Exhibit 10.44 
EXECUTION COPY

SHARE AND WARRANT PURCHASE AGREEMENT
 

 
SHARE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) dated as of December 8,
2010, among Limestone Business Limited, a limited company organized under the
laws of the British Virgin Islands (“Limestone”), Haverford (Bermuda) Limited, a
company organized under the laws of the Islands of Bermuda (“Haverford” and,
together with Limestone, the “Shareholders”), Mark J. Byrne of Roughill, 6 Long
Lane, Hamilton Parish, Bermuda (“Byrne”) and Flagstone (Bermuda) Holdings
Limited, a company organized under the laws of the Islands of Bermuda (the
“Company”).
 
WHEREAS the Company and Byrne are parties to a General Release and Settlement
Agreement dated as of May 21, 2010 (the “Settlement Agreement”).
 
WHEREAS the Company desires to purchase from Limestone, and Limestone desires to
sell to the Company, five million one hundred fifty five thousand one hundred
fifty six (5,155,156) shares, par value $0.01 per share (the “Limestone
Shares”), of Flagstone Reinsurance Holdings, SA, a company organized under the
laws of Luxembourg, with registered office at 37, Val Saint-Andre, L-1128,
Luxembourg with RCS Luxembourg Number B153214 (“Holdings”).
 
WHEREAS the Company desires to purchase from Haverford, and Haverford desires to
sell to the Company, two million eight hundred forty nine thousand eight hundred
sixty eight (2,849,868) shares, par value $0.01 per share (the “Haverford
Shares” and, together with the Limestone Shares, the “Shares”), of Holdings.
 
WHEREAS the Company desires to purchase from Haverford, and Haverford desires to
sell to the Company, the Amended and Restated Share Purchase Warrant dated as of
June 25, 2010 (the “Haverford Warrant”), issued to Haverford and exercisable for
seven million nine hundred fifty five thousand five hundred fifty three
(7,955,553) shares, par value $0.01 per share, of Holdings.
 
WHEREAS Byrne wishes to resign as a member of the board of directors of Holdings
(the “Board”).
 
NOW THEREFORE, each Shareholder, Byrne and the Company hereby agree, for receipt
of good and valuable consideration, the sufficiency of which is acknowledged, as
follows:
 
1. Purchase and Sale of the Shares.  On the terms and subject to the conditions
of this Agreement, each Shareholder shall sell, transfer and deliver or cause to
be sold, transferred and delivered to the Company, and the Company shall
purchase from each Shareholder, its respective Shares at a price per share equal
to $11.4823 (the “Shares Purchase Price”), payable as set forth below in
Section 3.
 
2. Purchase and Sale of the Haverford Warrant.  On the terms and subject to the
conditions of this Agreement, Haverford shall sell, transfer and deliver or
cause to be sold, transferred and delivered to the Company, and the Company
shall purchase from Haverford, the Haverford Warrant at a price equal to
$13,500,000 (the “Warrant Purchase Price”), payable as set forth below in
Section 3.
 
 
 

 
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3. Closing.  a) The closing (the “Closing”) of the purchase and sale of the
Shares and the Haverford Warrant shall be held at the offices of the Company, at
10:00 a.m., on the first business day following the satisfaction or waiver (by
the Company) of the conditions set forth in Section 3(b).  The date on which the
Closing shall occur is hereinafter referred to as the “Closing Date”.  At the
Closing, (i) the Company shall pay to the Shareholders an amount equal to the
Shares Purchase Price, pursuant to wire instructions that shall be delivered to
the Company by the Shareholders no later than one business day prior to the
Closing, (ii) each Shareholder shall deliver or cause to be delivered to the
Company the certificates representing the Shares to the address specified in
Section 17, or, if the Shares are held in book entry form, shall cause the
Shares to be transferred to such account as the Company shall specify no later
than one business day prior to the Closing, (iii) the Company shall pay to
Haverford an amount equal to the Warrant Purchase Price, pursuant to wire
instructions that shall be delivered to the Company by Haverford no later than
one business day prior to the Closing and (iv) Haverford shall deliver or cause
to be delivered to the Company the Haverford Warrant to the address specified in
Section 17.
 
   b)  The obligations of the Company to consummate the transactions
contemplated hereby are subject to the satisfaction or waiver (by the Company)
of the following conditions:
 
(i)  
the Company shall have received confirmation from Holdings’ ratings agencies
that Holdings’ current ratings have been affirmed and further that the current
ratings will not be adversely affected by a reduction in capital of up to $106
million;

 
(ii)  
the Company and Holdings shall have received any required regulatory approvals
for the consummation of the transactions contemplated herein;

 
(iii)  
the representation and warranties of the Shareholders and Byrne set forth in
Section 4 shall be true and correct;

 
(iv)  
 Byrne shall have tendered a written resignation to the Board conditioned only
on the consummation of the purchase of the Shares and the Haverford Warrant
hereunder; and

 
(v)  
neither Byrne nor any Shareholder is in breach of any provision of this
Agreement.

 
4. Representations and Warranties of the Shareholders and Byrne.  Each
Shareholder and Byrne hereby represents and warrants to the Company, as
applicable:
 
(a)  
Organization and Standing.  Limestone hereby represents and warrants that it is
a limited company duly organized, validly existing and in good standing under
the laws of the British Virgin Islands.  Haverford hereby represents and
warrants that it is a company duly organized, validly existing and in good
standing under the laws of the Islands of Bermuda.

 
(b)  
Authority.  Each Shareholder has full organization power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  This Agreement has been duly executed and
delivered by each Shareholder and Byrne, and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

 
(c)  
No Conflicts; Consents.  The execution and delivery of this Agreement by each
Shareholder and Byrne does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default under, or give rise to a right of
termination, cancellation or

 

 
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(d)  
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien, claim, encumbrance, security interest, option,
charge or restriction of any kind upon the Shares or the Haverford Warrant.  No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with any transnational, national, federal, state,
provincial or local governmental, regulatory or administrative authority,
department, court, agency or  official (a “Governmental Entity”) is required to
be obtained or made by or with respect to either Shareholder or Byrne in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.

 
(e)  
The Shares.  Each Shareholder has good and valid title to the Shares owned by
it, and upon Closing of the transfer in accordance with Section 3 above, the
Shares will be (i) free and clear of any liens, claims, encumbrances, security
interests, options, charges and restrictions of any kind, and (ii) other than
this Agreement, the Shares will not be subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or understanding, including
any such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares.

 
(f)  
The Haverford Warrant.  Haverford has good and valid title to the Haverford
Warrant and has not taken any activity to exercise it.  Upon Closing of the
transfer in accordance with Section 3 above, the Haverford Warrant will be (i)
free and clear of any liens, claims, encumbrances, security interests, options,
charges and restrictions of any kind, and (ii) other than this Agreement, the
Haverford Warrant will not be subject to any contract, agreement, arrangement,
commitment or understanding, including any such agreement, arrangement,
commitment or understanding restricting or otherwise relating to the disposition
or cancellation of the Haverford Warrant.

 
(g)  
No Reliance.  Each Shareholder is, or has been advised on this matter by a
person who is a sophisticated investor and has sufficient knowledge and
experience in investing in securities to properly evaluate the merits of the
transactions contemplated hereby.  Each Shareholder has independently, and
without reliance upon the Company or any of its affiliates, and based on such
information as it has deemed appropriate, made its own analysis and decision to
sell the Shares pursuant to the terms hereof.

 
(h)  
Compliance with Settlement Agreement.  Byrne has complied with his duties under
the Settlement Agreement through the date hereof in all material respects.

 
5. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Shareholders and Byrne, as applicable:
 
(a)  
Organization and Standing.  The Company is a company duly organized, validly
existing and in good standing under the laws of the Islands of Bermuda.

 
(b)  
Authority.  The Company has full corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.  All corporate acts and other proceedings
required to be taken by the Company to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken.

 

 
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(c)  
This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms.

 
(d)  
No Conflicts; Consents.  The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and compliance with
the terms hereof shall not, conflict with, or result in any violation of or
default under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien, claim, encumbrance, security interest, option,
charge or restriction of any kind upon any of the properties or assets of the
Company.  Except as set forth in Section 3(b)(i), no material consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required to be obtained or made by or
with respect to the Company in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.

 
(e)  
No Sale of Holdings.  As of the date of this Agreement, neither Holdings nor its
directors or executive officers is engaged in any continuing material
negotiations with respect to price and/or a letter of intent with any other
person regarding a possible sale of Holdings, whether as a merger, sale of
equity that would result in a change of control, or sale of substantially all
assets.

 
(f)  
Compliance with Settlement Agreement.  The Company and Holdings have complied
with their respective duties under the Settlement Agreement through the date
hereof in all material respects.

 
6. Reasonable Best Efforts.  All parties hereto shall use their reasonable best
efforts, and the Company shall cause Holdings to use its reasonable best
efforts, to cause the conditions to Closing set forth in Section 3(b) to be
satisfied, and the transactions contemplated hereby to be consummated, on or
prior to December 30, 2010.
 
7. Standstill.  From the date of this Agreement until the third anniversary of
the Closing Date (the “Restricted Period”), none of Limestone, Haverford, Byrne
will, nor will any of them permit any of their respective affiliates to, and
Byrne will not permit his spouse or children to, in any manner, directly or
indirectly, (a) acquire, offer to acquire, agree to acquire or make any proposal
to acquire, by purchase or otherwise, or become directly or indirectly the
beneficial owner of, any securities, or direct or indirect rights to acquire any
securities, of Holdings or any subsidiary of Holdings or of any successor to or
person in control of Holdings, or any cash settled call options or other
derivative securities or contracts or instruments in any way related to the
price of shares of common stock of Holdings, or any assets or property of
Holdings or any subsidiary of Holdings or of any such successor or controlling
person; (b) make or in any way participate in any “solicitation” of “proxies”
(as such terms are used in the rules of the Securities and Exchange Commission)
to vote, or seek to advise or influence any person with respect to voting of,
any voting securities of Holdings or any of its subsidiaries with respect to any
matter, or call or seek to call a meeting of Holdings’ stockholders or initiate
any stockholder proposal for action by Holdings’ stockholders, or make a request
for a list of Holdings’ shareholders, or seek election to or to place a
representative on the board of directors of Holdings or seek the removal of any
director from the board of directors of Holdings; (c) make any announcement with
respect to, or solicit or submit a proposal for, or offer of (with or without
conditions) any merger, consolidation, business combination, tender or exchange
offer, recapitalization, reorganization, purchase or license of a material
 

 
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portion of the assets and properties of or other similar extraordinary
transaction involving Holdings or any of its securities or subsidiaries; (d)
form, join or in any way participate in a “partnership, limited partnership,
syndicate or other group” (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) with respect to any
securities of Holdings or any of its subsidiaries or otherwise in connection
with any of the foregoing; (e) otherwise act, alone or in concert with others,
to seek to control or influence the management, board of directors or policies
of Holdings or any of its subsidiaries; (f) take any action that could
reasonably be expected to require Holdings to make a public announcement
regarding any of the events described in this paragraph; (g) request Holdings or
any of its subsidiaries, officers, directors, employees or affiliates, directly
or indirectly, to amend or waive any provision of this paragraph; (h) to contest
the validity of this agreement or seek a release of the restrictions contained
herein (whether by legal action or otherwise); (i) disclose (including without
limitation the filing of any document or report with the Securities and Exchange
Commission or any other governmental agency) any intention, plan or arrangement
inconsistent with any of the foregoing; or (j) have any discussions or
negotiations regarding or enter into any arrangements, understandings or
agreements (whether written or oral) with, or advise, assist, encourage or
direct any person to do, or to advise, assist, encourage or direct, any other
person to do, any of the foregoing, or make any investment in any other person
that engages, or offers or proposes to engage, in any of the foregoing, other
than a passive investment below 5% of the total equity and voting power of such
person made without knowledge that such person engages, or offers or proposes to
engage, in any of the foregoing.  During the Restricted Period, Limestone,
Haverford and Byrne shall promptly advise Holdings of any inquiry or proposal
made to any of them, with a proposed price, with respect to any of the
foregoing.  Notwithstanding any of the foregoing provisions of this Section 7,
none of Limestone, Haverford or Byrne shall be prohibited from acquiring, either
directly or indirectly, any securities of Holdings so long as the aggregate
amount of Holdings’ securities held collectively by Limestone, Haverford, Byrne
and his spouse and children, any of their affiliates and any other member of any
“partnership, limited partnership, syndicate or other group” (as defined in
Section 13(d)(3) of the Exchange Act) to which any of Limestone, Haverford or
Byrne belongs, is less than 5% of the outstanding amount of any class or series
of Holdings’ securities including, if applicable, on an “as converted” basis.
 
8. Resignation.  On the Closing Date, Byrne will resign as, and cease to be, a
member of the Board of Directors of Holdings.
 
9. Publicity.  Upon execution and delivery of this Agreement, the Company shall
procure that Holdings issue a press release in substantially the form attached
as Exhibit A.
 
10. Waiver Under Settlement Agreement.  Byrne waives any breach by the Company
of its obligations under the Settlement Agreement through the date hereof of
which Byrne has actual knowledge.  The Company waives any breach by Byrne of his
obligations under the Settlement Agreement through the date hereof of which
Holdings’ Chief Executive Officer, Chief Financial Officer, General Counsel or
Board of Directors in its capacity as such has actual knowledge.
 
11. Further Assurances.  From time to time, as and when requested by any party
hereto, each other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions, as such other party may reasonably
deem necessary or desirable to consummate the transactions contemplated by this
Agreement.
 

 
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12. Assignment.  This Agreement and the rights and obligations hereunder shall
not be assignable or transferable by the Company, either Shareholder or Byrne
(including by operation of law in connection with a merger, or sale of
substantially all the assets of the Company) without the prior written consent
of the other parties hereto; provided, however, that the Company may assign its
right to purchase the Shares or the Haverford Warrant hereunder to a subsidiary
of the Company without the prior written consent of either Shareholder or Byrne;
provided further, however, that no assignment shall limit or affect the
assignor’s obligations hereunder.  Any attempted assignment in violation of this
Section 12 shall be void.
 
13. No Third-Party Beneficiaries.  This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
 
14. Termination.  Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby
abandoned (a) by any party at any time after January 31, 2011, if the Closing
does not occur on or before January 31, 2011, (b) by Byrne and the Shareholders
if the conditions set forth in Section 3(b)(i) or 3(b)(ii) have not been
satisfied by December 30, 2010, or (c) by the mutual written consent of each
Shareholder, Byrne and the Company.  If this Agreement is terminated and the
transactions contemplated hereby are abandoned pursuant to this Section 14, this
Agreement shall become void and of no further force or effect.  Notwithstanding
any provision herein to the contrary, no party may terminate this Agreement if
the failure to close is caused by the breach by such party of any of its
obligations hereunder.
 
15. Expenses.  Whether or not the transactions contemplated hereby are
consummated, and except as otherwise specifically provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
 
16. Amendments.  No amendment, modification or waiver in respect of this
Agreement shall be effective unless it shall be in writing and signed by both
parties hereto.
 
17. Notices.  All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand, sent by
email, or sent by reputable overnight courier service and shall be deemed given
when so delivered by hand or sent by email, or one business day after sending if
sent by overnight courier service), as follows:
 
if to the Company,
     Crawford House
     23 Church Street
     Hamilton  HM 11  Bermuda
     Attention:       William Fawcett
Director & General Counsel
Email: william.fawcett@flagstonere.com
 
 

 
 
 
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if to Limestone, to them in care of
Maitland Services Limited
Falcon Cliff
Palace Road
Douglas
Isle of Man
IM2 4LB
Attention:             Julieanne Shimmin
Email: julieanne.shimmin@maitlandgroup.com
 
 
if to Byrne or to Haverford, to them in care of
         Dermot Limited
         2nd Floor Goldie House
         Upper Church Street
         Douglas
         Isle of Man
         IM1 1EB
        Attention:  Alan Oates
Email:  AlanOates@dermotltd.info
 
 

 
18. Interpretation.  The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
 
19. Counterparts.  This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to the other party.
 
20. Entire Agreement.  The Settlement Agreement shall survive the execution of
this Agreement and this Agreement shall not be construed to amend, modify,
supersede or terminate the Settlement Agreement, except that (a) Sections
3(b)(iv) and 8 of this Agreement supersede the phrase, “provided that Byrne will
remain a member of the Board as a non-employee director” in Section 1 of the
Settlement Agreement, (b) the last sentence of Section 1 of the Settlement
Agreement shall be deleted and (c) Section 10 hereof shall solely constitute a
wavier of the matters expressly set forth therein.  Except for the Settlement
Agreement, this Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.  No party shall be liable or bound to any other party in any manner by
any representations, warranties or covenants relating to such subject matter
except as specifically set forth herein.
 
21. Severability.  If any provision of this Agreement (or any portion thereof)
or the application of any such provision (or any portion thereof) to any person
or circumstance shall be held invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
 
22. Consent to Jurisdiction.  The Company, Byrne and each Shareholder
irrevocably submit to the non-exclusive jurisdiction of the courts of Bermuda,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby.
 

 
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23. Governing Law.  This Agreement shall in all respects be interpreted,
enforced and governed under the laws of Bermuda without regard to conflicts of
laws principles or choice of law provisions that would cause the application of
the law of any other jurisdiction.  It is the intention of the parties to this
Agreement that the laws of the Bermuda shall govern the validity of this
Agreement, the construction of its terms, the interpretation of the rights and
duties of the parties, and its enforcement.
 

 

 
[SIGNATURE PAGES FOLLOW]
 

 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.
 
LIMESTONE BUSINESS LIMITED
 
by:  Solon Director Limited, as its Director
 
  by: /s/ Wyn Hughes
 
________________________
     Name:           Wyn Hughes
        Title:              Authorized Signatory
 
  by: /s/ Maria Patterson
 
________________________
     Name:           Maria Patterson
        Title:              Authorized Signatory
 
 
HAVERFORD (BERMUDA) LIMITED
 
 
  by:
 
________________________
     Name:           Mark Byrne
        Title:              Director
 
  by:
 
________________________
     Name:
        Title:
 
 
_________________________________
     Name:           Mark J. Byrne
 
 
 
FLAGSTONE (BERMUDA) HOLDINGS LIMITED
 
  by: /s/ William F. Fawcett
 
________________________
     Name:           William F. Fawcett
     Title:              Director
 

 

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