountants’ resolution of the Unresolved
Changes, which for each of the Unresolved Changes shall be within the range of
values of the amount claimed by either party as to any of the Unresolved
Changes, shall be made within sixty (60) days of the submission of the
Unresolved Changes to the Outside Accountants and shall be set forth in a
written statement delivered to Seller and Buyer and shall be deemed to be
mutually agreed upon by Buyer and Seller

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for all purposes of this Agreement. Any changes to the Preliminary Closing
Balance Sheet resulting from such resolution of the Unresolved Changes shall be
made, and such Preliminary Closing Balance Sheet, as so changed, shall be the
Final Closing Balance Sheet and the final Purchase Price as of the close of
business on the Transaction Closing Date shall be the Aggregate Surplus
recalculated to reflect the Final Closing Balance Sheet.
(e)    At all times prior to the determination of the Final Closing Balance
Sheet, the final Purchase Price, Buyer shall, and shall cause the Companies to,
cooperate fully with Seller and Seller’s authorized representatives, including
providing, on a timely basis, all information necessary or useful in reviewing
the Preliminary Closing Balance Sheet, and require Company employees who remain
employees of the Companies following the Transaction Closing Date to assist
Seller and Seller’s authorized representatives in the review of the Preliminary
Closing Balance Sheet and the Purchase Price Calculations.
(f)    Notwithstanding anything to the contrary contained herein:
(i)
The accounting principles for determining (A) the Preliminary Closing Balance
Sheet and the Final Closing Balance Sheet, or (B) the Purchase Price
Calculations, shall be the same SAP principles applied in such Companies’ past
practices; and

(ii)
In the event the Transaction Closing Date shall not be the end of a fiscal
quarter end, the reserves of each Company as of the Transaction Closing Date
reflected in the Final Closing Balance Sheet shall be calculated and determined
using the reserving practices and procedures applicable to the preparation of
the balance sheet of such Company as of such fiscal quarter end.

Section 2.7    Adjustment to Purchase Price. If, the Estimated Purchase Price
shall exceed the final Purchase Price determined pursuant to Section 2.6, the
Seller shall pay to Buyer, as an adjustment to the Purchase Price, in a manner
and with interest as provided in Section 2.8, the amount of such excess. If, the
Estimated Purchase Price is less than the final Purchase Price determined
pursuant to Section 2.6, Buyer shall pay to Seller, as an adjustment to the
Purchase Price, in a manner and with interest as provided in Section 2.8, the
amount of such deficiency.
Section 2.8    Payment and Interest.
(a)    Any payment pursuant to Section 2.7 shall be made by the party obligated
to make such payment within five (5) Business Days after the Purchase Price has
been finally

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determined, by wire transfer to the party entitled to receive such payment of
immediately available funds to an account designated by such recipient.
(b)    The amount of any payment pursuant to Section 2.7 shall bear interest
from and including the Transaction Closing Date but excluding the date of
payment at the Applicable Rate.
ARTICLE III    

REPRESENTATIONS AND WARRANTIES
OF SELLER
Subject to the exceptions and qualifications set forth in the Disclosure
Schedule, Seller represents and warrants to Buyer as follows:
Section 3.1    Organization, Standing and Corporate Power. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite corporate
power and authority to carry on its business as now being conducted.
Section 3.2    Capital Structure; Certain Indebtedness. Section 3.2 of the
Disclosure Schedule sets forth, as of the date of this Agreement, the name and
jurisdiction of organization of each the Companies. Except as set forth in
Section 3.2 of the Disclosure Schedule, all of the issued and outstanding shares
of capital stock of, or other equity or voting interests in, each of the
Companies (except for directors’ qualifying shares) are owned directly or
indirectly, beneficially and of record, by Seller free and clear of all pledges,
restrictions, claims, liens, charges, encumbrances and security interests of any
kind (collectively, “Liens”) and material transfer restrictions, except for such
Liens and transfer restrictions of general applicability as may be created under
the Securities Act or other securities Applicable Laws. Each issued and
outstanding share of capital stock of each of the Companies is duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights, and
there are no subscriptions, options, warrants, rights, calls, contracts or other
commitments, understandings, restrictions or arrangements relating to the
issuance, acquisition, redemption, repurchase or sale of any shares of capital
stock or other equity or voting interests of any of the Companies, including any
right of conversion or exchange under any outstanding security, instrument or
agreement, any agreements granting any preemptive rights, subscription rights,
anti-dilutive rights, rights of first refusal or similar rights with respect to
any securities of any of the Companies. None of the Companies has any
outstanding equity compensation or similar plans relating to the capital stock
of, or other equity or voting interests in, any of the Companies. Neither the
Seller nor any of the Companies has any obligation to make any payments based on
the price or value of any securities of any of the Companies or dividends paid
thereon.

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Section 3.3    Authority. Seller has the requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Seller and no other
corporate action or proceeding on the part of Seller or any Affiliate of Seller
is necessary (including any shareholder vote). This Agreement has been duly
executed and delivered by Seller and, assuming this Agreement constitutes the
valid, legal and binding agreement of Buyer, constitutes a valid, legal and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors’ rights generally and (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 therefor
may be brought.
Section 3.4    Noncontravention; Consents. Neither the execution and delivery of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated by this Agreement, nor performance or compliance by Seller with any
of the terms or provisions hereof, will (i) conflict with or violate any
provision of the certificate or articles of incorporation, code of regulations,
by-laws or other comparable charter or organizational documents of Seller or
(ii) assuming (A) that the actions described in Section 4.02(a) of the Merger
Agreement have been completed, (B) that the authorizations, consents and
approvals referred to in this Section 3.4 are obtained and (C) that the filings
referred to in this Section 3.4 are made and any waiting periods thereunder have
terminated or expired, in the case of each of clauses (A) through (C), prior to
the Effective Time, (x) conflict with, contravene or violate any Law, judgment,
writ or injunction of any Governmental Entity applicable to Seller or the
Companies or (y) conflict with, contravene or violate or constitute a default or
breach under any of the terms, conditions or provisions of any Contract to which
Seller or any of the Companies is a party or accelerate Seller’s or any of the
Companies’, if applicable, obligations under any such Contract, except, in the
case of clause (ii), as would not reasonably be expected to have a Parent
Material Adverse Effect. Except for (a) compliance with the applicable
requirements of the Exchange Act, (b) compliance with the rules and regulations
of the NASDAQ Stock Market, (c) the filing of appropriate documents with the
relevant authorities of other jurisdictions in which any of the Companies is
qualified to do business, (d) filings required under, and compliance with other
applicable requirements of, the HSR Act, and such other consents, approvals,
filings, authorizations, declarations or registrations as are required to be
made or obtained under any non-U.S. Antitrust Laws, in each case as set forth in
Section 3.4 of the Disclosure Schedule, (e) compliance with any applicable state
securities or blue sky laws and (f) the Regulatory Approvals as set forth in
Section 3.4 of the Disclosure Schedule, no consent or approval of, action by or
in respect of, or filing, license, permit or authorization, declaration or
registration with, any court or governmental or regulatory

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authority or agency, domestic or foreign (a “Governmental Entity”), the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions contemplated hereunder, other than such other
consents, approvals, filings, licenses, permits or authorizations, declarations
or registrations that, if not obtained, made or given, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.5    Brokers. No broker, investment banker, financial advisor or other
Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Seller or the
Companies.
Section 3.6    Litigation. There is no suit, action, proceeding or arbitration
pending or threatened, to the knowledge of Seller, in writing against or
affecting Seller or any Affiliate of Seller that (i) seeks to restrain or enjoin
the consummation of any of the transactions contemplated by this Agreement or
(ii) would reasonably be expected to impair the ability of Seller to consummate
any of the transactions contemplated by this Agreement.
Section 3.7    No Other Representations and Warranties. Except for the
representations and warranties contained in this Article III (including the
related portions of the Disclosure Schedules), none of Seller or any other
Person has made or makes any other express or implied representation or
warranty, either written or oral, on behalf of Seller, including any
representation or warranty as to the accuracy or completeness of any information
regarding the Companies furnished or made available to Buyer and its
representatives.
Section 3.8    Merger Agreement Representations, Warranties and Covenants.
(a)    To Seller’s knowledge, the representations and warranties set forth in
the Merger Agreement are true and correct as of the date hereof and shall be
true and correct as of the Closing Date (as defined in the Merger Agreement).
For the avoidance of doubt, all qualifiers as to materiality, material adverse
effect and all other qualifiers contained in such representations and warranties
in the Merger Agreement shall be given effect in the determination of the
accuracy of such representations and warranties pursuant to this Section 3.8(a).
(b)    To Seller’s knowledge, there has been (i) no breach by Tower of any of
its representations and warranties set forth in the Merger Agreement; (ii) no
material failure on Tower’s part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement; or (iii) the occurrence or non-occurrence of any event or the
existence of any fact or condition that would cause or constitute a breach of
any of Tower’s representations or warranties under the Merger Agreement, which
in any case or in the

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aggregate would reasonably be expected to cause any condition to the
consummation of the Merger to fail to be satisfied.
ARTICLE IV    

REPRESENTATIONS AND WARRANTIES OF BUYER
Subject to the exceptions and qualifications set forth in the Disclosure
Schedule, Buyer represents and warrants to Seller as follows:
Section 4.1    Organization, Standing and Corporate Power. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite corporate
power and authority to carry on its business as now being conducted.
Section 4.2    Authority. Buyer has the requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Buyer. No
action by the stockholders of Buyer is necessary to authorize the execution and
delivery by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and, assuming this Agreement constitutes the valid, legal and
binding agreement of Seller, constitutes a valid, legal and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors’ rights generally
and (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 therefor may be brought.
Section 4.3    Noncontravention; Consents. The execution and delivery of this
Agreement do not, and except as disclosed in Section 4.3 of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, (i) conflict with, be prohibited by, or require any approval that has
not already been obtained under, any of the provisions of the certificate of
incorporation or the by-laws of Buyer or the comparable organizational documents
of any of its Subsidiaries, (ii) subject to the matters referred to in the next
sentence, conflict with, result in a breach of or default (with or without
notice or lapse of time, or both) under, be prohibited by, require approval or
consent under, give rise to a right of termination under, or result in the
creation of any Lien (other than a Permitted Lien) on any property or asset of
Buyer or any of its Affiliates under, any agreement, permit, franchise, license
or instrument to which Buyer or any of its Subsidiaries is a party or (iii)
subject to the matters

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referred to in the next sentence, contravene, be prohibited by, or require
approval or consent under, any Applicable Law, judgment, injunction or award
applicable to Buyer or any of its Subsidiaries, which, in the case of clauses
(ii) and (iii) above, would materially impair the ability of Buyer to consummate
any of the transactions contemplated hereby. No consent, approval or
authorization of, or declaration or filing with, or notice to, any Governmental
Entity is required by or with respect to Buyer or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Buyer or the
consummation by Buyer of any of the transactions contemplated hereby, except for
(i) if required, the filing of pre-merger notification and report forms under
the HSR Act, (ii) the approvals, filings and notices required under the
insurance laws of the jurisdictions set forth in Section 4.3 of the Disclosure
Schedule, (iii) such other consents, approvals, authorizations, declarations,
filings or notices as are set forth in Section 4.3 of the Disclosure Schedule
and (iv) such other consents, approvals, authorizations, declarations, filings
or notices that are not required to be set forth pursuant to clauses (ii) and
(iii) the failure to obtain or make which, in the aggregate, would not
materially impair the ability of Buyer to consummate any of the transactions
contemplated hereby.
Section 4.4    Purchase Not for Distribution. The Shares to be acquired under
the terms of this Agreement will be acquired by Buyer for its own account and
not with a view to distribution. Buyer is an “accredited investor” as defined in
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “Securities Act”). Buyer acknowledges
that it is informed as to the risks of the transactions contemplated hereby and
of ownership of the Shares. Buyer acknowledges that the Shares have not been
registered under the Securities Act or any state or foreign securities laws and
that the Shares may not be sold, transferred, offered for sale, assigned,
pledged, hypothecated or otherwise disposed of unless such transfer, sale,
assignment, pledge, hypothecation or other disposition is pursuant to the terms
of an effective registration statement under the Securities Act and the Shares
are registered under any applicable state or foreign securities laws or sold
pursuant to an exemption from registration under the Securities Act and any
applicable state or foreign securities laws.
Section 4.5    Litigation. There is no suit, action, proceeding or arbitration
pending or threatened in writing against or affecting Buyer or any Affiliate of
Buyer that (i) seeks to restrain or enjoin the consummation of any of the
transactions contemplated by this Agreement or (ii) would reasonably be expected
to impair the ability of Buyer to consummate any of the transactions
contemplated by this Agreement.
Section 4.6    Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Buyer or any
Affiliate.

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ARTICLE V    

COVENANTS
Section 5.1    Commercially Reasonable Efforts. Upon the terms and subject to
the conditions and other agreements set forth in this Agreement, each of the
parties agrees to use its commercially reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
Section 5.2    Consents, Approvals and Filings. Seller and Buyer shall each use
their commercially reasonable efforts, and shall cooperate fully with each other
(i) to comply as promptly as practicable with all governmental requirements
applicable to the transactions contemplated by this Agreement and (ii) to obtain
as promptly as practicable all necessary permits, orders or other consents,
approvals or authorizations of Governmental Entities and consents or waivers of
all third parties necessary in connection with the consummation of the
transactions contemplated by this Agreement. In connection therewith, Seller and
Buyer shall make and cause their respective Affiliates to make all legally
required filings as promptly as practicable in order to facilitate prompt
consummation of the transactions contemplated by this Agreement, and shall
provide and shall cause their respective Affiliates to provide such information
and communications to Governmental Entities as such Governmental Entities may
request. The parties hereto shall not willfully take any action that will have
the effect of delaying, impairing or impeding the receipt of all necessary
permits, orders or other consents, approvals or authorizations of Governmental
Entities and consents or waivers of all third parties necessary in connection
with the consummation of the transactions contemplated by this Agreement.
Section 5.3    Public Announcements. Until the Transaction Closing Date, the
parties hereto shall consult with each other before issuing, and give each other
the opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated hereunder, and shall
not issue any such press release or make any such public statement prior to such
consultation and joint approval of Buyer and Seller, except as may be required
by Applicable Law, court process or the rules and regulations of any national
securities exchange or national securities quotation system provided that, to
the extent possible under the circumstances, the party making such disclosure
consults with the other party, and considers in good faith the views of the
other party, before doing so.
Section 5.4    Further Assurances. Seller and Buyer agree, and Seller, prior to
the Transaction Closing, and Buyer, after the Transaction Closing, agree to
cause the Companies and each of their Subsidiaries, to execute and deliver such
other documents, certificates, agreements

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and other writings and to take such other actions as may be reasonably necessary
or desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
Section 5.5    Notice of Events.
(a)    Buyer shall promptly notify Seller, and Seller shall promptly notify
Buyer, in writing, upon (1) becoming aware of any order or decree or any
complaint praying for an order or decree restraining or enjoining the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement, or (2) receiving any notice from any Governmental Entity of its
intention to (i) institute a suit or proceeding to restrain or enjoin the
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement or (ii) nullify or render ineffective this Agreement or such
transactions if consummated.
(b)    During the period from the date hereof to the Transaction Closing Date or
the earlier termination of this Agreement, Buyer shall promptly notify the
Seller in writing if Buyer becomes aware of: (i) the occurrence or
non-occurrence of any event or the existence of any fact or condition that would
cause or constitute a breach of any of its representations or warranties had any
such representation or warranty been made as of the time of the Buyer’s
discovery of such event, fact or condition; (ii) any material failure on its
part or the Seller’s or the Companies’ part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; or (iii) the occurrence or non-occurrence of any event or the
existence of any fact or condition that would cause or constitute a breach of
any of Seller’s representations or warranties hereunder.
(c)    During the period from the date hereof to the Transaction Closing Date or
the earlier termination of this Agreement, Seller shall promptly notify the
Buyer in writing if Seller becomes aware of: (i) the occurrence or
non-occurrence of any event or the existence of any fact or condition that would
cause or constitute a breach of any of its representations or warranties had any
such representation or warranty been made as of the time of the Seller’s
discovery of such event, fact or condition; (ii) any material failure on its
part or the Buyer’s part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; or (iii) the
occurrence or non-occurrence of any event or the existence of any fact or
condition that would cause or constitute a breach of any of Buyer’s
representations or warranties hereunder.
Section 5.6    Merger Agreement. During the period from the date hereof to the
Transaction Closing Date or the earlier termination of this Agreement, Seller
shall promptly notify the Buyer in writing if Seller becomes aware of: (i) the
occurrence or non-occurrence of any event or the existence of any fact or
condition that would cause or constitute a material

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breach of any of Tower’s representations or warranties set forth in the Merger
Agreement had any such representation or warranty been made as of the time of
the Seller’s discovery of such event, fact or condition; (ii) any material
failure on Tower’s part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under the Merger Agreement; or
(iii) the occurrence or non-occurrence of any event or the existence of any fact
or condition that would cause or constitute a material breach of any of Tower’s
representations or warranties under the Merger Agreement. Seller hereby agrees
that without Buyer’s written consent that it shall not waive: (i) any material
breach by Tower of any of its representation or warranty set forth in the Merger
Agreement; or (ii) any material failure by Tower to comply with any covenants or
conditions to closing contained in the Merger Agreement.
Section 5.7    Transition Services.
(a)    From and after the Transaction Closing until the Transition Services
Agreement shall be executed, Seller or its Affiliates shall provide to Buyer and
the Companies all usual and customary services and customarily prepared data and
information relating to the Commercial Lines Business that is reasonably
necessary to renew and replace the insurance contracts (the “Seller Transition
Service”) at no cost to Buyer; provided that Buyer shall reimburse Seller for
its reasonable out-of-pocket costs and expenses in providing the Seller
Transition Services paid to Persons not affiliated with Seller who customarily
provided such services relating to renewal or replacement of insurance contracts
and provided further that Seller and its Affiliates shall not be obligated to
provide Seller Transition Services to the extent Seller and its Affiliates are
unable to provide such services, data or information because Buyer has employed
the Transferred Employees or acquired the assets necessary to provide same.
(b)    From and after the Transaction Closing until the Transition Services
Agreement shall be executed, Buyer and the Companies shall provide to the
Personal Lines Companies any usual and customary services and customarily
prepared data and information relating to the Personal Lines Business that is
reasonably necessary to renew and replace the insurance contracts under the
Personal Lines Business (the “Buyer Transition Service”) at no cost to the
Personal Lines Companies to the extent Seller and its Affiliates are unable to
provide such services, data or information because Buyer has employed the
Transferred Employees or acquired the assets necessary to provide same. In
consideration of the provision of the Buyer Transition Services, the Personal
Lines Companies shall reimburse Buyer and the Companies for their reasonable
out-of-pocket costs and expenses in providing the Buyer Transition Services paid
to Persons not affiliated with Buyer who customarily provided such services
relating to renewal or replacement of insurance contracts relating to the
Personal Lines Business.
(c)    Seller and Buyer shall negotiate with National General in good faith a
Transition Services Agreement to take effect following the Transaction Closing
Date that among other matters will provide for (i) any Seller Transition
Services, Buyer Transition Services or any

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other services provided by National General or the Personal Lines Companies to
Seller, its Affiliates, the Buyer or the Companies with respect to the renewal
or replacement of insurance contracts relating to the Personal Lines Business or
Commercial Lines Business and (ii) any services to be provided by National
General, the Personal Lines Companies, Seller, its Affiliates, the Buyer or the
Companies that relate to the administration of business in-force as of the
Transaction Closing Date (the “Transition Services Agreement”).
Section 5.8    Option to Acquire Assets. By written notice delivered to the
Seller and National General within ninety (90) days following the Transaction
Closing Date, the Buyer may elect to acquire any assets acquired in the Merger
of the Seller or the Affiliates of Tower that are reasonably required to conduct
the Commercial Lines Business not included among the Companies that have not
previously been transferred to National General or the Personal Lines Companies
(the “Post-Closing Purchased Assets”) for no additional consideration. If within
ten (10) days following National General’s and Seller’s receipt of such notice,
neither National General or Seller has objected to the acquisition of all or any
of such Post-Closing Purchased Assets, Seller shall transfer the Post-Closing
Purchased Assets as to which no objection shall have been made to Buyer. If
National General or Seller provides such written objection, Seller, National
General and Buyer shall negotiate in good faith to coordinate the transfer or
retention of such Post-Closing Purchased Assets among themselves. If an
agreement as to the transfer or retention of any of such Post-Closing Purchased
Assets is reached, Seller shall transfer such Post- Closing Purchased Assets in
accordance with such agreement. If within thirty (30) days of the delivery of
any such objection, Seller, National General and Buyer shall have failed to
reach an agreement with respect to the transfer or retention of any of such
Post-Closing Purchased Assets to which such objection is related, Seller, Buyer
and National General shall enter mediation. In the event pursuant to such
mediation the Seller, National General and Buyer shall reach an agreement as the
transfer or retention of such Post-Closing Purchased Assets, Seller shall
transfer such Post-Closing Purchased Assets in accordance with such agreement.
ARTICLE VI    

EMPLOYEE MATTERS
Section 6.1    Transferred Employees.
(a)    From time to time on or after the Transaction Closing Date, upon ten (10)
days written notice to Seller and National General (a “Transferred Employee
Offer Notice”), subject to subsection (b) below, the Buyer may, or may cause an
Affiliate to, offer employment to employees of Tower or its Affiliates that
Buyer reasonably determines are necessary for the Commercial Lines Business
under terms and conditions satisfying the obligations of the Seller under the
Merger Agreement with respect to such employees (the employees who accept such
offer of employment shall be referred to as the “Transferred Employees”).

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(b)    If within ten (10) days following a Transferred Employee Offer Notice,
neither National General or Seller has objected to the making of offers of
employment to the employees indicated in such Transferred Employee Offer Notice,
Buyer may make an offer of employment to such employees. If National General or
Seller provides such written objection, Seller, National General and Buyer shall
negotiate in good faith to coordinate the employment or retention of such
employees among themselves. If an agreement as to the employment or retention of
such employees is reached, Buyer may make offers to such employees pursuant to
such agreement. If within thirty (30) days of the delivery of any such
objection, Seller, National General and Buyer shall have failed to reach an
agreement with respect to the employment or retention of such employees, Seller,
Buyer and National General shall enter mediation. In the event pursuant to such
mediation the Seller, National General and Buyer shall reach an agreement as the
employment or retention of such employees, Buyer may make offers of employment
to the employees designated in such agreement.
Section 6.2    No Third Party Beneficiary Rights. Nothing contained in this
Agreement shall confer upon any employee of Tower or any of its Affiliates any
right with respect to continued employment by Buyer or any of its Affiliates. No
provision of this Agreement shall create any third-party rights in any such
employee, or any beneficiary or dependent thereof, with respect to the
compensation, terms and conditions of employment and benefits that may be
provided to such employee by Buyer or any of its Affiliates or under any benefit
plan that Buyer or any of its Affiliates may maintain.
ARTICLE VII    

CONDITIONS PRECEDENT
Section 7.1    Conditions to Each Party’s Obligations. The respective
obligations of each party to effect the purchase and sale of the Shares and the
other actions to be taken at the Transaction Closing are subject to the
satisfaction or waiver on or prior to the Transaction Closing Date of the
following conditions:
(a)    Governmental Consents. All filings required to be made prior to the
Transaction Closing Date with, and all consents, approvals, permits and
authorizations required to be obtained prior thereto from, Governmental Entities
in connection with the consummation of the transactions contemplated hereby by
Seller and Buyer set forth in Section 3.4 and Section 4.3 of the Disclosure
Schedule shall have been made or obtained.
(b)    HSR Act. If premerger notification and report forms are filed under the
HSR Act, the waiting period (and any extension thereof) applicable to the
transactions contemplated hereby under the HSR Act shall have been terminated or
shall have otherwise expired.

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(c)    No Injunctions or Restraints. No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction and no Applicable Law of any Governmental Entity preventing the
consummation of the purchase and sale of the Shares or any of the other
transactions contemplated hereby shall be in effect; provided, however, that the
party invoking this condition shall have used all reasonable efforts to have any
such order or injunction vacated, and no Governmental Entity shall have
instituted any proceeding that is pending seeking any such order, preliminary or
permanent injunction or other order to prohibit consummation of the purchase and
sale of the Shares or any of the other transactions contemplated hereby.
(d)    Consents. All consents, waivers, clearances, approvals and authorizations
from third parties under the contracts and agreements set forth on Section
7.1(d) of the Disclosure Schedule as being required to be obtained prior to
Transaction Closing shall have been retained.
(e)    Merger Agreement.    The Closing (as defined in the Merger Agreement) of
the Merger (as defined in the Merger Agreement) contemplated by the Merger
Agreement shall have occurred.
(f)    LPT Agreement. The LPT Agreement shall have been entered into.
(g)    Personal Lines Acquisition. The transactions contemplated by the Personal
Lines Purchase Agreement to be effected as of the “Transaction Closing” (as
defined in the Personal Lines Purchase Agreement) shall occur contemporaneous
with the transactions contemplated herein.
Section 7.2    Conditions to Obligations of Buyer. The obligations of Buyer to
effect the purchase and sale of the Shares and the other actions to be taken at
the Transaction Closing are further subject to the satisfaction or waiver by
Buyer on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties. The representations and warranties of
Seller in this Agreement shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Transaction Closing
Date as though made on and as of the Transaction Closing Date, (except as to any
representation or warranty which specifically relates to another date); provided
that this condition shall be deemed to be satisfied unless any failure of any
such representation or warranty to be true and correct has a Company Material
Adverse Effect, either alone or when taken in the aggregate with other breaches
of any such representations and warranties.

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(b)    Performance of Obligations of Seller. Seller shall have performed in all
material respects all obligations required to be performed by it under this
Agreement on or prior to the Transaction Closing Date.
(c)    Closing Deliveries. Seller shall have delivered to Buyer each of the
items described in Section 2.4.
Section 7.3    Conditions to Obligations of Seller. The obligations of Seller to
effect the purchase and sale of the Shares and the other actions to be taken at
the Transaction Closing are further subject to the satisfaction or waiver by
Seller on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties. The representations and warranties of
Buyer set forth in this Agreement shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the
Transaction Closing Date as though made on and as of the Transaction Closing
Date (except as to any representation or warranty which specifically relates to
another date); provided that this condition shall be deemed to be satisfied
unless any failure of any such representation or warranty to be true and correct
has a material adverse effect, either alone or when taken in the aggregate with
other breaches of any such representations and warranties.
(b)    Performance of Obligations of Buyer. Buyer shall have performed in all
material respects all obligations required to be performed by it under this
Agreement on or prior to the Transaction Closing Date.
(c)    Consideration. Seller shall have received the Purchase Price as provided
in Section 2.1.
(d)    Closing Deliveries. Buyer shall have delivered to Seller each of the
items described in Section 2.5.
Section 7.4    Frustration of Closing Conditions. No party to this Agreement may
rely on the failure of any condition set forth in this Article VII to be
satisfied if such failure was caused by such party’s failure to use reasonable
best efforts to cause the Transaction Closing to occur, as required by Section
5.1 hereof.
ARTICLE VIII    

INDEMNIFICATION
Section 8.1    Obligation to Indemnify.

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(a)    Seller agrees to indemnify, defend and hold harmless Buyer and its
Affiliates and their respective representatives from and against all Losses to
the extent arising from or related to (i) any material breach of any of the
covenants and agreements of Seller, except any breach of or inaccuracy in any
representation or warranty set forth in Article III, contained in this
Agreement, or (ii) any liability not reflected on the Final Closing Balance
Sheet as determined in accordance with Section 2.6.
(b)    Buyer agrees to indemnify, defend and hold harmless Seller and its
Affiliates and their respective representatives from and against all Losses to
the extent arising from or related to any breach of any of the covenants and
agreements of Buyer, except any breach of or inaccuracy in any representation or
warranty set forth in Article IV, contained in this Agreement.
Section 8.2    Indemnification Procedures.
(a)    In order for a party (the “Indemnified Party”) to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim or demand made by, or an action, proceeding or
investigation instituted by, any Person not a party to this Agreement (a “Third
Party Claim”), such Indemnified Party must notify the other party (the
“Indemnifying Party”) in writing, and in reasonable detail, of the Third Party
Claim promptly, and in any event within thirty (30) days, after such Indemnified
Party learns of the Third Party Claim; provided, however, that any delay or
failure to give such notification shall not affect the indemnification provided
hereunder except and only to the extent that the Indemnifying Party forfeits
rights or defenses as a result of such failure. Thereafter, the Indemnified
Party shall deliver to the Indemnifying Party, within ten (10) days after the
Indemnified Party’s receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the Third
Party Claim.
(b)    If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof at its own expense with counsel
selected by the Indemnifying Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party will not as
long as it conducts such defense be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof, except as otherwise set forth herein. If the Indemnifying Party
assumes such defense, the Indemnified Party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense; provided, however, that if in the
reasonable opinion of counsel to the Indemnified Party, (i) there are legal
defenses available to an Indemnified Party that are different from or additional
to those available to the Indemnifying Party or (ii) there exists a conflict of
interest between the Indemnifying Party and

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the Indemnified Party, the Indemnifying Party shall be liable for the reasonable
fees and expenses of one law firm to represent the Indemnified Party and, if
applicable, local counsel in the jurisdiction in which an action is held. The
Indemnifying Party shall be liable for the fees and expenses of counsel employed
by the Indemnified Party for any period during which the Indemnifying Party has
not assumed the defense thereof. If the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, all of the parties hereto shall cooperate in
the defense or prosecution thereof in all reasonable respects. Such cooperation
shall include the retention and (upon the Indemnifying Party’s request) the
provision to the Indemnifying Party of records and information which are
relevant to such Third Party Claim (subject, in each case, to the Indemnifying
Party entering into a confidentiality agreement with respect to such records and
information in a form reasonably acceptable to the Indemnified Party), and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. If the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party’s
prior written consent, which consent shall not be unreasonably withheld. The
Indemnifying Party shall not settle, compromise, consent to the entry of any
judgment in or otherwise seek to terminate any action giving rise to a Third
Party Claim unless the Indemnifying Party obtains the prior written consent of
the Indemnified Party or such settlement, compromise, consent or termination (i)
includes an express, unconditional release of such Indemnified Party in form and
substance satisfactory to such Indemnified Party from any and all liability
relating to such action, (ii) does not include any statement as to or any
admission of fault, culpability or failure to act by or on behalf of any
Indemnified Party and (iii) does not create any financial or other obligation on
the part of the Indemnified Party.
(c)    After the Transaction Closing, the indemnities provided in Section 8.1
shall be the sole and exclusive remedy at law for any breach of covenant or
agreement (other than those covenants and agreements which survive the
Transaction Closing) or other claim arising out of this Agreement except for
claims based on actual fraud, criminal activity or willful misconduct.
(d)    The amount of any Losses for which indemnification is provided under this
Agreement shall be (i) net of any amounts actually received by the Indemnified
Party from insurers or other third parties with respect to such Losses (less any
related costs and expenses, including the aggregate cost of pursuing any
insurance claims paid by the Indemnified Party, but not any premiums or charges
paid by the Indemnified Party), (ii) net of any amounts taken into account as a
reserve, accrual or expense in the calculation of Aggregate Surplus with respect
to the facts, circumstances or matters giving rise to such Losses, and (iii)
reduced to take account of any Tax benefit realized by the Indemnified Party
arising from the incurrence or payment of any such Losses.

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(e)    Notwithstanding anything contained herein to the contrary, no
Indemnifying Party shall be liable for lost profits or any punitive, exemplary,
consequential (but not incidental) or similar damages, except for lost profits
or punitive, exemplary, consequential or similar damages actually paid to a
third party in a Third Party Claim by an Indemnified Party.
(f)    In accordance with Applicable Law, the Indemnified Party shall take, and
shall cause its Affiliates to take, all commercially reasonable steps to
mitigate any Losses upon and after becoming aware of any facts, matters,
failures or circumstances that would reasonably be expected to result in any
Losses that are indemnifiable hereunder.
(g)    In the event of payment by or on behalf of any Indemnifying Party to any
Indemnified Party (including pursuant to this Article VIII) in connection with
any claim or demand by any Person other than the parties hereto or their
respective Affiliates, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnified Party as to any events or circumstances
in respect of which such Indemnified Party may have any right, defense or claim
relating to such claim or demand against any claimant or plaintiff asserting
such claim or demand. Such Indemnified Party shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost of such Indemnifying
Party, in presenting any subrogated right, defense or claim.
Section 8.3    Tax Treatment; Tax Indemnification. Except to the extent
otherwise required by Applicable Law, any indemnity payment made pursuant to
this Article VIII hereof will be treated as an adjustment to the Purchase Price
for all Tax purposes.

ARTICLE IX    

TERMINATION PRIOR TO CLOSING
Section 9.1    Termination of Agreement. This Agreement may be terminated at any
time prior to the Transaction Closing:
(a)    by the written agreement of the Buyer and the Seller;
(b)    by either the Seller or the Buyer in writing, if there shall be any
order, injunction or decree of any Governmental Entity which prohibits or
restrains any party from consummating the transactions contemplated hereby, and
such order, injunction or decree shall have become final and nonappealable;
(c)    by either the Seller or the Buyer in writing, if a Governmental Entity
shall have disapproved a Regulatory Approval;

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(d)     unless the Seller or the Buyer otherwise agree in writing, upon the
withdrawal of filings submitted in connection with any Regulatory Approvals; or
(e)    Automatically following the termination of the Merger Agreement.
Section 9.2    Effect of Termination. In the event of termination pursuant to
Section 9.1, this Agreement shall become null and void and have no effect,
(other than Section 5.3 (Public Announcements), this Section 9.2 and Article X
(General Provisions), all of which shall survive termination of this Agreement),
and there shall be no liability on the part of Seller, the Companies or Buyer or
their respective directors, officers and Affiliates, except (a) as liability may
exist pursuant to the sections specified in the immediately preceding
parenthetical that survive such termination and (b) that no such termination
shall relieve any party from liability for any willful and material breach by
such party of any representation, warranty, covenant or agreement set forth in
this Agreement or fraud. For purposes hereof, “willful and material breach”
means a material breach by a party of the applicable provision of this Agreement
as a result of an action or failure to act by such Person that it knew would
result in a breach of this Agreement.
ARTICLE X    

GENERAL PROVISIONS
Section 10.1    No Survival of Representations, Warranties, Covenants and
Agreements. This Article X, Article VIII and the agreements of the Seller and
Buyer contained in Article II, Article V and Article VI shall survive the
Effective Time. No other representations, warranties, covenants or agreements in
this Agreement shall survive the Effective Time.
Section 10.2    Fees and Expenses. Whether or not the purchase and sale of the
Shares is consummated, each party hereto shall pay its own fees and expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby. For the avoidance of
doubt, Seller shall be solely responsible for the payment of all of the
transaction expenses incurred by or on behalf of Seller or the Companies
incident to the transaction which is the subject of this Agreement, including
investment banking fees, accounting fees and legal fees.
Section 10.3    Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, by facsimile (which is confirmed as provided
below) or sent by overnight courier (providing proof of delivery) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
if to Buyer, to

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c/o AmTrust Financial Services, Inc.
59 Maiden Lane, 43rd Floor
New York, New York 10038
(646) 458-7913
Fax: (212) 220-7130

Attention: Stephen Ungar, Esq.
if to Seller, to

c/o ACP Re, Ltd
59 Maiden Lane, 38th Floor
New York, NY 10038
(212) 380-9479
Facsimile: (212) 380-9498
Attention: Jeffrey Weissmann, Esq.
Notice given by personal delivery or overnight courier shall be effective upon
actual receipt. Notice given by facsimile shall be confirmed by appropriate
answer back and shall be effective upon actual receipt if received during the
recipient’s normal business hours, or at the beginning of the recipient’s next
Business Day if not received during the recipient’s normal business hours. All
notices by facsimile shall be confirmed promptly after transmission in writing
by personal delivery or overnight courier.
Section 10.4    Interpretation. When a reference is made in this Agreement to a
section, exhibit or schedule, such reference shall be to a section of, or an
exhibit or schedule to, this Agreement unless otherwise indicated. The inclusion
of any information in the Disclosure Schedule will not be deemed an admission or
acknowledgment, in and of itself and solely by virtue of the inclusion of such
information in the Disclosure Schedule, that such information is required to be
listed in the Disclosure Schedule or that such items are material to the
Companies. The specification of any dollar amount in the Disclosure Schedule is
not intended to imply that such amount, or higher or lower amounts is or is not
material for purposes of this Agreement and no party shall use the fact of the
setting forth of such amount in any dispute or controversy between the parties
as to whether any obligation, item or matter not described therein is or is not
material for purposes of this Agreement. Unless the Agreement specifically
provides otherwise, neither the specification of any item or matter in any
representation or warranty contained in this Agreement nor the inclusion of any
specific item in the Disclosure Schedule is intended to imply that such item or
matter, or other items or matters, are or are not in the ordinary course of
business (except as expressly provided herein), and no party shall use the fact
of the setting forth or the inclusion of any such item or matter in any dispute
or controversy among the parties as to whether any obligation, item or matter
not described in this Agreement or included in any Disclosure Schedule is or is
not in the ordinary course of business for purposes of this Agreement

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(except as expressly provided herein). The disclosure of an item in one section
of the Disclosure Schedule as an exception to a particular covenant,
representation or warranty will be deemed adequately disclosed as an exception
with respect to all other covenants, representations or warranties to the extent
that the relevance of such item to such other covenants, representations or
warranties is reasonably apparent on the face of such item, notwithstanding the
presence or absence of an appropriate section of the Disclosure Schedule with
respect to such other covenants, representations or warranties or an appropriate
cross-reference thereto. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” Whenever the singular is used
herein, the same shall include the plural, and whenever the plural is used
herein, the same shall include the singular, where appropriate.
Section 10.5    Entire Agreement; Third-Party Beneficiaries. This Agreement
(including all exhibits and schedules hereto) constitutes the entire agreement,
and supersede all prior agreements, understandings, representations and
warranties, both written and oral, among the parties with respect to the subject
matter of this Agreement. Buyer has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its purchase of the Shares and the other transactions contemplated
hereby and is capable of bearing the economic risks thereof. Except as expressly
provided herein, this Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies.
Section 10.6    Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed entirely within that State, regardless
of the laws that might otherwise govern under any applicable conflict of laws
principles, except to the extent the provisions of the laws of Bermuda are
mandatorily applicable to the Merger.
Section 10.7    Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment that is not
consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 10.8    Dispute Resolution; Enforcement.
(a)    In the event of any dispute arising under this Agreement, prior to the
commencement of litigation, a senior officer of Buyer and a senior officer of
Seller shall attempt in good faith to resolve the dispute consistent with the
terms of this Agreement. If they are

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unable to resolve the dispute in this manner within a reasonable period of time,
the parties may pursue judicial remedies with respect to such dispute. This
section shall not apply to any application to obtain emergency judicial
intervention.
(b)    All actions and proceedings arising out of or relating to the
interpretation and enforcement of the provisions of this Agreement and in
respect of the transactions contemplated by this Agreement (except to the extent
any such proceeding mandatorily must be brought in Bermuda) shall be heard and
determined in the United States District Court for the Southern District of New
York and any Federal appellate court therefrom (or, if United States federal
jurisdiction is unavailable over a particular matter, the Supreme Court of the
State of New York, New York County) and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction and venue of such courts in any such action
or proceeding and irrevocably waive the defense of an inconvenient forum or lack
of jurisdiction to the maintenance of any such action or proceeding. The
consents to jurisdiction and venue set forth in this Section 10.8(b) shall not
constitute general consents to service of process in the State of New York and
shall have no effect for any purpose except as provided in this paragraph and
shall not be deemed to confer rights on any Person other than the parties
hereto. Each party hereto agrees that service of process upon such party in any
action or proceeding arising out of or relating to this Agreement shall be
effective if notice is given by overnight courier at the address set forth in
Section 10.3 of this Agreement. The parties hereto agree that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable Law; provided, that nothing in the foregoing shall restrict any
party’s rights to seek any post-judgment relief regarding, or any appeal from, a
final trial court judgment.
Section 10.9    WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW,
THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED
WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

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Section 10.10    Severability; Amendment and Waiver.
(a)    Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any Applicable Law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(b)    This Agreement may be amended, and the terms hereof may be waived, only
by a written instrument signed by each of the parties or, in the case of a
waiver, by the party waiving compliance.
(c)    No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
Section 10.11    Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall be
deemed to be one and the same agreement. A signed copy of this Agreement
delivered by facsimile, e-mail or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
Section 10.12    Commercially Reasonable Efforts. Buyer and Seller acknowledge
and agree that any reference made to commercially reasonable efforts in this
Agreement shall not include any obligation to commence or continue any contested
arbitration or litigation other than the filing of a proof of claim or similar
filing requirement necessary to preserve a claim against any insolvent or
otherwise financially impaired debtor.
Section 10.13    Specific Enforcement. The parties hereto agree that irreparable
damage for which monetary relief, even if available, would not be an adequate
remedy, would occur in the event that any provision of this Agreement is not
performed in accordance with its specific terms or is otherwise breached,
including if the parties hereto fail to take any action required of them
hereunder to consummate this Agreement. The parties acknowledge and agree that
(a) the parties shall be entitled to an injunction or injunctions, specific
performance or other equitable relief to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in the courts described
in Section 10.8(b) without proof of damages or otherwise, this

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being in addition to any other remedy to which they are entitled under this
Agreement and (b) the right of specific enforcement is an integral part of the
transactions contemplated hereunder and without that right, neither Buyer nor
Seller would have entered into this Agreement. The parties hereto agree not to
assert that a remedy of specific enforcement is unenforceable, invalid, contrary
to Applicable Law or inequitable for any reason, and not to assert that a remedy
of monetary damages would provide an adequate remedy or that the parties
otherwise have an adequate remedy at law. The parties hereto acknowledge and
agree that any party seeking an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in accordance with this Section 10.13 shall not be required to provide
any bond or other security in connection with any such order or injunction.
[Signature Page Follows]

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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be signed by
their respective officers thereunto duly authorized, all as of the date first
written above.
ACP RE, LTD

By /s/ Mike Weiner    
Name: Mike Weiner    
Title: CFO    

AMTRUST FINANCIAL SERVICES, INC.

By /s/ Stephen Ungar    
Name: Stephen Ungar    
Title: SVP, General Counsel and Secretary

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EXHIBIT A

List of Companies
Tower Insurance Company of New York
Castle Point National Insurance Company
Tower National Insurance Company
Hermitage Insurance Company
Castle Point Florida Insurance Company
Kodiak Insurance Company
North East Insurance Company

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EXHIBIT B

Form of Commercial Lines Bill of Sale and Assignment and Assumption Agreement

This COMMERCIAL LINES BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT is
made and entered into as of [ ], 2014, by and among ACP Re, Ltd., a Bermuda
corporation (“ACP Re”), the Acquired Affiliates (as defined below), who are
signatories hereto as Sellers (collectively with ACP Re, the “Sellers” and each
one, individually, a “Seller”) and AmTrust Financial Services, Inc., a Delaware
corporation (the “Purchaser”).
WITNESSETH:
WHEREAS, ACP Re, the Purchaser and National General Holdings Corporation, a
Delaware corporation (“National General”), are jointly entering into a series of
related agreements for the purpose of acquiring Tower Group International, Ltd.
(“Tower”), a Bermuda insurance holding company which transacts commercial and
personal lines insurance business in the United States through 15 insurance
company Subsidiaries and other non-insurance company Subsidiaries (collectively
the “Acquired Affiliates”), including the Subsidiaries of ACP Re that are
parties hereto;
WHEREAS, pursuant to that certain Commercial Lines Stock and Asset Purchase
Agreement, dated as of January 3, 2014, by and between ACP Re and the Purchaser
(the “Agreement”), Purchaser is acquiring the assets listed on Exhibit A
attached hereto (the “Purchased Assets”); and
WHEREAS, from and after the date hereof, Purchaser is assuming all liabilities
and obligations described on Exhibit A (the “Assumed Liabilities”).
NOW, THEREFORE, for good and valuable consideration paid by Purchaser to Sellers
as of the date of this Bill of Sale and Assignment and Assumption Agreement, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Sellers by this Bill of Sale and Assignment and Assumption Agreement do hereby
convey, grant, bargain, sell, transfer, set over, assign, alienate, remise,
release, deliver and confirm unto Purchaser, its successors and assigns,
forever, all of Sellers’ right, title, interest in and to the Purchased Assets
as of the close of business on the date hereof.
TO HAVE AND TO HOLD all and singular the Purchased Assets unto Purchaser, its
successors and assigns, to its and their own use and enjoyment forever.
THE PARTIES FURTHER COVENANT AND AGREE AS FOLLOWS:
A.
For value received, Sellers hereby assign, and Purchaser hereby assumes and
agrees to perform and discharge all rights under the Assumed Liabilities on and
after the Transaction Closing Date (as defined in the Agreement).

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B.
This Bill of Sale and Assignment and Assumption Agreement shall not constitute
an assignment in whole or in part of any Purchased Asset or Assumed Liability if
an attempted assignment of such Purchased Asset or Assumed Liability without the
consent of any other party thereto or with an interest therein would constitute
a breach thereof or in any way affect the rights of Sellers or Purchaser
thereunder or be contrary to applicable law. If any such consent is not obtained
with respect to any such Purchased Asset or Assumed Liability, then the Sellers
or Purchaser and their successors and assigns, as applicable, shall act as
Purchaser’s agent or Sellers’ agent, as applicable, in order to obtain for
Purchaser or Sellers and their successors and assigns, as applicable, the
benefits thereunder.

C.
This Bill of Sale and Assignment and Assumption Agreement is given pursuant to
the provisions of the Agreement, and, except as herein otherwise provided, the
transfer of the Purchased Assets hereunder is made subject to the terms and
provisions of the Agreement.

D.
This Bill of Sale and Assignment and Assumption Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns and shall not be relied upon, or inure to the benefit of, any other
party.

E.
Any notice, request or other document to be given hereunder or in connection
herewith to any party hereto shall be given in the manner described in the
Agreement.

F.
This Bill of Sale and Assignment and Assumption Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.

[Signature Page Follows]

B-2

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IN WITNESS WHEREOF, each of the parties by their respective duly authorized
officers has caused this Bill of Sale and Assignment and Assumption Agreement to
be executed as of the date first above written.
AMTRUST FINANCIAL SERVICES, INC.
By: ________________________________
Name:    
Title:    
Sellers:
ACP RE, LTD.

By: ______________________________
Name:     
Title:     
YORK INSURANCE COMPANY OF MAINE

By: ________________________________
Name:    
Title:    
MASSACHUSETTS HOMELAND INSURANCE COMPANY

By: ________________________________
Name:    
Title:    

B-3

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PRESERVER INSURANCE COMPANY

By: ________________________________
Name:    
Title:    
CASTLE POINT INSURANCE COMPANY

By: ________________________________
Name:    
Title:    

Acknowledged and agreed to:
NATIONAL GENERAL HOLDINGS CORPORATION

By: ______________________________
Name:     
Title:

B-4

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EXHIBIT C

Form of Commercial Lines Reinsurance Agreement

THIS COMMERCIAL LINES QUOTA SHARE REINSURANCE AGREEMENT (this “Agreement”) is
entered into as of [ ], 2014 by and among YORK INSURANCE COMPANY OF MAINE, an
insurance company organized under the laws of Maine, MASSACHUSETTS HOMELAND
INSURANCE COMPANY, an insurance company organized under the laws of
Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company organized under
the laws of New Jersey, and CASTLE POINT INSURANCE COMPANY, an insurance company
organized under the laws of New York (the “Companies” and, each a “Company”),
and TECHNOLOGY INSURANCE COMPANY, INC., an insurance company organized under the
laws of New Hampshire (the “Reinsurer”) (collectively, the “Parties”).
WHEREAS, ACP Re. Ltd. (“ACP Re”), has entered into that certain Agreement and
Plan of Merger of even date herewith by and between Tower Group International,
Ltd. (“Tower”), ACP Re and Merger Sub (the “Merger Agreement”) whereby Merger
Sub is merging with and into Tower with Tower surviving such merger (the
“Merger”);
WHEREAS, (i) AmTrust Financial Services, Inc. (“AmTrust”) has entered into that
certain Stock Purchase Agreement dated January 3, 2013 by and between AmTrust
and ACP Re (the “Commercial Lines SPA”), pursuant to which AmTrust is purchasing
all of the capital stock of certain subsidiaries of Tower (the “Purchased
Commercial Lines Companies”) and renewal rights to all of Commercial Lines
Business (as defined herein) of the Purchased Personal Lines Companies and (ii)
National General Holdings Corporation (“National General”) has entered into that
certain Stock Purchase Agreement dated January 3, 2013 by and between ACP Re and
National General (the “Personal Lines SPA”), whereby National General is
purchasing all of the capital stock of certain subsidiaries of Tower (the
“Purchased Personal Lines Companies”) and the renewal rights to all of Personal
Lines Business (as defined herein) of the Purchased Commercial Lines Companies;
and
WHEREAS, as more particularly set forth herein, the Companies and the Reinsurer
wish to enter into a quota share arrangement pursuant to which the Reinsurer
will reinsure all Losses with respect to the Fronted Policies (as defined
herein) written by the Companies in accordance with the terms hereof following
the Effective Time.
NOW, THEREFORE, in consideration of the mutual and several promises and
undertakings herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE 1
DEFINITIONS

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Section 1.1    Defined Terms.
The following terms shall have the respective meanings specified below
throughout this Agreement.
“ACP Re” has the meaning set forth in the Recitals.
“Agreement” has the meaning set forth in the first paragraph.
“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect
to any Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person. As used in this definition, “control” (including, with
correlative meanings, “controlled by” and “under common control with”) shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract, as trustee or executor,
or otherwise).
“Applicable Law” means any applicable order, law, statute, regulation, rule,
pronouncement, ordinance, bulletin, writ, injunction, directive, judgment,
decree, principle of common law, constitution or treaty enacted, promulgated,
issued, enforced or entered by any Governmental Authority applicable to the
parties hereto, or any of their respective businesses, properties or assets.
    “Ceding Commission” means an amount equal to the Fronting Acquisition Costs
with respect to Fronted Policies, in each case subject to any applicable
commission or brokerage adjustments, which adjustments shall be accounted for
and settled up as between the Parties as part of the monthly reporting pursuant
to Section 3.4.
“Claim” and “Claims” means any and all claims, requests, demands or notices made
by or on behalf of Policyholders, beneficiaries or third party claimants for the
payment of Losses and any other amounts due or alleged to be due under or in
connection with the Fronted Policies.
“Closing Date” means the date upon which the Merger is effected.
“Commercial Lines Business” means all insurance contracts, policies,
certificates, binders, slips, covers or other agreements of insurance, including
all supplements, riders, endorsements, renewals and extensions (other than
Personal Lines Business) issued by a Company.
“Commercial Lines SPA” has the meaning set forth the Recitals
“Company(ies)” has the meaning set forth in the Recitals.
“Damages” means all damages, losses, liabilities and expenses (including
reasonable attorneys’ fees and reasonable expenses of investigation in
connection with any action, suit or proceeding).

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“Effective Time” has the meaning set forth in the Merger Agreement.
“Fronted Policies” has the meaning set forth in Section 2.1(a).
“Fronting Acquisition Costs” has the meaning set forth in Section 3.1.
“Fronting Authority” means the authority conferred upon the Reinsurer and its
designees under this Agreement to write Fronted Policies.
“Fronting Period” has the meaning set forth in Section 2.1(a).
“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local U.S. or non-U.S. governmental authority, quasi-governmental
authority, instrumentality, court or government, self-regulatory organization,
commission, tribunal or organization or any political or other subdivision,
department, branch or representative of any of the foregoing.
“Insurance Contracts” means all insurance contracts, policies, certificates,
binders, slips, covers or other agreements of insurance, including all
supplements, riders, endorsements, renewals and extensions as to the Commercial
Lines Business issued by the Companies or any Company on or after the Effective
Time.
“Losses” shall mean liabilities and obligations to make payments to
Policyholders, beneficiaries and/or other third party claimants under the
Fronted Policies (including, without limitation, liabilities or assessments
arising from a Company’s participation, if any, in any voluntary or involuntary
pools, guaranty funds, or other types of government-sponsored or
government-organized insurance funds) and all loss adjustment expenses and
defense costs, including, without limitation, (i) all expenses incurred by or on
behalf of the a Company related to the investigation, appraisal, adjustment,
litigation, defense or appeal of claims under or covered by the Fronted Policies
and/or coverage actions under or covered by the Fronted Policies, (ii) all
liabilities for consequential, exemplary, punitive or similar extra contractual
damages, or for statutory or regulatory fines or penalties, or for any loss in
excess of the limits arising under or covered by any Fronted Policy, and (iii)
court costs accrued prior to final judgment, prejudgment interest or delayed
damages and interest accrued after final judgment. Notwithstanding the
foregoing, “Losses” shall not include any liabilities or obligations incurred by
or on behalf of a Company as a result of any willful, fraudulent and/or criminal
act by a Company or any of its Affiliates or any of their respective officers,
directors, employees or agents following the Effective Time.
“Merger” has the meaning set forth in the Recitals.
“Merger Agreement” has the meaning set forth in the Recitals.
“Merger Sub” means the subsidiary of ACP Re that will merge with Tower pursuant
to the Merger Agreement.

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“National General” has the meaning set forth in the Recitals.
“Parties” has the meaning set forth in the first paragraph.
“Person” shall mean any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, limited liability company, trust,
estate, unincorporated organization, Government Authority or other entity.
“Personal Lines SPA” has the meaning set forth in the Recitals.
“Personal Lines Business” means all insurance contracts, policies, certificates,
binders, slips, covers or other agreements of insurance, including all
supplements, riders, endorsements, renewals and extensions for personal
automobile liability and physical damage, homeowners, personal excess and
umbrella coverage issued by the Companies.
“Policyholder” means policyholders and named insureds of the Insurance
Contracts.
“Premium(s)” means all gross written premium(s), considerations, deposits,
premium adjustments, fees and similar amounts related to the Fronted Policies,
less cancellation and return premiums.
“Purchased Commercial Lines Companies” has the meaning set forth in the
Recitals.
“Purchased Personal Lines Companies” has the meaning set forth in the Recitals.
“Reinsurer” has the meaning set forth in the first paragraph.
“Taxes” (or “Tax” as the context may require) means all United States federal,
state, county, local, foreign and other taxes (including, without limitation,
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security taxes, premium taxes, excise taxes, sales taxes, use taxes,
gross receipts taxes, franchise taxes, ad valorem taxes, severance taxes,
capital property taxes and import duties), and includes interest, additions to
tax and penalties with respect thereto, whether disputed or not.
“Tower” has the meaning set forth in the Recitals.
“Transaction Documents” means this Agreement, the Commercial Lines SPA, the
Personal Lines SPA, the Personal Lines Quota Share Reinsurance Agreement of even
date herewith to be entered into by an Affiliate of National General and certain
Affiliates of AmTrust, and such other and further documents reasonably necessary
to effectuate the Merger.
ARTICLE 2    
BASIS OF REINSURANCE AND BUSINESS REINSURED
Section 2.1    Fronted Business.

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(a)    From and until two (2) years after the Closing Date (the “Fronting
Period”), the Companies, in their own name and on their own behalf, or in the
name and on behalf of any of their Affiliates will issue or cause to be issued
insurance contracts, policies, certificates, binders, slips, covers or other
agreements of insurance, including supplements, riders, endorsements and
extensions thereto that are approved and requested by AmTrust or its designee
(the “Fronted Policies”). Neither AmTrust nor any of its Affiliates shall have
any obligation to request Companies’ issuance of Fronted Policies. Any interest
of the Companies in renewal rights and expirations relating to the Insurance
Contracts shall be property of the Reinsurer. Upon written request by the
Companies to the Reinsurer, the Reinsurer will execute such additional documents
or endorsements as are reasonably necessary to effectuate the issuance and
administration of Fronted Policies under this Agreement.
(b)    During the Fronting Period, and as the sole consideration payable
hereunder, Reinsurer shall pay the Companies the Ceding Commission in connection
with writing the Fronted Policies.
(c)    From and after the Effective Time, each Company hereby cedes, and the
Reinsurer hereby assumes, one hundred percent (100%) of all Losses for which
such Company is liable in respect of the Fronted Policies that are issued on or
after the Effective Time.
(d)    In the event the Reinsurer makes an indemnity payment on behalf of a
Company directly to any Policyholder, insured or third party pursuant to any
Fronted Policy that pays, in full, a Loss, cost or expense under such Fronted
Policy, such payment satisfies and extinguishes any and all obligation of the
Reinsurer hereunder to indemnify a Company for such Loss, cost or expense to the
extent of such payment. In no event shall the Reinsurer be obligated hereunder
to indemnify with respect to any Loss, cost or expense under a Fronted Policy
for an amount in excess of such Loss, cost or expense.
ARTICLE 3    
PAYMENTS, OFFSET, AND SECURITY
Section 3.1    Premium.
(a)    As premium for the Fronted Policies ceded under this Agreement, each
Company shall pay to the Reinsurer (to the extent the Reinsurer has not retained
such Premiums directly pursuant to Article 4) by wire transfers of immediately
available funds one hundred percent (100%) of the collected Premiums
attributable to the Fronted Policies, net of a ceding commission in an amount
equal to the actual out-of-pocket expenses incurred by such Company for amounts
paid or payable by, or on behalf of, such Company to persons who are not
Affiliates of such Company to acquire the Fronted Policies, including all
brokerage commissions and any adjustments thereto,

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and any Taxes, surcharges and other similar amounts on premiums required to be
paid or collected by such Company or its producers or agents (the “Fronting
Acquisition Costs”).
(b)    The Reinsurer shall pay to the Companies the Ceding Commission pursuant
to the monthly settlement under Section 3.4.
Section 3.2    Offset Rights.
Except as otherwise expressly provided, each Party hereto shall have, and may
exercise at any time and from time to time, the right to offset any balance or
balances due to the other Party arising under this Agreement, and regardless of
whether on account of Premiums, Ceding Commissions, or Losses related to or
arising under the Fronted Policies; provided, however, that in the event of the
insolvency of a Party hereto or any of its Affiliates, offsets shall only be
allowed in accordance with the provisions of Applicable Law.
Section 3.3    Premiums for Fronted Policies.
(a)    The Reinsurer is authorized to collect Premiums for the Fronted Policies
from Policyholders of a Company and may deposit such Premiums directly into one
or more accounts designated by, and issued in the name of, the Reinsurer. To the
extent any Premiums are collected directly by a Company, such Company shall so
advise the Reinsurer and shall promptly remit them to the Reinsurer, net of any
Ceding Commissions which shall be retained by such Company. The Reinsurer and
the Companies agree to maintain accounting and operational records and books in
adequate detail so as to identify the specific Fronted Policies and
Policyholders of the Companies with respect to all collected Premiums.
(b)    The Reinsurer shall: (i) timely pay any return premium coming due under
the Fronted Policies payable on or after the Closing Date; or (ii) promptly
reimburse a Company for any of the foregoing amounts that are instead paid by
such Company.
Section 3.4    Reports and Remittances.
(a)    The Parties shall conduct monthly settlements based upon monthly
bordereaux to be provided by or on behalf of the Reinsurer evidencing the amount
due or to be due in a form, and containing such detail, as is agreed to by the
Parties. Such settlements shall take into account and fully settle any profit
commission, return commission, loss corridor payment, or other similar premium
or commission adjustments payable to or by the Companies pursuant to the terms
of any Fronted Policy or any agent or broker contract that relates to the
Fronted Policies, which adjustments, whether positive or negative, shall be
credited to or charged against the Reinsurer, as the case may be. Each Party
shall pay or credit in cash or its equivalent to the other all net amounts for
which it may be liable under the terms and conditions of this Agreement within
thirty (30) days after receipt of each monthly bordereau.

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(b)    The Companies and the Reinsurer shall furnish each other with such
records, reports and information with respect to the Losses, Claims and the
reinsurance contemplated hereby as may be reasonably required by the other Party
to comply with any internal reporting requirements or reporting requirements of
any Governmental Authority or to prepare and complete such Party’s quarterly and
annual financial statements.
(c)    If any Company or the Reinsurer receives notice of, or otherwise becomes
aware of, any inquiry, investigation, proceeding, from or at the direction of a
Governmental Authority, or is served or threatened with a demand for litigation,
arbitration, mediation or any other similar proceeding relating to the Fronted
Policies, such Company or the Reinsurer, as applicable, shall promptly notify
the other party thereof, whereupon the parties shall cooperate in good faith and
use their respective commercially reasonable efforts to resolve such matter in a
mutually satisfactory manner in light of all the relevant business, regulatory
and legal facts and circumstances.
(d)    Each Party shall have the right, through authorized representatives and
upon reasonable advance notice during normal business hours, to periodically
audit and inspect all books, records, and papers of the other Party solely in
connection with the Fronted Policies and any reinsurance hereunder or claims in
connection therewith and the performance of the claims, underwriting and other
administration services pursuant to Article 4. Each Party shall treat the other
Party’s books, records, and papers in confidence. A Party shall be permitted to
conduct such audits no more frequently than semi-annually except as is otherwise
reasonably necessary in the day-to-day administration of the Fronted Policies
including but not limited to Claims.

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Section 3.5    Collection of Premiums. Following the Closing Date and subject to
Section 3.3(a), all Premiums collected by the Reinsurer or any of its Affiliates
shall be retained by the Reinsurer and all Premiums collected by a Company, net
of the applicable Ceding Commission, shall be deposited directly into an account
(or accounts) designated by, and issued in the name of, the Reinsurer. Any
Premiums collected by a Company pursuant to this Section 3.5 shall, net of any
Ceding Commission, be the sole and exclusive property of the Reinsurer and,
notwithstanding Section 3.2, shall not be subject to setoff in any form by a
Company.
Section 3.6    Collateral for Ceded Losses. Without limiting the Reinsurer’s
other obligations under this Section 3.6, in the event pursuant to Applicable
Law of any state of the United States of America or the District of Columbia
having jurisdiction over a Company, such Company is no longer able to take full
reserve credit on its statutory financial statements for the reinsurance ceded
to the Reinsurer without qualifying collateral therefor, the Reinsurer shall
promptly agree to modifications to this Agreement so that the Reinsurer shall
provide collateral for its obligations hereunder in the amount and form
necessary for such Company to take full reserve credit on its statutory
financial statements for the reinsurance provided hereunder on terms and
conditions reasonably satisfactory to such Company and Reinsurer and in
accordance with Applicable Law.
ARTICLE 4    
CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
(a)    On and after the Effective Time, each Company will provide prompt notice
to the Reinsurer or its designee of all Claims (but only to the extent such
Claims are not otherwise known or reported to the Reinsurer or any of its
Affiliates), and the Reinsurer or its designee will have the obligation to
administer, investigate and defend, as applicable, at its own expense, any Claim
affecting this Agreement. At the request of the Reinsurer or such designee, the
applicable Company will jointly associate with the Reinsurer, at the expense of
the Reinsurer, in the defense or control of any Claim, suit or proceeding
involving this reinsurance, and such Company shall cooperate with the Reinsurer
or such designee in every respect to procure the most favorable disposition of
such claim, suit or proceeding.
(b)    Each Company grants to the Reinsurer or one or more of the Reinsurer’s
Affiliates designated by the Reinsurer, as of the Effective Time, authority in
all matters relating to the administration of the Fronted Policies and any
Claims thereunder, including but not limited to the authority (i) to pay and
adjust Claims on behalf of such Company, (ii) to communicate directly with
Policyholders and to collect on behalf of such Company unpaid Premiums that
relate solely to the Fronted Policies, and (iii) to handle the placement,
production, underwriting, service and management of the Fronted Policies,
including without limitation the authority to (A) solicit, accept and receive
submissions for Fronted Policies or renewals of Fronted Policies; (B) secure, at
its own expense, reasonable underwriting information through reporting agencies
or other appropriate sources relating to each submission; (C) issue, renew and
countersign Fronted Policies and

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endorsements related thereto; (D) collect and receipt for the premiums on
Fronted Policies; (E) calculate and pay producer commissions, countersignature
fees, inspection fees, loss prevention expenses, and all other expenses directly
related to the production, underwriting and administration of the business
subject to this Agreement, (F) purchase facultative reinsurance as deemed
appropriate by the Reinsurer, (G) adjust and settle claims under the Fronted
Policies; (H) set and establish loss reserves for the Fronted Policies; and (I)
any and all other acts or duties that would otherwise be performed by such
Company necessary and appropriate to the Fronted Policies, to the extent such
authority may be granted pursuant to Applicable Law and the Reinsurer, or one or
more of the Reinsurer’s Affiliates designated by the Reinsurer, shall perform
all such functions as outlined herein. In exercising such authorities, the
Reinsurer or any such Affiliate may delegate the performance of any duty
described above to a third party; provided that no such delegation shall relieve
the Reinsurer of its obligations hereunder. Subject to the forgoing limitation,
effective as of the Effective Time, each Company hereby appoints the Reinsurer
as its attorney-in-fact with respect to the rights, duties and privileges and
obligations of such Company in and to the Fronted Policies, with full power and
authority to act in the name, place and stead of such Company with respect to
such contracts, including without limitation, the power to service such
contracts, to adjust, defend, settle and to pay all Claims, to recover salvage
and subrogation for any losses incurred and to take such other and further
actions as may be necessary or desirable to effect the transactions contemplated
by this Agreement, provided, that the Reinsurer covenants to exercise such
authority in a professional manner and to use the same level of care as is used
in administering the Reinsurer’s other insurance business. As part of the
foregoing, each Company grants full authority to the Reinsurer to adjust, settle
or compromise all Losses hereunder, and all such adjustments, settlements and
compromises shall be binding on such Company. Each Company agrees to cooperate
fully with the Reinsurer in the transfer of such administration, and the
Reinsurer agrees to be responsible for such administration. Notwithstanding the
foregoing, the Parties understand and acknowledge that all management services
performed by the Reinsurer with respect to the Insurance Contracts issued by a
Company shall be provided subject to the general supervision and control of such
Company and its officers and directors. For the avoidance of doubt, and
notwithstanding the delegation of duties contained in this Agreement, each
Company has and retains the ultimate control of and authority over the
performance of all functions and services delegated hereunder by it.
(c)    Each Company agrees that such Company will not take action to prevent or
limit the Reinsurer or its designee from servicing or administering the Fronted
Policies or the Claims as contemplated by this Agreement. If the Reinsurer fails
to cure a material breach of its servicing or other obligations hereunder within
thirty (30) days following a Company's written notice to Reinsurer of such
breach, which notice shall in reasonable detail describe the nature of such
breach or, if such breach shall not be reasonably susceptible to cure within
such thirty (30) day period such additional reasonable time not exceeding an
additional sixty (60) days as shall be necessary to cure

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such breach, such Company shall have the right to exercise its remedies at law
or in equity with respect to such breach.
(d)    The Reinsurer shall maintain sufficient resources and adequate staffing
levels of personnel with appropriate experience to administer the Fronted
Policies in a professional manner and shall administer the Fronted Policies in
accordance with all Applicable Laws.
ARTICLE 5    
REGULATORY MATTERS
At all times during the term of this Agreement, the Companies and the Reinsurer
shall hold and maintain all licenses and authorizations required under
Applicable Law and otherwise take all actions that may be necessary to perform
its obligations hereunder.
ARTICLE 6    
DUTY OF COOPERATION & INDEMNITY; REINSURANCE
Section 6.1    Cooperation.
Each Party hereto shall cooperate fully with the other in all reasonable
respects in order to accomplish the objectives of this Agreement.
Section 6.2    Reinsurance.
Without written consent of the Reinsurer (which consent may be withheld at
Reinsurer’s sole discretion), the Companies shall not enter into any reinsurance
agreements, treaties and contracts, including any renewals or extensions
thereof, to the extent such reinsurance agreements, treaties and contracts
provide reinsurance coverage for the Fronted Policies.
ARTICLE 7    
INSOLVENCY
In the event of the insolvency of a Company, this reinsurance as to Fronted
Policies issued by such Company shall be payable directly to such Company or its
liquidator, receiver, conservator or statutory successor on the basis of the
amount of the claims allowed in the insolvency proceeding without diminution
because of the insolvency of such Company or because the liquidator, receiver,
conservator or statutory successor of such Company has failed or is unable to
pay all or a portion of a claim, except where (a) this Agreement specifically
provides another payee of such reinsurance in the event of such Company’s
insolvency, provided that this exception shall only apply to the extent that the
reinsurance proceeds due such payee are actually paid by the Reinsurer, or (b)
the Reinsurer, with the consent of the direct insured or insureds, has assumed
such policy obligations of such Company as direct obligations of the Reinsurer
to the payees under such policies and in full and complete substitution for the
obligations of such Company to such payees. It is agreed,

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however, that the liquidator, receiver, conservator or statutory successor shall
give written notice to the Reinsurer of the pendency of a claim against such
Company indicating the Fronted Policy which involves a possible liability on the
part of the Reinsurer within reasonable time after such claim is filed in the
conservation or liquidation proceeding or in the receivership and that, during
the pendency of such claim, the Reinsurer may investigate such claim and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that it may deem available to such Company
or its liquidator, receiver, conservator or statutory successor. The expenses
thus incurred by the Reinsurer shall be chargeable, subject to the Court’s
approval, against such Company as part of the expense of the conservation or
liquidation to the extent of a pro rata share of the benefit that may accrue to
such Company solely as a result of the defense undertaken by the Reinsurer.
ARTICLE 8    
REGULATORY APPROVALS
The Companies and the Reinsurer shall submit all necessary registrations,
filings and notices with, and obtain all necessary consents, approvals,
qualifications and waivers from, all Governmental Authorities and other parties
which may be required under Applicable Law as a result of the transactions
contemplated by, or to perform its respective obligations under, this Agreement.
The Parties agree that where formal approval is required by any Governmental
Authority, this Agreement shall not be effective as to any and all Fronted
Policies to be reinsured hereunder in such jurisdiction until such approval is
obtained.
ARTICLE 9    
DURATION
Subject to Section 2.1 above, this Agreement shall not be subject to termination
by any Party except (i) by written agreement between Reinsurer and the
respective Company on the date indicated by such agreement, after receipt of any
required approval from Government Authorities, or (ii) upon the termination or
expiration of the Fronting Authority, the expiration of all liability on all
Fronted Policies, and the complete performance by Reinsurer and the Companies of
all obligations and duties arising under this Agreement.
ARTICLE 10    
FOLLOW THE FORTUNES
The Reinsurer’s liability shall attach simultaneously with that of each Company
and shall be subject in all respects to the same risks, original terms and
conditions, interpretations, waivers, and to the same cancellation of the
Fronted Policies as such Company is subject to, the true intent of this
Agreement being that the Reinsurer shall, in every case to which this Agreement
applies, follow the fortunes and follow the settlements of such Company.

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ARTICLE 11    
INDEMNIFICATION
Section 11.1    Indemnification.
(a)    Each Company agrees to indemnify and hold the Reinsurer and its
Affiliates, predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against and in respect of all
Damages resulting from or relating to a breach by such Company of any covenant
or agreement of such Company in this Agreement and to be performed post-Closing.
(b)    The Reinsurer agrees to indemnify and hold each Company and its
Affiliates, predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against and in respect of all
Damages, resulting from or relating to a breach by the Reinsurer of any covenant
or agreement of the Reinsurer in this Agreement and to be performed post-Closing
or from any third party claim against a Company resulting from (i) the
administration of Fronted Policies or Claims by Reinsurer or (ii) any action or
failure to act of a Company pursuant to express written instructions of the
Reinsurer.    
ARTICLE 12    
MISCELLANEOUS
Section 12.1    Notices. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the Parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
(a)    If to a Company, to:
c/o National General Management Corp.
59 Maiden Lane, 38th fl
New York, NY 10038
Attention: Jeffrey Weissmann, Esq.
Facsimile: (212) 380-9499
E-mail: jeffrey.weissmann@ngic.com

or to such other person or address as the Company shall furnish to the Reinsurer
in writing.

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(b)
If to the Reinsurer, to:

c/o AmTrust Financial Services, Inc.
AmTrust North America, Inc.
59 Maiden Lane, 43rd fl
New York, NY 10038
Attn:    Stephen Ungar, Esq.
Facsimile No.: (212) 220-7130
E-mail: Steve.Ungar@amtrustgroup.com

or to such other person or address as the Reinsurer shall furnish to the
Companies in writing.
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this paragraph, such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this paragraph, such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Any Party
to this Agreement may change its address for the purposes of this Agreement by
giving notice thereof in accordance with this Section.
Section 12.2    Assignment; Parties in Interest.
(a)    Assignment. Except as expressly provided herein, the rights and
obligations of a Party hereunder may not be assigned, transferred or encumbered
without the prior written consent of the other Party.
(b)    Parties in Interest. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the Parties and their respective successors
and permitted assigns. Except as provided in Section 3.2, nothing contained
herein shall be deemed to confer upon any other Person any right or remedy under
or by reason of this Agreement.

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Section 12.3    Waivers and Amendments; Preservation of Remedies. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by each of the Parties or, in
the case of a waiver, by the Party waiving compliance. No delay on the part of
any Party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any Party of any right,
power, remedy or privilege, nor any single or partial exercise of any such
right, power, remedy or privilege, preclude any further exercise thereof or the
exercise of any other such right, remedy, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any Party may otherwise have under Applicable Law or in equity.
Section 12.4    Governing Law; Venue. This Agreement shall be construed and
interpreted according to the internal laws of the State of New York excluding
any choice of law rules that may direct the application of the laws of another
jurisdiction. The Parties hereby stipulate that any action or other legal
proceeding arising under or in connection with this Agreement may be commenced
and prosecuted in its entirety in the federal or state courts sitting in New
York, New York, each Party hereby submitting to the personal jurisdiction
thereof, and the Parties agree not to raise the objection that such courts are
not a convenient forum. Process and pleadings mailed to a party at the address
provided in Section 12.1 shall be deemed properly served and accepted for all
purposes.
Section 12.5    Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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Section 12.6    Entire Agreement; Merger. This Agreement, the Transaction
Documents, and any exhibits, schedules and appendices attached hereto and
thereto together constitute the final written integrated expression of all of
the agreements among the Parties with respect to the subject matter hereof and
is a complete and exclusive statement of those terms, and supersede all prior or
contemporaneous, written or oral, memoranda, arrangements, contracts and
understandings between the Parties relating to the subject matter hereof. Any
representations, promises, warranties or statements made by any Party which
differ in any way from the terms of this Agreement or any applicable provisions
contained in the Ancillary Agreements shall be given no force or effect. The
Parties specifically represent, each to the other, that there are no additional
or supplemental agreements or contracts between or among them related in any way
to the matters herein contained unless specifically included or referred to in
this Agreement or any applicable provisions contained in the Transaction
Documents. No addition to or modification of any provision of this Agreement or
any applicable provisions of the Transaction Documents shall be binding upon
either Party unless embodied in a dated written instrument signed by both
Parties.
Section 12.7    Exhibits and Schedules. All exhibits, schedules and appendices
are hereby incorporated by reference into this Agreement as if they were set
forth at length in the text of this Agreement.
Section 12.8    Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
Section 12.9    Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under Applicable Law or regulations, that
provision shall not apply and shall be omitted to the extent so contrary,
prohibited, or invalid; but the remainder of this Agreement shall not be
invalidated and shall be given full force and effect insofar as possible.
Section 12.10    Expenses. Regardless of whether or not the transactions
contemplated in this Agreement are consummated, each of the Parties shall bear
their own expenses and the expenses of its counsel and other agents in
connection with the transactions contemplated hereby.
Section 12.11    Currency. The currency of this Agreement and all transactions
under this Agreement shall be in United States Dollars.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first written
above to be effective as of the Effective Time.
COMPANIES:
YORK INSURANCE COMPANY OF MAINE

By ______________________________
Title _____________________________

MASSACHUSETTS HOMELAND INSURANCE COMPANY

By _______________________________
Title ______________________________

PRESERVER INSURANCE COMPANY

By _______________________________
Title ______________________________

CASTLE POINT INSURANCE COMPANY

By _______________________________
Title ______________________________

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REINSURER:
TECHNOLOGY INSURANCE COMPANY, INC.

By _______________________________
Title ______________________________
 

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EXHIBIT D

Form of Loss Portfolio Transfer Agreement

THIS LOSS PORTFOLIO TRANSFER AGREEMENT (this “Agreement”) is entered into as of
[ ], 2014 by and among [TOWER INSURANCE COMPANY OF NEW YORK, an insurance
company organized under the laws of New York]/[CASTLE POINT NATIONAL INSURANCE
COMPANY, an insurance company organized under the laws of Illinois,] TOWER
NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of
Massachusetts, HERMITAGE INSURANCE COMPANY, an insurance company organized under
the laws of New York, CASTLE POINT FLORIDA INSURANCE COMPANY, an insurance
company organized under the laws of Florida, KODIAK INSURANCE COMPANY, an
insurance company organized under the laws of New Jersey, NORTH EAST INSURANCE
COMPANY, an insurance company organized under the laws of Maine, YORK INSURANCE
COMPANY OF MAINE, an insurance company organized under the laws of Maine,
MASSACHUSETTS HOMELAND INSURANCE COMPANY, an insurance company organized under
the laws of Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company
organized under the laws of New Jersey, and CASTLE POINT INSURANCE COMPANY, an
insurance company organized under the laws of New York, as the Companies
(collectively, the “Companies” and, individually, each a “Company”), and either
CastlePoint Reinsurance Company Ltd. or Tower Reinsurance, Ltd., as agreed to by
the parties (the “Reinsurer”) (collectively, the “Parties”).
WHEREAS, ACP Re, Ltd., a Bermuda corporation (the “Seller”), AmTrust Financial
Services, Inc., a Delaware corporation (“AmTrust”), and National General
Holdings Corporation, a Delaware corporation (“National General”) are jointly
entering into a series of related agreements for the purpose of acquiring Tower
Group International, Ltd. (“Tower”), a Bermuda insurance holding company, which
transacts commercial and personal lines insurance business in the United States
through 15 insurance company subsidiaries, including the Companies which are
parties to this Agreement;
WHEREAS, Seller, pursuant to that certain Merger Agreement among Seller, Merger
Sub and Tower dated as of January 3, 2014 (the “Merger Agreement”) is acquiring
Tower and its subsidiaries, including, indirectly, all of the issued and
outstanding shares of capital stock of the Companies, through the merger of
Merger Sub with and into Tower with Tower surviving such merger (the “Merger”);
WHEREAS, Technology Insurance Company, Inc. (the “Commercial Lines Reinsurer”)
and the Companies are parties to that certain Commercial Lines Cut-Through Quota
Share Reinsurance Agreement, dated January 3, 2014 (the “Commercial Lines
Cut-Through QSA”) pursuant to which the Commercial Lines Reinsurer is reinsuring
Subject Policies (as defined in the

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Commercial Lines Cut-Through QSA and herein called the “Commercial Lines New
Policies”) relating to the Commercial Lines Business (as defined in the
Commercial Lines Cut-Through QSA);
WHEREAS, Integon National Insurance Company (the “Personal Lines Reinsurer”) and
the Companies are parties to that certain Personal Lines Cut-Through Quota Share
Reinsurance Agreement dated as of January 3, 2014 (the “Personal Lines
Cut-Through QSA”) pursuant to which the Personal Lines Reinsurer is reinsuring
Subject Policies (as defined in the Personal Lines Cut-Through QSA, and together
with the Commercial Lines New Policies herein called the “New Policies”)
relating to the Personal Lines Business (as defined in the Personal Lines
Cut-Through QSA); and
WHEREAS, as more particularly set forth herein, the Companies and the Reinsurer
wish to enter into a new reinsurance arrangement pursuant to which the Reinsurer
will reinsure all the business written by the Companies prior to the Effective
Time.
NOW, THEREFORE, in consideration of the mutual and several promises and
undertakings herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Parties agree as
follows:
ARTICLE 1    
DEFINITIONS
Section 1.1    Defined Terms.
The following terms shall have the respective meanings specified below
throughout this Agreement.
“Agreement” has the meaning set forth in the first paragraph.
“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect
to any Person, any other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person. As used in this definition, “control” (including, with
correlative meanings, “controlled by” and “under common control with”) shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract, as trustee or executor,
or otherwise).
“Alternative Accountants” has the meaning set forth in Section 2.2(c).
“AmTrust” has the meaning set forth in the Recitals.

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“Ancillary Agreements” shall mean the Merger Agreement, the Commercial Lines
Cut-Through QSA, the Personal Lines Cut-Through QSA, the Commercial Lines SPA
and the Personal Lines SPA.
“Applicable Law” means any domestic or foreign federal, state or local statute,
law, ordinance or code, or any written rules, regulations or administrative
interpretations issued by any Governmental Entity pursuant to any of the
foregoing, and any order, writ, injunction, directive, judgment or decree of a
court of competent jurisdiction applicable to the parties hereto.
“Claim” and “Claims” means any and all claims, requests, demands or notices made
by or on behalf of policyholders, beneficiaries or third party claimants for the
payment of Losses and any other amounts due or alleged to be due under or in
connection with the Insurance Contracts.
“Closing Date” means the date upon which the Merger is effected.
“Commercial Lines New Policies” has the meaning set forth in the Recitals.
“Commercial Lines Reinsurer” has the meaning set forth in the Recitals.
“Commercial Lines Cut-Through QSA” has the meaning set forth in the Recitals.
“Commercial Lines SPA” means Commercial Lines Stock and Asset Purchase Agreement
dated January 3, 2014 between the Seller and AmTrust.
“Company” has the meaning set forth in the first paragraph.
“Damages” means all damages, losses, liabilities and expenses (including
reasonable attorneys’ fees and reasonable expenses of investigation in
connection with any action, suit or proceeding).
“Effective Time” means 12:01 a.m. Eastern Time on the Closing Date.
“Governmental Entity” means any foreign, domestic, federal, territorial, state
or local U.S. or non-U.S. governmental authority, quasi-governmental authority,
instrumentality, court or government, self-regulatory organization, commission,
tribunal or organization or any political or other subdivision, department,
branch or representative of any of the foregoing.
“IBNR” has the meaning set forth in the definition for the term Loss Reserves.
“Initial Loss Reserve Transfer Amount” has the meaning set forth in Section
2.2(a).
“Insurance Contracts” means all insurance contracts, policies, certificates,
binders, slips, covers or other agreements of insurance, including all
supplements, riders and endorsements issued or written in connection therewith
and extensions thereto, whether or not in-force, issued, renewed,

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or written by or on behalf of any Company prior to the Effective Time (other
than the New Policies reinsured under the Commercial Lines QSA or the Personal
Lines QSA).
“Inuring Reinsurance” means all reinsurance agreements, treaties and contracts,
including any renewals or extensions thereof, to the extent such reinsurance
agreements, treaties and contracts provide reinsurance coverage for the
Insurance Contracts.
“Losses” shall mean liabilities and obligations to make payments to
policyholders, beneficiaries and/or other third party claimants under the
Insurance Contracts (excluding liabilities or assessments arising from a
Company’s participation, if any, in any voluntary or involuntary pools, guaranty
funds, or other types of government-sponsored or government-organized insurance
funds) and all loss adjustment expenses and defense costs, including, without
limitation, (i) all expenses incurred by or on behalf of a Company related to
the investigation, appraisal, adjustment, litigation, defense or appeal of
claims under or covered by the Insurance Contracts and/or coverage actions under
or covered by the Insurance Contracts, (ii) all liabilities for consequential,
exemplary, punitive or similar extra contractual damages, or for statutory or
regulatory fines or penalties, or for any loss in excess of the limits arising
under or covered by any Insurance Contract, and (iii) court costs accrued prior
to final judgment, prejudgment interest or delayed damages and interest accrued
after final judgment.
“Loss Reserve True Up Report” has the meaning set forth in Section 2.2(b).
“Loss Reserve Adjustment” has the meaning set forth in Section 2.2(d).
“Loss Reserves” shall mean, with respect to a Company, as of any date the amount
recorded on the books of such Company, net of Inuring Reinsurance but without
taking into account the reinsurance ceded to the Reinsurer hereunder, on account
of its actual or potential obligations for unpaid Losses as of such date,
including, without limitation, amounts for incurred but not reported Losses
(“IBNR”), calculated consistent with the established actuarial practices applied
by such Company in respect of the Insurance Contracts, but in all cases
consistent with the reserve requirements, statutory accounting rules and
actuarial principles applicable to such Company under Applicable Law as of the
date at issue. For avoidance of doubt, such reserve requirements, statutory
accounting rules and actuarial principles as of the date hereof shall be those
in effect prior to giving effect to the Merger but thereafter such reserve
requirements, statutory accounting rules and actuarial principles shall be those
then in effect.
“Merger” has the meaning set forth in the Recitals.
“Merger Agreement” has the meaning set forth in the Recitals.
“Merger Sub” means the subsidiary of the Seller that will merge with Tower
pursuant to the Merger.

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“National General” has the meaning set forth in the Recitals.
“New Policies” has the meaning set forth in the Recitals.
“Parties” has the meaning set forth in the first paragraph.
“Person” shall mean any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, limited liability company, trust,
estate, unincorporated organization, Government Entity or other entity.
“Personal Lines Cut-Through QSA” has the meaning set forth in the Recitals.
“Personal Lines Reinsurer” has the meaning set forth in the Recitals.
“Personal Lines SPA” means that certain Personal Lines Stock Purchase Agreement
dated January 3, 2014 between the Seller and National General Holdings.
“Reinsurer” has the meaning set forth in the first paragraph.
“Seller” has the meaning set forth in the Recitals.
“Tower” has the meaning set forth in the Recitals.
“Trust Account” has the meaning set forth in Section 3.3(b).
“Trust Agreement(s)” has the meaning set forth in Section 3.3(b).
“Trustee” has the meaning set forth in Section 3.3(b).
ARTICLE 2    
BASIS OF REINSURANCE AND BUSINESS REINSURED
Section 2.1    Existing Business.
(e)    Each Company hereby cedes, and the Reinsurer hereby assumes, one hundred
percent (100%) of all Losses occurring on or prior to the date hereof for which
such Company is liable in respect of the Insurance Contracts (other than Losses
assumed under the Commercial Lines Cut-Through QSA and the Personal Lines
Cut-Through QSA). All Losses reinsured hereunder and any payments of Claims with
respect to such Losses by the Reinsurer shall be net Inuring Reinsurance paid
and collected for the benefit of the applicable Company.
(f)    In the event the Reinsurer makes an indemnity payment on behalf of a
Company directly to any policyholder, insured or third party pursuant to any
Insurance Contract that pays, in full or in part, a Loss, cost or expense under
such Insurance Contract, such payment satisfies and extinguishes any and all
obligation of the Reinsurer hereunder to indemnify such

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Company for such Loss, cost or expense to the extent of such payment. In no
event shall the Reinsurer be obligated hereunder to indemnify with respect to
any Loss, cost or expense under an Insurance Contract for an amount in excess of
such Loss, cost or expense.
Section 2.2    Transfer of Loss Reserves.
(a)    On the Closing Date, the Companies shall convey to the Reinsurer one
hundred percent (100%) of the aggregate Loss Reserves of the Companies by wire
transfer of immediately available funds in an amount equal to [ ] Dollars ($[
]), which amount represents the estimate of the Loss Reserves as of the Closing
Date (the “Initial Loss Reserve Transfer Amount”).
(b)    Within ninety (90) days following the Closing Date, the Reinsurer shall
perform a calculation of the aggregate Loss Reserves of the Companies as of the
Closing Date, and, if different from the Initial Loss Reserve Transfer Amount,
the Reinsurer shall send to the Companies its computation of such aggregate Loss
Reserve together with its work papers used to compute the same (the “Loss
Reserve True Up Report”). Such aggregate Loss Reserves shall be calculated
utilizing the established actuarial practices as followed by the Companies in
respect of the Insurance Contracts, as well as the reserve requirements,
statutory accounting rules and actuarial principles applicable to the Companies
as of the Effective Time.
(c)    Within ten (10) days following the Companies’ receipt of the Loss Reserve
True-Up Report, the Parties shall confer in good faith with regard to any
disputed calculations and an appropriate adjustment shall be made to the
aggregate Loss Reserves as agreed upon by the Parties. If the Parties are unable
to agree on an appropriate adjustment within twenty (20) days of the Loss
Reserve True Up Report, “Alternative Accountants,” whose decision on the matter
shall be binding on the Parties, shall be designated by agreement between the
Companies and the Reinsurer. If the Parties fail to agree on the selection of
the Alternative Accountants, the Alternative Accountants shall be selected by
mutual agreement of each of the Companies’ and the Reinsurer’s outside
independent auditors. The Alternative Accountants shall conduct such analysis as
they deem appropriate, during a period not to exceed thirty (30) days after they
are selected, to determine the amounts which they conclude should have been
reflected in the Loss Reserve True Up Report and shall issue their decision
(which shall be rendered in writing and shall specify the reasons for the
decision) within fifteen (15) days after the conclusion of their analysis. The
Alternative Accountants’ decision shall include a determination of the aggregate
Loss Reserve, the amounts which they have determined should be used for the Loss
Reserve True Up Report and a determination of the Loss Reserve Adjustment (as
that term is defined in Section 2.2(d)) due to the Reinsurer or the Companies,
as the case may be. Each Party shall make available to the other Party and the
Alternative Accountants such work papers as may be reasonably necessary to
calculate the aggregate Loss Reserves and Loss Reserve Adjustment under this
Section 2.2(c). No Party shall have any ex parte discussions or communications,
directly or indirectly, with the Alternative Accountants regarding the subject
matter of a dispute arising under this Section 2.2(c), unless the Party seeking
such discussions or

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communications first obtains the other Party’s written consent to such ex parte
contact with the Alternative Accountants. For the avoidance of doubt, in the
event of any dispute with respect to the Loss True Up Report, such dispute shall
be governed by this Section 2.2 and the procedures set forth herein.
(d)    On the fifth (5th) business day following the deemed acceptance of, the
mutual written agreement of the Companies and the Reinsurer to, or the
determination by the Alternative Accountants of, the aggregate Loss Reserves, if
the aggregate Loss Reserves exceeds the Initial Loss Reserve Transfer Amount,
the Companies shall remit funds to the Reinsurer equal to the difference, and if
the aggregate Loss Reserves are less than the Initial Loss Reserve Transfer
Amount, the Companies shall be paid such difference by the Reinsurer (the amount
so transferred being herein called the “Loss Reserve Adjustment”).
(e)    From and after the Effective Time, the Reinsurer shall maintain as a
liability on its statutory financial statements adequate reserves for all
liabilities ceded under this Agreement. The Reinsurer shall provide the
Companies with its periodic reports filed with its insurance regulators and a
copy of its audited financial statements along with the audit report thereon
within fifteen (15) days of the Reinsurer’s filing of such statements and
reports with the insurance regulator of its jurisdiction of domicile.
Section 2.3    Inuring Reinsurance.
As additional consideration for the liabilities assumed by the Reinsurer
pursuant to this Agreement, the parties hereby agree that all Inuring
Reinsurance shall inure to the benefit of the Reinsurer and, accordingly, any
recovery of funds under the Inuring Reinsurance shall be paid promptly to the
Reinsurer.
ARTICLE 3    
PAYMENTS, OFFSET, AND SECURITY
Section 3.1    Offset Rights.
Except as otherwise expressly provided, each Party hereto, and each of its
respective Affiliates at the time an offset is asserted, shall have, and may
exercise at any time and from time to time, the right to offset any balance or
balances due to the other Party under this Agreement at the time an offset is
asserted; provided, however, that in the event of the insolvency of a Party
hereto or any of its Affiliates, offsets shall only be allowed in accordance
with the provisions of Applicable Law.
Section 3.2    Reports and Remittances.
(a)    The Parties shall conduct monthly settlements based upon monthly
bordereaux to be provided by or on behalf of the Reinsurer evidencing the amount
due or to be due

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in a form, and containing such detail, as is agreed to by the Parties. Each
Party shall pay or credit in cash or its equivalent to the other all gross
amounts for which it may be liable under the terms and conditions of this
Agreement within thirty (30) days after receipt of each monthly bordereau.
(b)    The Companies and the Reinsurer shall furnish each other with such
records, reports and information with respect to the Losses, Claims, Inuring
Reinsurance, and the reinsurance contemplated hereby as may be reasonably
required by the other Party to comply with any internal reporting requirements
or reporting requirements of any Governmental Entity or to prepare and complete
such Party’s quarterly and annual financial statements.
(c)    If a Company or the Reinsurer receives notice of, or otherwise becomes
aware of, any inquiry, investigation, proceeding, from or at the direction of a
Governmental Entity, or is served or threatened with a demand for litigation,
arbitration, mediation or any other similar proceeding relating to the Insurance
Contracts, such Company or the Reinsurer, as applicable, shall promptly notify
the other party thereof, whereupon the parties shall cooperate in good faith and
use their respective commercially reasonable efforts to resolve such matter in a
mutually satisfactory manner in light of all the relevant business, regulatory
and legal facts and circumstances.
(d)    Each Party shall have the right, through authorized representatives and
upon reasonable advance notice during normal business hours, to periodically
audit and inspect all books, records, and papers of the other Party solely in
connection with the Insurance Contracts, the Inuring Reinsurance and any
reinsurance hereunder or claims in connection therewith. Each Party shall treat
the other Party’s books, records, and papers in confidence. Each Party shall
comply in all material respects with its privacy policies as to and all Privacy
Laws with respect to Personal Information. “Personal Information” means any
information related to an identified or identifiable natural person and does not
meet the definition of de-identified as defined by the Health Insurance
Portability and Accountability Act of 1996. “Privacy Laws” shall mean any laws,
statutes, rules, regulations, codes, orders, decrees, and rulings thereunder of
any federal, state, regional, county, city, municipal or local government of the
United States that relate to privacy, data protection or data transfer issues.
Section 3.3    Security.
(a)    As regards Insurance Contracts coming within the scope of this Agreement,
each Ceding Company agrees that, when it files with the applicable
jurisdiction(s) or sets up on its books reserves for the Policies covered
hereunder, which it is required by law to set up, it will forward to the
Reinsurer a statement showing the proportion of such reserves applicable to it.
For purposes of this Article, "reserves" will consist of:
(i)    Loss and loss adjustment expense paid by such Company but not recovered
from the Reinsurer;

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(ii)    Loss and loss adjustment expense reported and outstanding; and
(iii)    A reserve amount for incurred but not reported losses.
(b)    The Reinsurer hereby agrees that with respect to each Ceding Company,
severally, it will fund an amount equal to the Reinsurer’s proportion of such
reserves by establishing a trust account pursuant to trust agreement (“Trust
Account”) which may be combined with one or more of the following:
(i)    Cash advances or funds withheld; or
(ii)    Letters of credit
(c)    Except as otherwise provided herein, the Reinsurer will have the option
of determining the method of funding referred to above, provided it is
reasonably acceptable to the applicable Ceding Company and, to the extent that
funding is required for such Ceding Company to receive credit for the
reinsurance under this Agreement, each applicable regulatory authority. Income
on the amounts funded as provided above shall accrue to the benefit of the
Reinsurer.
(d)    If a Reinsurer's choice of funding is or includes a letter of credit, it
will apply for and secure delivery to the applicable Ceding Company of a clean,
irrevocable, unconditional letter of credit, dated on or before December 31 of
the year in which the request is made, issued by a member of the Federal Reserve
System or any other bank approved for use by the National Association of
Insurance Commissioners' Securities Valuation Office and such Ceding Company,
containing provisions acceptable to the insurance regulatory authorities having
jurisdiction over such Ceding Company's reserves in an amount equal to the
Reinsurer's proportion of such reserves as shown in the statement prepared by
such Ceding Company.
(e)    Any letter of credit will be issued for a period of not less than one
year, and will be automatically extended for one year from its date of
expiration or any future expiration date unless thirty (30) days prior to any
expiration date the issuing bank notifies the Ceding Company that is the
beneficiary of such letter of credit by registered mail that the issuing bank
elects not to consider the letter of credit extended for any additional period.
An issuing bank, not a member of the Federal Reserve System or not chartered in
the state of domicile of the Ceding Company that is the beneficiary of such
letter of credit, will provide 60 days’ notice to such Ceding Company prior to
any expiration in the event of nonextension.
(f)    Notwithstanding any other provisions of this Agreement, a Ceding Company
or its court-appointed successor in interest may draw upon and apply any amounts
which it may draw against such letter of credit or trust agreement (pursuant to
the terms of the agreement under which the letter of credit or trust agreement
is held), or any other method of funding that may apply,

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at any time without diminution because of the insolvency of such Ceding Company
or of Reinsurer for one or more of the following purposes only:
(i)    To reimburse such Ceding Company for the Reinsurer's share of unearned
premium (if applicable) on Insurance Contracts reinsured hereunder on account of
cancellations of such Insurance Contracts.
(ii)    To pay the Reinsurer's share or to reimburse such Ceding Company for the
Reinsurer's share of any Loss reinsured by this Agreement, which has not been
otherwise paid.
(iii)    To make refund of any sum in excess of 102% of the actual amount of the
Reinsurer’s security requirement under this Agreement.
(iv)    In the event of nonextension of the letter of credit as provided for
above, to establish deposit of the Reinsurer's security requirement under this
Agreement. Such cash deposit will be held in an interest-bearing account
separate from such Ceding Company's other assets, and interest thereon will
accrue to the benefit of the Reinsurer, except that any such interest shall
accrue to the benefit of such Ceding Company to the extent that the Reinsurer
has not fully complied with its funding obligations hereunder.
(v)    In the event that the Reinsurer funds its obligations hereunder by use of
a trust agreement, where such Ceding Company has received notification of
termination of the trust account established by the trust agreement to secure
the Reinsurer’s obligations to such Ceding Company and where the Reinsurer’s
entire obligations to such Ceding Company under the Agreement remain
unliquidated and undischarged ten (10) days prior to the termination date, to
withdraw amounts equal to such Reinsurer’s obligations under the Agreement,
including reserves for outstanding claims (including claims incurred but not
reported), reserves for loss adjustment expenses and reserves for unearned
premium, if applicable, and deposit those amounts in a separate account, in the
name of such Ceding Company in any qualified United States financial institution
as defined in relevant state insurance laws and regulations apart from its
general assets, in trust for such uses and purposes specified above as may
remain executory after such withdrawal and for any period after the termination
date.
(vi)    To pay the Reinsurer's share of any other amounts such Ceding Company
claims are due under this Agreement.
(g)    Monthly, each Ceding Company will prepare, for the sole purpose of
determining the funding required in this Article, a specific statement of the
Reinsurer's security requirement under this Agreement. If the statement shows
that the Reinsurer's security requirement exceeds the balance of funding as of
the statement date, the Reinsurer will, within fifteen (15) days

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after receipt of notice of such excess, make an adjustment increasing the amount
of such funding by the amount of such difference. If, however, the statement
shows that the Reinsurer's security requirement is less than the balance of
funding as of the statement date, such Ceding Company will, within fifteen (15)
days after receipt of written request from the Reinsurer release such excess by
making the appropriate adjustment.
ARTICLE 4    
CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
(a)    On and after the Effective Time, each Company will provide prompt notice
to the Reinsurer or its designee of all Claims (but only to the extent such
Claims are not otherwise known or reported to the Reinsurer or any of its
Affiliates), and the Reinsurer or its designee will have the obligation to
investigate and defend, as applicable, at its own expense, any Claim affecting
this Agreement and to administer the Insurance Contracts and the Claims
thereunder. At the request of the Reinsurer or such designee, each Company will
jointly associate with the Reinsurer, at the expense of the Reinsurer, in the
defense or control of any Claim, suit or proceeding involving this reinsurance,
and such Company shall cooperate with the Reinsurer or such designee in every
respect to procure the most favorable disposition of such claim, suit or
proceeding.
(b)    Each Company grants to the Reinsurer, or one or more of the Reinsurer’s
Affiliates designated by the Reinsurer, as of the Effective Time authority in
all matters relating to the administration of Inuring Reinsurance, the Insurance
Contracts and any Claims thereunder, including the authority (i) to pay Claims
on behalf of such Company, (ii) to communicate directly with policyholders,
(iii) to handle the service and management of the Insurance Contracts, including
without limitation the authority to (A) adjust and settle claims under the
Insurance Contracts; (B) set and establish loss reserves for the Insurance
Contracts; and (C) any and all other acts or duties that would otherwise be
performed by such Company necessary and appropriate to the Insurance Contracts,
to the extent such authority may be granted pursuant to Applicable Law and the
Reinsurer, or one or more of the Reinsurer’s Affiliates designated by the
Reinsurer, shall perform all such functions as outlined herein, and (iv) to
collect amounts payable to such Company under Inuring Reinsurance, including
intervening in any action to collect Inuring Reinsurance. In exercising such
authorities, the Reinsurer or any such Affiliate may delegate the performance of
any duty described above to a third party; provided that no such delegation
shall relieve the Reinsurer of its obligations hereunder. Subject to the
forgoing limitation, effective as of the Effective Time, each Company hereby
appoints the Reinsurer as its attorney-in-fact with respect to the rights,
duties and privileges and obligations of such Company in and to the Insurance
Contracts, with full power and authority to act in the name, place and stead of
such Company with respect to such contracts, including without limitation, the
power to service such contracts, to adjust, defend, settle and to pay all
Claims, to recover salvage and subrogation for any losses incurred and to take
such other and further actions as may be necessary or desirable to effect the
transactions contemplated by this Agreement, provided,

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that the Reinsurer covenants to exercise such authority in a professional manner
and to use the same level of care as is used in administering the Reinsurer’s
other insurance business. As part of the foregoing, each Company grants full
authority to the Reinsurer to adjust, settle or compromise all Losses hereunder,
and all such adjustments, settlements and compromises shall be binding on such
Company. Each Company agrees to cooperate fully with the Reinsurer in the
transfer of such administration, and the Reinsurer agrees to be responsible for
such administration.
(c)    The Companies agree that so long as (i) the Reinsurer is solvent, and
(ii) the Reinsurer or its designee shall not be in material breach of its
obligations to service and administer the Insurance Contracts or the Claims
under this Agreement, the Companies will not take action to prevent or limit the
Reinsurer or its designee from servicing or administering the Insurance
Contracts or the Claims as contemplated by this Agreement. If the Reinsurer (i)
becomes insolvent, makes an assignment for the benefit of its creditors, or
becomes the subject of any voluntary or involuntary supervision, conservation,
rehabilitation, liquidation or other similar proceeding, the Reinsurer’s
authority under this Article 4 shall be automatically revoked and the Companies
shall handle, or retain a third-party administrator to handle, the
administration and runoff of the Insurance Contracts and all reasonable costs
and expenses incurred by or on behalf of the Companies in taking back and
administering the runoff of the Insurance Contracts shall constitute loss
adjustment expenses fully reinsured under this Agreement. In all other
circumstances, if the Reinsurer fails to cure a material breach of its servicing
or other obligations hereunder within thirty (30) days following the Companies’
written notice to Reinsurer of such breach, which notice shall in reasonable
detail describe the nature of such breach or, if such breach shall not be
reasonably susceptible to cure within such thirty (30) day period such
additional reasonable time not exceeding an additional thirty (30) days as shall
be necessary to cure such breach, the Companies shall have the right to exercise
their remedy options set forth in the last sentence of this paragraph. The
remedies available to the Companies, without prejudice to any other remedies
otherwise available, shall include: (1) the Companies shall have the option, at
its sole discretion, (i) to revoke the Reinsurer’s authority hereunder and
handle the administration and runoff of the Insurance Contracts directly or
through their designee, or (2) to provide the Reinsurer with a list of three
third-party administrators acceptable to the Companies, and the Reinsurer shall,
within thirty (30) days, contract (at the Reinsurer's expense) with one of such
listed third-party administrator to perform all of the Reinsurer's
claim-handling duties and all duties under this Article 4, with the terms of
such contract subject to the agreement of the Companies, which agreement shall
not be unreasonably withheld; or (3) should the Reinsurer fail to comply with
the foregoing clause (2), the Companies shall have the option, at its sole
discretion, to revoke all or a portion of the Reinsurer's authority pursuant to
this Article 4, and to contract with one of the listed third-party
administrators. In all cases, the reasonable expenses incurred by the Companies
pursuant to this Section 4(c) shall be deemed to constitute loss adjustment
expenses fully reinsured under this Agreement.

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(d)    The Reinsurer shall maintain sufficient resources and adequate staffing
levels of personnel with appropriate experience to administer the Insurance
Contracts in a professional manner and shall administer the Insurance Contracts
in accordance with all Applicable Laws.
(e)    The Reinsurer shall use its own claims practices and procedures, loss
control services and other administrative practices and procedures in
administering and managing the Claims. The Companies acknowledges that they have
reviewed, or had the opportunity to review, all such practices and procedures as
in effect at the inception of this Agreement and approve of the same for the
Reinsurer’s use in administration and management of the Claims. Notwithstanding
the foregoing, the Parties understand and acknowledge that all management
services performed by the Reinsurer with respect to the Insurance Contracts
issued by a Company shall be provided subject to the general supervision and
control of such Company and its officers and directors. For the avoidance of
doubt, and notwithstanding the delegation of duties contained in this Agreement,
each Company has and retains the ultimate control of and authority over the
performance of all functions and services delegated hereunder by it.
ARTICLE 5    
REGULATORY MATTERS
At all times during the term of this Agreement, each Company and the Reinsurer
shall hold and maintain all licenses and authorizations required under
Applicable Law and otherwise take all actions that may be necessary to perform
its obligations hereunder.
ARTICLE 6    
DUTY OF COOPERATION & INDEMNITY
Section 6.1    Cooperation.
Each Party hereto shall cooperate fully with the other in all reasonable
respects in order to accomplish the objectives of this Agreement.
Section 6.2    Indemnity.
This Agreement is an agreement for indemnity reinsurance solely between the
Companies and the Reinsurer and shall not create any legal relationship
whatsoever between the Reinsurer and any Person other than the Companies.

D-13

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ARTICLE 7    
[INTENTIONALLY OMITTED]
ARTICLE 8    
INSOLVENCY
In the event of the insolvency of a Company, this reinsurance shall be payable
directly to such Company or its liquidator, receiver, conservator or statutory
successor on the basis of the amount of the claims allowed in the insolvency
proceeding without diminution because of the insolvency of such Company or
because the liquidator, receiver, conservator or statutory successor of such
Company has failed or is unable to pay all or a portion of a claim, except where
(a) this Agreement specifically provides another payee of such reinsurance in
the event of such Company’s insolvency, provided that this exception shall only
apply to the extent that the reinsurance proceeds due such payee are actually
paid by the Reinsurer, or (b) the Reinsurer, with the consent of the direct
insured or insureds, has assumed such policy obligations of such Company as
direct obligations of the Reinsurer to the payees under such policies and in
full and complete substitution for the obligations of such Company to such
payees. It is agreed, however, that the liquidator, receiver, conservator or
statutory successor shall give written notice to the Reinsurer of the pendency
of a claim against such Company indicating the Insurance Contract which involves
a possible liability on the part of the Reinsurer within reasonable time after
such claim is filed in the conservation or liquidation proceeding or in the
receivership and that, during the pendency of such claim, the Reinsurer may
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that it may deem
available to such Company or its liquidator, receiver, conservator or statutory
successor. The expenses thus incurred by the Reinsurer shall be chargeable,
subject to the Court’s approval, against such Company as part of the expense of
the conservation or liquidation to the extent of a pro rata share of the benefit
that may accrue to such Company solely as a result of the defense undertaken by
the Reinsurer.
ARTICLE 9    
REGULATORY APPROVALS
The Companies and the Reinsurer shall submit all necessary registrations,
filings and notices with, and obtain all necessary consents, approvals,
qualifications and waivers from, all Governmental Entities and other parties
which may be required under Applicable Law as a result of the transactions
contemplated by this Agreement. The Parties agree that where formal approval is
required by any Governmental Entity, this Agreement shall not be effective as to
any and all Insurance Contracts to be reinsured hereunder in such jurisdiction
until such approval is obtained.

D-14

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ARTICLE 10    
DURATION
This Agreement shall not be subject to termination by any Party except (i) by
written agreement between Reinsurer and the Companies on the date indicated by
such agreement, after receipt of any required approval from Government Entities,
or (ii) upon the expiration of all liability on all Insurance Contracts, and the
complete performance by Reinsurer and the Companies of all obligations and
duties arising under this Agreement.
ARTICLE 11    
FOLLOW THE FORTUNES
The Reinsurer’s liability shall attach simultaneously with that of the Companies
and shall be subject in all respects to the same risks, original terms and
conditions, interpretations, waivers, and to the same cancellation of the
Insurance Contracts as the Companies are subject to, the true intent of this
Agreement being that the Reinsurer shall, in every case to which this Agreement
applies, follow the fortunes and follow the settlements of the Companies.
ARTICLE 12    
SURVIVAL; INDEMNIFICATION
Section 12.12    Indemnification.
(a)    The Reinsurer agrees to indemnify and hold the Companies and their
Affiliates, predecessors, successors and assigns (and their respective officers,
directors, employees and agents) harmless from and against and in respect of all
Damages resulting from or relating to a breach by the Reinsurer of any covenant
or agreement of the Reinsurer in this Agreement and to be performed after the
date hereof.
(b)    Each Company agrees, severally and not jointly, to indemnify and hold the
Reinsurer and its Affiliates, predecessors, successors and assigns (and their
respective officers, directors, employees and agents) harmless from and against
and in respect of all Damages, resulting from or relating to a breach by such
Company of any covenant or agreement of such Company in this Agreement and to be
performed after the date hereof.

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ARTICLE 13    
MISCELLANEOUS
Section 13.1    Notices. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the Parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
(a)    If to any Company, to:
National General Management Corp.
59 Maiden Lane, 38th fl
New York, NY 10038
Attention: Jeffrey Weissmann, Esq.
Facsimile: (212) 380-9499
E-mail: jeffrey.weissmann@ngic.com

with copies to:
AmTrust Financial Services, Inc.
59 Maiden Lane, 43rd fl
New York, NY 10038
Attn:    Stephen Ungar, Esq.
Facsimile No.: (212) 220-7130
E-mail: Steve.Ungar@amtrustgroup.com

or to such other person or address as the Companies shall furnish to the
Reinsurer in writing.
(c)
If to the Reinsurer, to:

ACP Re, Ltd.
59 Maiden Lane, 38th fl
New York, NY 10038
Attention: Jeffrey Weissmann, Esq.
Facsimile: (212) 380-9499
E-mail: jeffrey.weissmann@ngic.com

or to such other person or address as the Reinsurer shall furnish to the
Companies in writing.
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this paragraph, such communication shall be

D-16

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deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any Party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
Section 13.2    Assignment; Parties in Interest.
(a)    Assignment. Except as expressly provided herein, the rights and
obligations of a Party hereunder may not be assigned, transferred or encumbered
without the prior written consent of the other Party.
(b)    Parties in Interest. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the Parties and their respective successors
and permitted assigns. Except as provided in Section 3.1, nothing contained
herein shall be deemed to confer upon any other Person any right or remedy under
or by reason of this Agreement.
Section 13.3    Waivers and Amendments; Preservation of Remedies. This Agreement
may be amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by each of the Parties or, in
the case of a waiver, by the Party waiving compliance. No delay on the part of
any Party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any waiver on the part of any Party of any right,
power, remedy or privilege, nor any single or partial exercise of any such
right, power, remedy or privilege, preclude any further exercise thereof or the
exercise of any other such right, remedy, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any Party may otherwise have under Applicable Law or in equity.
Section 13.4    Governing Law; Venue. This Agreement shall be construed and
interpreted according to the internal laws of the State of New York excluding
any choice of law rules that may direct the application of the laws of another
jurisdiction. Subject to the provisions of Article 7, the Parties hereby
stipulate that any action or other legal proceeding arising under or in
connection with this Agreement may be commenced and prosecuted in its entirety
in the federal or state courts sitting in New York, New York, each Party hereby
submitting to the personal jurisdiction thereof, and the Parties agree not to
raise the objection that such courts are not a convenient forum. Process and
pleadings mailed to a party at the address provided in Section 13.1 shall be
deemed properly served and accepted for all purposes.
Section 13.5    Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

D-17

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Section 13.6    Entire Agreement; Merger. This Agreement, the Ancillary
Agreements, and any exhibits, schedules and appendices attached hereto and
thereto together constitute the final written integrated expression of all of
the agreements among the Parties with respect to the subject matter hereof and
is a complete and exclusive statement of those terms, and supersede all prior or
contemporaneous, written or oral, memoranda, arrangements, contracts and
understandings between the Parties relating to the subject matter hereof. Any
representations, promises, warranties or statements made by any Party which
differ in any way from the terms of this Agreement or any applicable provisions
contained in the Ancillary Agreements shall be given no force or effect. The
Parties specifically represent, each to the other, that there are no additional
or supplemental agreements or contracts between or among them related in any way
to the matters herein contained unless specifically included or referred to in
this Agreement or any applicable provisions contained in the Ancillary
Agreements. No addition to or modification of any provision of this Agreement or
any applicable provisions of the Ancillary Agreements shall be binding upon
either Party unless embodied in a dated written instrument signed by both
Parties.
Section 13.7    Exhibits and Schedules. All exhibits, schedules and appendices
are hereby incorporated by reference into this Agreement as if they were set
forth at length in the text of this Agreement.
Section 13.8    Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
Section 13.9    Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under Applicable Law or regulations, that
provision shall not apply and shall be omitted to the extent so contrary,
prohibited, or invalid; but the remainder of this Agreement shall not be
invalidated and shall be given full force and effect insofar as possible.
Section 13.10    Expenses. Regardless of whether or not the transactions
contemplated in this Agreement are consummated, each of the Parties shall bear
their own expenses and the expenses of its counsel and other agents in
connection with the transactions contemplated hereby.
Section 13.11    Currency. The currency of this Agreement and all transactions
under this Agreement shall be in United States Dollars.

D-18

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first written
above to be effective as of the Effective Time.
[CASTLEPOINT REINSURANCE COMPANY LTD.]/[TOWER REINSURANCE, LTD.]

By _______________________________
Title ______________________________

TOWER INSURANCE COMPANY OF NEW YORK

By                            
Title                        

CASTLE POINT NATIONAL INSURANCE COMPANY

By _______________________________
Title ______________________________

TOWER NATIONAL INSURANCE COMPANY

By _______________________________
Title ______________________________

D-19

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HERMITAGE INSURANCE COMPANY

By _______________________________
Title ______________________________

CASTLE POINT FLORIDA INSURANCE COMPANY

By _______________________________
Title ______________________________

KODIAK INSURANCE COMPANY

By _______________________________
Title ______________________________

NORTH EAST INSURANCE COMPANY

By _______________________________
Title ______________________________

YORK INSURANCE COMPANY OF MAINE,

By _______________________________
Title ______________________________

D-20

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MASSACHUSETTS HOMELAND INSURANCE COMPANY

By _______________________________
Title ______________________________

PRESERVER INSURANCE COMPANY

By _______________________________
Title _______________________________

CASTLE POINT INSURANCE COMPANY

By _______________________________
Title _______________________________

D-21