EXHIBIT 10.7


 


MASTER AGREEMENT


 


This Agreement (“Agreement”) is made this 4th
day of April, 2006 by and between Tower Group, Inc, a Delaware corporation (“TGI”),
Tower Insurance Company of New York (“TICNY), a New York Corporation, and Tower
National Insurance Company (“TNIC”) a Massachusetts corporation, (collectively “Tower”)
and CastlePoint Holdings, Ltd. (“CPH”), a Bermuda exempted corporation, and
CastlePoint Management Corp., (“CPM”), a Delaware corporation (collectively “CastlePoint”).


 


RECITALS


 


WHEREAS, TGI owns
Tower Insurance Company of New York (“TICNY”) and Tower National Insurance
Company (“TNIC”), and has historically underwritten Brokerage Business,
Traditional Program Business, and Specialty Program Business, as defined below,
and would like to enter into a strategic agreement with CPH, CPM and
CastlePoint Reinsurance Company, Ltd.(“CPRe”) and other subsidiaries that CPH
plans to form or acquire as described below; and


 


WHEREAS, CPH plans
to (i) form an intermediate Bermuda company (hereinafter CastlePoint
Bermuda Holdings, Ltd. or “CPBH”), (ii) raise $235 million in capital to (a) capitalize
a reinsurance company subsidiary domiciled in Bermuda (hereinafter “CastlePoint
Re” or “CPRe”) to be wholly owned by CPBH and (b) acquire and capitalize one
or more property and casualty insurance companies (hereinafter


 


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referred to as “CastlePoint Insurance Companies” or “CPIC”); and


 


WHEREAS, CPM will
enter into a Program Management Agreement with Tower whereby CPM will manage
the Specialty Program Business and Insurance Risk Sharing Business on behalf of
Tower performing certain services until such time that pooling agreements,
described below, become effective; and


 


WHEREAS, CPH, after
the Effective Time and the licensing and capitalization of CPRe, plans to cause
CPRe to reinsure the Brokerage Business and Traditional Program Business
managed and written by Tower and Specialty Program Business and Insurance Risk
Sharing Business managed by CPM as described below on behalf of Tower pursuant
to certain quota share reinsurance agreements to be entered into between Tower
and CPRe. Tower shall initially cede to CPRe 30% of its Brokerage Business and
Traditional Program Business (subject to adjustment as described below) and
initially cede 85% of its Specialty Program Business and Insurance Risk Sharing
Business. The Specialty Program Business and Insurance Risk Sharing Business
Quota Share Reinsurance Agreement will be terminated when the Specialty Program
Business Pooling Agreement, as described below, becomes effective.
Additionally, Tower plans to cede to CPRe a certain percentage participation in
its excess of loss and property catastrophe reinsurance agreements at terms and
conditions to be agreed upon in the future as described in further detail in
this Agreement; and


 


WHEREAS, CPH, after
the Effective Time and acquisition and licensing of CPIC, plans to cause CPIC
to enter into pooling agreements with Tower whereby (1) Tower will act as manager
of the Brokerage Business pool performing certain insurance company services
and both


 


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Tower and CPIC plan to share in the underwriting results of this
business by Tower retaining initially 75% and CPIC assuming initially 25% of
this business, (2) Tower will act as manager of the Traditional Program
Business pool performing certain insurance company services and both Tower and
CPIC intend to share in the underwriting results of this business by Tower
retaining initially 75% and CPIC assuming initially 25% of this business, and (3) CPIC
will act as manager of the Specialty Insurance Business pool performing certain
insurance company services and both Tower and CPIC plan to share in the
underwriting results of this business by CPIC retaining initially 85% and Tower
assuming initially 15% of this business; and


 


WHEREAS, Tower and
CastlePoint are desirous of entering into a Service and Expense Sharing
Agreement whereby Tower and CastlePoint provide services to each other at each
other’s request (other than services provided in their respective role as the
manager of the Brokerage Business and Traditional Program Business and
Specialty Program Business under the Program Management Agreement or pooling
agreements) and to provide a method for sharing those expenses as well as
sharing any profits and losses from rendering services to third parties;


 


NOW THEREFORE, in
consideration of the mutual agreements described in this Agreement, Tower and
CastlePoint agree as follows:


 


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Article I


 


Purpose
and Overview


 


1.1           Overview               As
a result of the contemplated transactions set forth herein, whereby Tower is
the sponsor of, an investor in and an intended strategic business partner with
CastlePoint, it is intended that CastlePoint will be an organization that (a) on
fair and reasonable terms, can provide a stable source of reinsurance to Tower,
can provide insurance risk sharing capability to Tower through pooling, reduce
Tower’s costs by sharing certain expenses and generate fee income for Tower by
rendering services to CPH’s customers and be the manager of Tower’s Specialty
Program Business to permit Tower to concentrate on its Brokerage Business and
Traditional Program Business; (b) can provide Specialty Program Business
expertise to Tower and provide to third party insurance companies similar
insurance risk sharing opportunities and solutions and insurance related
services at a fair and reasonable price; (c) can utilize Tower’s
infrastructure as CastlePoint grows to reduce its initial expenses; and (d) on
fair and reasonable terms, can have a steady source of profitable reinsurance
and pooling business from Tower in its initial years as it establishes itself
in the market place.


 


1.2           Purpose of Agreement.      The
purpose of this Agreement is to:


 


(a)           Ratify
and reaffirm all activities taken by Tower and CPH to date regarding the
organization of CPH by Tower, its sponsor.


 


(b)           Set
forth duties and covenants of Tower and CPH regarding the continued
organization of CPH subsequent to the date of this Agreement to achieve the
foregoing business purposes. These duties and covenants involve:


 


1.             Duties
and covenants of CPH to Tower subsequent to the date of this Agreement but
prior to the Effective Time.


 


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2.             Duties
and covenants of Tower to CPH subsequent to the date of this Agreement but
prior to the Effective Time.


 


3.             Duties
and covenants of Tower to CPH after the Effective Time.


 


4.             Duties
and covenants of CPH to Tower after the Effective Time.


 


5.             Duties
and covenants of Tower and CPH to each other regarding the establishment of
appropriate corporate governance principles to address conflicts of interest
and potential breaches of fiduciary duties by each in connection with
intercompany transactions.


 


1.3           Agreements Contemplated.               This
Agreement contemplates that to effectuate the business goals set forth herein,
the following agreements will be created between each organization:


 


(a)           Program
Management Agreement between CPM, TICNY and TNIC, in substantially the form of
agreement attached hereto as Exhibit A, to be executed at the Effective
Time;


 


(b)           Service
and Expense Sharing Agreement between CPM, TICNY and TNIC, in substantially the
form of agreement attached hereto as Exhibit B, to be executed at the
Effective Time;


 


(c)           Quota
Share Reinsurance Agreements between CPRe and TICNY and TNIC: one for Brokerage
Business, one for the Traditional Program Business, and one for the Specialty
Program Business and Insurance Risk Sharing Business, in 


 


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substantially the forms of agreement attached hereto as Exhibits C, D
and E, to be executed at the Effective Time;


 


(d)           Pooling
Agreements between CPIC and TICNY and TNIC: one for the Brokerage Business, one
for the Traditional Program Business and one for the Specialty Program Business
in substantially the forms of agreement attached hereto as Exhibits F, G and H;
and


 


(e)           Property
and casualty excess of loss reinsurance agreements between TICNY and TNIC and
CPRe, to be effective April 1, 2006 for existing reinsurance agreements of
TICNY and TNIC, if permitted by the current third party reinsurers, and
renewals thereof.


 


It is expressly understood by all parties
that the parties will act with diligence to cause these agreements to become
effective as soon as practicable after the Effective Time but that some or all
of these agreements may require submission to and approval by various
insurance regulators before they can become effective. Additionally, to
accomplish the business purposes of this Agreement, certain other agreements
that will impact both parties will be developed, such as Program Underwriting
Agency Agreements to appoint third party Program Underwriting Agents, and third
party administration agreements.


 


1.4           Good Faith.            Each
party expressly represents and warrants to the other that it will negotiate and
act in good faith to carry out the intent of this Agreement, including
negotiating and entering into any other agreements that are reasonable and
necessary to carry out the intent of the parties.


 


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1.5           Term.     This
Agreement shall be effective upon the Effective Time and shall terminate on the
third anniversary of the Effective Time.


 


Article II.


 


DEFINITIONS


 


The following words or terms shall have the following definitions for
the purposes of this Agreement:


 


“Brokerage Business”  means broad classes of business that are
underwritten on an individual policy basis by an insurance company’s
underwriting staff through retail and wholesale agents and most or all of the
services are provided by the insurance company as part of the overall
product offering.


 


“Effective Time” means the date on which all
conditions precedent (such as CPH raising sufficient capital as contemplated
herein and receipt by CPRe of an A- rating from A. M. Best’s) to make the
transactions contemplated herein effective are satisfied.


 


“Insurance Risk Sharing Business” means
various risk sharing arrangements such as (i) pooling or sharing of
premiums and losses between TICNY initially and CPIC subsequently and other
insurance companies based upon their respective percentage allocations or (ii) appointing
other third party insurance companies as Program Underwriting Agents and then
having those third party insurance companies assume through reinsurance a
portion of the business they produce as Program Underwriting Agents.


 


“Program Underwriting Agent or Agency” means
an insurance intermediary that aggregates business from retail and general
agents and manages business on behalf of


 


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insurance companies, including functions such as risk selection and
underwriting, premium collection, policy form design and client service.


 


“Program Business” means narrowly defined
classes of business that are underwritten on an individual policy basis by a
Program Underwriting Agent on behalf of insurance companies.


 


“Specialty Program Business” means (i) Program
Business other than Traditional Program Business and (ii) Traditional
Program Business that Tower elects not to manage and that CPH elects to manage.


 


“Traditional Program Business” shall mean blocks of Program Business in
excess of $5 million in gross written premium that Tower has historically
underwritten, consisting of non-auto related personal lines and the following
commercial lines of business: retail stores and wholesale trades, commercial
and residential real estate, restaurants, grocery stores, office and service
industries, and artisan contractors.


 


Article III


 


RATIFICATION
AND AFFIRMATION OF ACTIVITIES TO DATE.


 


3.1           Tower’s Affirmations.        Tower
affirms that it is the sponsor of CPH. As of the date of this Agreement, TGI
has caused CPH to be incorporated in Bermuda and has purchased all of the
shares of CPH stock for $15.0 million. Tower’s sponsorship has further
included, but has not been limited to, advancing organizational expenses of
CPH.


 


3.2           CPH’s Affirmations.  CPH affirms
that is has been organized as a holding company under the laws of Bermuda and
that its share capital plus share


 


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premium is currently $15.0 million. CPH affirms that it has made no
capital distributions as of the date of this Agreement but may have paid
certain necessary expenses, as set forth on schedule 3.2 attached hereto.
CPH affirms that it has received approval from the Bermuda Monetary Authority
of CPRe’s incorporation application as a class 3 reinsurer. CPH affirms
that it intends to raise the sum of approximately $250 million, taking into
account the existing contribution of Tower to CPH, to effectuate the business
goals described herein. CPH shall reimburse Tower for organization expenses
advanced by Tower as follows: CPH will reimburse Tower for (1) all
reasonable direct external expenses incurred on behalf of CPH by Tower and (2) a
portion of all Tower’s reasonable direct employee expenses incurred on behalf
of CPH by Tower after January 1, 2006; provided that CPH will not
reimburse Tower for direct expenses incurred for legal, accounting, tax and
other professional advice requested by the TGI board for its benefit. Such
reimbursement may occur either before or immediately after the Effective
Time. CPH further affirms that CPM has been incorporated as a corporation under
the laws of the State of Delaware.


 


Article IV


 


TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT


 


4.1           Duties of Tower after Date of this Agreement and
Until Effective Time


 


(a)           Tower
shall continue such activities as are reasonably necessary to enable CPH to
complete the organization of its subsidiaries and raise an additional $235
million in capital. These activities shall include, but not be limited to,
providing


 


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personnel to prepare for and complete organizational and marketing
activities required to be completed prior to the Effective Time, advancing
reasonable and necessary organizational expenses of CPH as requested by CPH,
and providing office space and office services in New York and Bermuda for
necessary CPH activities.


 


(b)           TICNY
shall enter into a Program Management Agreement (Exhibit A) with CPM at
the Effective Date to authorize CPM to manage the Specialty Program Business
and Insurance Risk Sharing Business until CPIC is operational, after which,
CPIC will manage the Specialty Program Business and CPM or CPIC will manage the
Insurance Risk Sharing Business. Tower shall continue to manage the Brokerage
Business and Traditional Program Business. Tower shall further authorize CPM to
appoint small insurers or their affiliates to act as a Program Underwriting
Agent for it as long as those insurers assume part of the risk on business
that they write using Tower’s policies.


 


(c)           Tower
shall continue to write and issue policies for the same type of business that
it now writes, which is Brokerage Business, Traditional Program Business,
Specialty Program Business and Insurance Risk Sharing Business, subject to
prudent business discretion, provided that it may add authority for
additional lines of business and obtain authority to write in additional
states.


 


(d)           Tower
shall analyze whether it will need to perform any other services for CPH
than as set forth in the Services and Expense Sharing Agreement in connection
with the Specialty Program Business and Insurance Risk Sharing Business after
management of such business is transferred to CPM under the Program Management
Agreement and later to CPIC with respect to the Specialty Program


 


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Business after the Specialty Program Business Pooling Agreement becomes
effective. Tower shall notify CPH of the results and cost thereof.


 


(e)           Tower
shall enter into a Service and Expense Sharing Agreement with CPH whereby Tower
will offer insurance company services to CPH to allow CPM to market unbundled
services to CPH’s Program Underwriting Agents and insurance risk sharing
customers. The Agreement will provide that the parties shall share equally in
the profits and losses generated.


 


4.2           Duties of CPH after Date of this Agreement and
Until Effective Time.


 


(a)           CPH
shall use its best efforts and act in good faith to raise the capital
contemplated herein by April 5, 2006 and receive an indicative rating from A.M.
Best’s of at least “A-”. Upon the Effective Time, CPH will issue to Tower
warrants of ten year duration exercisable for 1,127,000 common shares of CPH. In
addition, CPH will reserve an additional 1,735,021 of its shares to be issued
under its Long-Term Equity Compensation Plan with options to purchase 1,126,166
CPH common shares to be granted immediately after the Effective Time to
CastlePoint management and non-employee directors.


 


 (b)          CPM
shall use its best efforts to become qualified to do business in all states in
which Tower does business (including any necessary insurance producer and
managing general agency licenses) so that CPM is able to conduct business as
soon as practicable after the Effective Time.


 


(c)           CPM
shall enter into a Program Management Agreement with Tower for CPM to manage
the Specialty Program Business and Insurance Risk Sharing Business, the
policies for which will be issued by Tower until CPIC is operational.


 


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(d)           CPM
shall enter into a Service and Expense Sharing Agreement with TICNY and TNIC
whereby Tower will offer, inter alia, insurance company services to CPH in
order that CPH can market unbundled services through CPM to its Program
Underwriting Agents.


 


 (e)          CPH
shall perform all actions necessary and desirable, specifically including
contributing capital in the amount of no less than $120,000 to CPRe in order
for CPRe to be incorporated and obtain its class 3 insurance license prior
to the Effective Time, subject to an undertaking not to write business until
fully capitalized.


 


(f)            CPH
shall not expend any funds on any expenses inconsistent with its pre-Effective
Time activities as set forth herein. It shall not declare or pay any dividends
or return any capital to Tower prior to the Effective Time (but may reimburse
it for expenses). Notwithstanding the foregoing, if the Effective Time has not
occurred by April 5, 2006, and Tower remains the sole shareholder of CPH,
then, if so requested by Tower, CPH shall, shall subject to legal requirements
and/or restrictions, return any remaining capital to Tower (after paying all
expenses incurred in connection with the Offering).


 


(g)           CPH
shall, within two weeks after the date of this Agreement, identify in writing
and provide to Tower a list of the current Tower employees that it wishes to
employ.


 


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4.3           Duties of CPH after Effective Time


 


(a)           Immediately
after the Effective Time, CPH will contribute an additional amount of $156
million to CPBH which will in turn contribute such amount to CPRe.


 


(b)           After
the Effective Time, CPH will contribute $73 million to CPBH which will in turn
contribute such amount to CPM in order to enable CPM, and CPM will use its best
efforts, to purchase, acquire or otherwise organize and capitalize one or more
property/casualty insurance companies domiciled in a United States jurisdiction
(“CPIC”) that have little or no pre-existing business or accrued liabilities
and that possess the authority to write the same lines of business that Tower
possesses. To the extent that authority to write additional lines of business
is necessary, CPM will cause CPIC to apply for authority for those lines as
soon as practicable. CPH shall cause CPIC to commence operations with a capital
base of no less than $60 million.


 


(c)           CPM
shall employ the identified former employees of Tower, offer these employees
employee benefit plans, at the minimum, of like kind and quality to those which
they enjoyed as Tower employees, and pay any necessary relocation expenses for
such employees.


 


(d)           CPM
shall begin marketing activities to appoint Program Underwriting Agents to
underwrite Specialty Program Business and Insurance Risk sharing Business for
Tower initially and subsequently for CPIC. CPM shall prepare the Program
Underwriting Agency Agreements used for such appointments, subject to good
faith review by Tower.


 


(e)           CPH
shall cause CPRe to enter into “traditional” quota share reinsurance agreements
with Tower whereby CPRe shall initially assume (i) under both


 


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the Brokerage Business Quota Share Reinsurance Agreement and
Traditional Program Business Quota Share Reinsurance Agreement, 30% of Tower’s
net liabilities (subject to adjustment but in no event to less than 25% of nor
more than 45% of Tower’s net liabilities) less recoveries on its Brokerage
Business and Traditional Program Business and (ii) under the Specialty
Program Business and Insurance Risk Sharing Business Quota Share Agreement, 85%
of Tower’s Specialty Program Business and Insurance Risk Sharing Business
(subject to adjustment but no less than 75% or more than 85% of Tower’s net
liabilities less recoveries for such business). Each of the quota share
reinsurance agreements shall provide that there is a maximum dollar amount that
limits the participation of either Tower or CPH therein to that dollar amount
even if the application of the dollar amount would cause the percentage share
to be below the minimum. Under the Brokerage Business Quota Share Reinsurance
Agreement, CPH shall cause CPRe shall pay a ceding commission to Tower of 34%
until April 1, 2007, that is subject to adjustment thereafter depending
upon the net loss ratio of the business, as more particularly set forth in section 4.5(a) on
the Brokerage Business, and 30 % for both the Specialty Program Business and
Insurance Risk Sharing Business and Traditional Program Business that is
subject to adjustment depending upon the loss ratio of the business, as more
particularly set forth in section 4.5(a). CPH shall cause CPRe to post
collateral, if required, so as to enable Tower to reflect credit for any such
reinsurance on Tower’s statutory financial statements pursuant to the laws of
its various domiciliary states.


 


(f)            CPH
shall cause CPRe to participate as a reinsurer of Tower, if permitted by the
third party reinsurers, in the existing excess of loss reinsurance


 


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agreements with third party reinsurers at an attachment level of
$1,000,000, for the Brokerage Business, Traditional Program Business and
Specialty Program Business.


 


(g)           If
CPM determines that it will require services from Tower and Tower agrees to
provide such services, other than having Tower manage the Brokerage Business
and Traditional Program Business or other than as set forth in the Services and
Expense Sharing Agreement, then CPM will negotiate in good faith to provide
fair and reasonable compensation to Tower for those services.


 


(h)           As
soon as CPIC is authorized to write business, CPH shall cause CPIC to enter
into (1) the Brokerage Business Pooling Agreement with Tower whereby Tower
will continue to manage the Brokerage Business, (2) the Traditional
Program Business Pooling Agreement whereby Tower will continue to manage the
Traditional Program Business, and (3) the Specialty Program Business
Pooling Agreement whereby CPIC will manage the Specialty Program Business
Business pool. CPIC will participate initially (i) in 25% of the Brokerage
Business pool and Traditional Program Business pool but in no event less than
25% of, and no more than 45% of, both the Brokerage Business and the
Traditional program Business and (ii) in 85% of the Specialty Program
Business pool but in no event less than 75% of, and no more than 85% of, the
Specialty Program Business pool. Each of the pooling agreements shall provide
that there is a maximum dollar amount that limits the participation of either
Tower or CPH therein to that dollar amount even if the application of the
dollar amount would cause the percentage share to be below the minimum. Tower
will receive a management fee of 34% for its management of the Brokerage
Business pool until April 1, 2007 after which it is subject to adjustment
based on loss ratio as more particularly set forth in section 4.5 (b)


 


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below, and Tower will receive a management fee of 30% for its
management of the Traditional Program Business Pool and CPIC will receive a management
fee of 30% for its management of the Specialty Program Business pool, both of
which are subject to adjustment based on loss ratios of the business as more
particularly set forth in section 4.5(b). In order to effectuate these
pooling agreements, CPM shall (1) assign to CPIC management of the Specialty
Program Business and may transfer its employees to CPIC, along with the
employee benefit plans; (2) cause CPRe to terminate the Specialty Program
Business and Insurance Risk Sharing Business Quota Share Reinsurance Agreement;
and (3) cause CPIC to begin, as soon as is practicable, to underwrite
Specialty Program Business for the Specialty Program Business pool. CPM may assign
to CPIC management of the Insurance Risk Sharing Business.


 


(i)            CPH
shall make and shall cause all its subsidiaries to make available to Tower,
during such time, if any, that CPH is a member of Tower’s holding company
system, all information Tower reasonably believes is necessary for Tower to
file required Holding Company System Act reports, especially forms B and C,
pursuant to the laws of the domiciliary states of Tower and the states in which
it does business.


 


(j)            CPM
shall develop and market insurance risk sharing business solutions and
insurance services to unrelated insurance companies and Program Underwriting
Agents. CPM shall focus on marketing to insurance companies with less than $100
million in surplus, and Program Underwriting Agents, but CPM shall not be
restricted from selling to any size company. The Insurance Risk Sharing
Business solutions that CPM will offer, subject to market conditions, include,
but are not limited to: (1) traditional quota share reinsurance through
CPRe for both personal and


 


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commercial lines with low to moderate hazard risks; (2) property
and casualty excess of loss reinsurance to quota share reinsureds; (3) pooling
agreements with CPIC and Tower; (4) appointment of the third party
insurers as Program Underwriting Agents for CPIC and Tower with such companies
reinsuring a portion of the risk so written through quota share or excess of
loss reinsurance; (5) reinsurance of program business and captive
insurers; and (6) insurance services such as claims services, policy
administration and insurance technology services. CPH shall cause its appropriate
subsidiary to offer these products and services. CPH may also consider
making strategic investments in small property/casualty insurance companies and
Program Underwriting Agents with which it may do business.


 


(k)           CPH
shall incorporate and organize CPBH which shall ultimately own 100% of the
issued and outstanding shares of CPRe as well as CPM.


 


4.4           Duties of Tower after Effective Time


 


(a)           Tower
shall immediately transfer sufficient employees of Tower to CPM, as directed by
CPM, to enable CPM to commence conducting the activities contemplated herein.


 


(b)           Tower
shall continue to issue policies for both the Brokerage Business and
Traditional Program Business and, subject to direction from and management by
CPM, Specialty Program Business and Insurance Risk Sharing Business until such
time that CPIC can lawfully issue policies for the Specialty Program Business
and Insurance Risk Sharing Business and CPIC indicates to Tower that it will do
so. Thereafter, Tower shall manage both the Brokerage Business and Traditional
Program


 


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Business pools and Tower shall enter into a pooling agreement with CPIC
whereby CPIC will manage the Specialty Program Business pool. The Insurance
Risk Sharing Business will not be pooled. With respect to the Traditional
Program Business pool and the Specialty Program Business pool, the
participating companies, including Tower, will authorize the applicable pool
manager to appoint small insurers or their affiliates to act as Program Underwriting
Agents using the policies issued by these participating companies on the
condition that such small insurers participate as a reinsurer on the Program
Business that they underwrite.


 


(c)           Tower
shall continue to (i) write for the Brokerage Business and Traditional
Program Business the lines and classes of business it has historically written
and (ii) write the substantial portion of its business in the State of New
York. The proportion of Tower’s business written outside the State of New York
shall not exceed 25% of Tower’s gross written premium in any twelve month
period ending on the anniversary date of the applicable quota share reinsurance
agreement or pooling agreement. If Tower materially changes the Brokerage
Business or Traditional Program Business, without the consent of CPRe or CPIC,
as applicable, from what Tower has historically written, or exceeds the
foregoing geographical limitations, CPRe or CPIC may, in their discretion,
elect to decline reinsurance coverage of such business from coverage under the
Brokerage Business and Traditional Program Business Quota Share Reinsurance
Agreements or elect to treat such business as not Brokerage Business or
Traditional Program Business under the Brokerage Business Pooling Agreement or
Traditional Program Business Pooling Agreement for any current period and
exclude it from coverage under those quota share agreements and pooling
agreements on a


 


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prospective basis. In such situation, Tower may reinsure such
business with any reinsurer of its choice.


 


(d)           Once
CPRe is authorized as a reinsurer and Tower is permitted to reflect credit for
reinsurance ceded to it, Tower shall enter into the quota share reinsurance
agreements with CPRe, to be effective the later of April 1, 2006 or the
capitalization and licensing of CPRe, for CPRe to reinsure both the Brokerage
Business and Traditional Program Business and Specialty Program Business and
Insurance Risk Sharing Business issued by Tower. Both the Brokerage Business
Quota Share Reinsurance Agreement and the Traditional Program Business Quota
Share Reinsurance Agreement shall provide that Tower will (i) cede
initially 30% of its net liabilities less recoveries on its Brokerage Business
and Traditional Program Business but that such percentage may be adjusted
every 6 months provided that it shall never cede less than 25% of and no more
than 45% of its net liabilities less recoveries on the Brokerage Business or
Traditional Program Business. The Specialty Program Business and Insurance Risk
Sharing Business Quota Share Agreement shall provide that Tower shall cede
initially 85% of the Specialty Program and Insurance Risk Sharing Business to
CPRe, (subject to adjustment but in no event less than 75% and no more than 85%
of Tower’s net liabilities). Each of the quota share reinsurance agreements
shall provide that there is a maximum dollar amount that limits the
participation of either Tower or CPH therein to that dollar amount even if the
application of the dollar amount would cause the percentage share to be below
the minimum. Tower shall receive an initial ceding commission of (i) 34%
until April 1, 2007 with respect to the Brokerage Business and (ii) 30%
with respect to both the Specialty Program Business and Insurance Risk Sharing


 


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Business and Traditional Program Business, provided that the ceding
commission for the Brokerage Business, the Specialty Program Business,
Insurance Risk Sharing Business and the Traditional Program Business is subject
to adjustment depending upon the loss ratio of the business, as more
particularly set forth in section 4.5 (a). The ceding commission may also
be adjusted in good faith by the parties subject to section 4.5(a) hereof
if the regulatory authorities will not approve the agreement with that
commission level.


 


(e)           Tower
shall use its best efforts to have the existing reinsurers consent to permit
CPRe to participate as a reinsurer of Tower in the existing property and
casualty excess of loss reinsurance agreements with third party reinsurers at
an attachment level of $1,000,000 for the Brokerage Business, Traditional
Program Business and Specialty Program Business. Tower shall offer to CPRe the
right of first refusal to participate in any property and casualty excess of
loss reinsurance programs sought by Tower.


 


(f)            Once
CPIC may lawfully write business in a jurisdiction where Tower writes
policies, Tower shall enter into three or more pooling agreements with CPIC.
Tower shall enter into the (1) Brokerage Business Pooling Agreement and (2) Traditional
Program Business Pooling Agreement, under both of which Tower will manage the
Brokerage Business and Traditional Program Business pools and (3) the
Specialty Program Business pool under which CPIC will manage the Specialty
Program Business pool. Tower’s participation in the Brokerage Business pool and
in the Traditional Program Business pool will initially be 75% each of the
Brokerage Business pool and Traditional Program Business pool, but Tower shall
have discretion to adjust


 


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that participation to no less than 55% and no more than 75% of the
Brokerage Business pool and Traditional Program Business pool. Tower’s
participation percentages in the Specialty Program Business pool will be
initially 15% of the Specialty Program Business, but CPIC shall have discretion
to adjust that participation to no less than 15% and no more than 25% of the
Specialty Program Business pool. Each of the pooling agreements shall provide
that there is a maximum dollar amount that limits the participation of either
Tower or CPH therein to that dollar amount even if the application of the
dollar amount would cause the percentage share to be below the minimum. Tower,
as manager of the Brokerage Business pool, will receive a provisional
management fee of 34% until April 1, 2007, subject to adjustment
thereafter based on loss ratio of the business, and, as manager of the
Traditional Program Business pool, will receive a provisional management fee of
30% that may be adjusted based upon the net loss ratio of that business,
and CPIC, as manager of the Specialty Program Business pool, will receive a
provisional management fee of 30% that may be adjusted based upon the net
loss ratio of that business. Each pool participant will deduct from the
management fee paid to the pool manager the actual direct expenses charged to
their company by the pool manager, including actual commissions paid to agents
or brokers, the difference between actual premium taxes; actual fees and
assessments for boards, bureaus, associations and industry and residual market
facilities (BB&T) related to policy or accident years as applicable and a
provisional 3% for BB&T; and any other underwriting expenses allocated to
the pool participant by the pool manager, or other expenses as may, from time
to time, be agreed by the parties. The management fee for all three pools shall
be adjusted based on loss ratios of the business, as more particularly set forth
in section 4.5(b). The


 


21

















 


management fee shall be adjusted in good faith by the parties subject
to section 4.5(b) hereof if the applicable regulatory authorities
will not approve the treaty with that commission level.


 


(g)           Tower,
after the three pools are operational, shall continue to reinsure the Brokerage
Business and Traditional Program Business with CPRe through the Brokerage
Business Quota Share Reinsurance Agreement and Traditional Program Business
Quota Share Reinsurance Agreement subject to their terms. The Specialty Program
and Insurance Risk Sharing Business Quota Share Reinsurance Agreement shall be
terminated.


 


(h)           CPIC
shall issue policies for the Specialty Program Business that Tower has been
issuing and Tower shall have CPRe be the reinsurer under, all or part of,
an assumed quota share reinsurance agreement whereby Tower currently assumes
business from Accident Insurance Company if the reinsured so consents.


 


(i)            TICNY
shall enter into the Service and Expense Sharing Agreement with CPM to share
costs and share fee income that results from providing insurance services to
third party insurers and Program Underwriting Agents.


 


(j)            Tower
shall not sell, give, transfer, or alienate any of the shares it acquires in
CPH for a period of six months after the Effective Time, unless required to do
so by a regulatory authority having jurisdiction over it.


 


(k)           Tower,
as lead company in the holding company system, shall undertake to prepare and
make all filings, specifically including all Form Ds, that are necessary
in order to obtain any required regulatory approval of the intercompany
transactions set forth herein; provided, however, that if any agreement
relating to a


 


22

















 


proposed intercompany transaction is able to be filed prior to the
Effective Time, it may be filed prior to the Effective Time.


 


(l)            Tower
shall determine whether it wants to underwrite a Traditional Program Business
submission in the Traditional Program Business pool after diligently reviewing
the data submitted to it. Tower, in consultation with CPM, shall establish
reasonable guidelines for how it will and evaluate and process such
submissions.


 


4.5           Material terms of the Agreements contemplated
hereby


 


(a)           The
quota share reinsurance agreements between Tower and CPRe shall be “traditional”
quota share agreements whereby risk is transferred to CPRe and shall provide
for ceding commissions of 34% for the Brokerage Business and 30% for both the
Traditional Program Business and Specialty Program Business and Insurance Risk
Sharing Business.


 


The ceding commission for the Brokerage
Business may be adjusted on and after April 1, 2007. The ceding
commission shall increase nine-tenths of a percentage point for every point by
which the net loss ratio is below 61% up to a maximum ceding commission of 36%,
and decrease nine-tenths of a percentage point by which the net loss ratio is
above 61%, subject to a minimum ceding commission of 31%, as follows.


 


	
  Net Loss Ratio

  	
   

  	
  Ceding Commission

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  64.33% or higher

  	
   

  	
  31.0

  	
  %

  
	
  64

  	
   

  	
  31.3

  	
   

  
	
  63

  	
   

  	
  32.2

  	
   

  
	
  62

  	
   

  	
  33.1

  	
   

  
	
  61

  	
   

  	
  34.0

  	
   

  
	
  60

  	
   

  	
  34.9

  	
   

  
	
  59

  	
   

  	
  35.8

  	
   

  
	
  58.78 or lower

  	
   

  	
  36.0

  	
   

  



 


23

















 


The ceding commissions for both the
Traditional Program Business and the Specialty Program Business and Insurance
Risk Sharing Business shall be adjusted on each sixth month anniversary of the
effective date of the reinsurance agreement. The ceding commission shall
increase nine-tenths of a percentage point for every point by which the net
loss ratio is below 63% up to a maximum ceding commission of 36%, as follows:


 


	
  Net Loss Ratio

  	
   

  	
  Ceding Commission

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  63% or higher

  	
   

  	
  30.0

  	
  %

  
	
  62

  	
   

  	
  30.9

  	
   

  
	
  61

  	
   

  	
  31.8

  	
   

  
	
  60

  	
   

  	
  32.7

  	
   

  
	
  59

  	
   

  	
  33.6

  	
   

  
	
  58

  	
   

  	
  34.5

  	
   

  
	
  57

  	
   

  	
  35.4

  	
   

  
	
  56.33 or lower

  	
   

  	
  36.0

  	
   

  



 


However, in the event that regulatory
authorities do not approve an intercompany transaction containing these ceding
commissions, the quota share reinsurance agreements shall require Tower and
CPRe to use their best good faith efforts to structure the transaction for the
ceding company to cede premiums to CPRe in order that the Net Loss Ratio plus
ceding commission equals 95% for the Brokerage Business and 93% for each of the
Traditional Program Business and Specialty Program Business and Insurance Risk
Sharing Business.


 


24

















 


(b)           The
three pooling agreements between Tower and CPIC for (i) the Brokerage
Business (ii) Traditional Program Business and (iii) the Specialty
Program Business shall provide for management fees to the manager of 34% for
the Brokerage Business and 30% for each of the Traditional Program Business and
Specialty Program Business. The management fees will be reduced by actual
direct expenses charged to their company by the pool manager, including actual
commissions paid to agents or brokers, the difference between actual premium
taxes; actual fees and assessments for boards, bureaus, associations and
industry and residual market facilities (BB&T) related to policy or
accident years as applicable and a provisional 3% for BB&T; and any other
underwriting expenses allocated to the pool participant by the pool manager, or
other expenses as may, from time to time, be agreed by the parties. The
management fee for the Brokerage Business shall be adjusted based on net loss
ratio of the business covered. The management fee percentage for the Brokerage
Business shall be 34% (which shall be applied during each year as to premium
written during such year) which shall be adjusted on and after April 1,
2007. The management fee percentage shall increase nine-tenths of a point for
every point by which the net loss ratio is below 61% up to a maximum management
fee of 36% and decrease nine-tenths of a point for every point by which the net
loss ratio exceeds 61%, subject to a minimum of 31%, as follows:


 


	
  Net Loss Ratio

  	
   

  	
  Management Fee Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  64.33% or higher

  	
   

  	
  31.0

  	
  %

  
	
  64

  	
   

  	
  31.3

  	
   

  
	
  63

  	
   

  	
  32.2

  	
   

  
	
  62

  	
   

  	
  33.1

  	
   

  
	
  61

  	
   

  	
  34.0

  	
   

  
	
  60

  	
   

  	
  34.9

  	
   

  
	
  59

  	
   

  	
  35.8

  	
   

  
	
  58.78 or lower

  	
   

  	
  36.0

  	
   

  



 


25

















 


The management fee percentage for the Traditional Program Business pool
and Specialty Program Business pool shall be increased by nine-tenths of a
percentage point for each percentage point that the net loss ratio is less than
63%, subject to a maximum fee percentage of 36%, as follows:


 


	
  Net Loss ratio

  	
   

  	
  Management Fee Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  63% or higher

  	
   

  	
  30.0

  	
  %

  
	
  62

  	
   

  	
  30.9

  	
   

  
	
  61

  	
   

  	
  31.8

  	
   

  
	
  60

  	
   

  	
  32.7

  	
   

  
	
  59

  	
   

  	
  33.6

  	
   

  
	
  58

  	
   

  	
  34.5

  	
   

  
	
  57

  	
   

  	
  35.4

  	
   

  
	
  56.33 or lower

  	
   

  	
  36.0

  	
   

  



 


Within sixty (60) days following the end of each year, the applicable
pool manager shall calculate the net loss ratio for each year that remains open
and shall forward copies of such calculations to the other pool participants. The
participating companies will settle amounts due within ten (10) days
thereafter. The net loss ratio for each year shall be deemed to be finalized
six (6) years following the close of such year or at any time before six (6) years
by mutual agreement of the participating companies.


 


However, in recognition that regulatory authorities may not
approve an intercompany transaction containing these management fees, this Agreement
shall provide for an alternate calculation. In the event that management fees
set forth


 


26

















 


above are modified for any reasons, including at the request of any
insurance departments in the various states where Tower and CPIC are domiciled,
the participating companies shall use their best good faith effort to structure
the transaction for the participating companies in order that the sum of the
net loss ratio plus management fees equals 95% for the Brokerage Business pool
and 93% for the Specialty Program Business pool and Traditional Program
Business pool.


 


The pooling agreements shall further provide that the pool manager of
each pool shall negotiate, obtain and maintain such pool reinsurance as it
deems appropriate, including property and casualty excess of loss reinsurance
and property catastrophe excess of loss reinsurance from third party
reinsurers, with respect to the liabilities of each pool, which reinsurance
shall inure to the benefit of the participating companies according to their
respective pooling percentages. The property catastrophe excess of loss reinsurance
purchased by the pool manager may provide for up to approximately 10% of
the combined surplus of Tower and CPIC to be retained by the pool prior to
reinsurance by third party reinsurers (“Pooled Retention”). A participating
company may also, in its discretion, require the pool manager to increase
the Pooled Retention by an additional amount of up to 10% of the surplus of
CPRe provided that the pool manager purchases reinsurance for such additional
Pooled Retention from CPRe. In addition, for the first 12 months of the
Brokerage Business Pooling Agreement, Tower shall reimburse CPIC for the
property catastrophe excess of loss reinsurance premium paid by CPIC to protect
CPIC’s net exposure to the Pooled Retention that is in excess of


 


27

















 


an amount equal to the product of $10 million multiplied by CPIC’s
percentage participation in the Brokerage Business pool.


 


(c)           Any
property and casualty excess of loss reinsurance agreements between Tower and
CPRe shall contain a right of first refusal for CPRe to participate as a
reinsurer of Tower in any future property and casualty excess of loss
reinsurance agreements.


 


(d)           The
Program Management Agreement between Tower and CPM and the Specialty Program
Business Pooling Agreement between Tower and CPIC shall provide that CPM or
CPIC, as applicable, shall conduct marketing activities on behalf of Tower and
is authorized by Tower to appoint Program Underwriting Agents to write program
business for it. Under those agreements, initially CPM and then CPIC, with
respect to the Specialty Program Business, shall manage and control the Program
Underwriting Agent’s business issued by Tower and shall be responsible to Tower
for any losses resulting from gross malfeasance or gross misfeasance of a
Program Underwriting Agent.


 


(e)           The
Service and Expense Sharing Agreement shall provide a method for compensating
Tower if it provides services to CPM or CPIC other than services rendered in
connection with its management of the Brokerage Business and Traditional
Program Business pool. It may include necessary office space in Tower’s
offices. Similarly, that agreement shall specify a method for compensating CPM
or CPIC for services rendered to Tower other than for services related to its
management of the Specialty Program Business pool and Insurance Risk Sharing
Business. That agreement


 


28

















 


shall also provide for the equal sharing of profits and losses from any
services rendered to third parties.


 


(f)            Tower
and CPH further recognize that other agreements between the two organizations may be
reasonable and necessary to effectuate the consummation of the transactions
contemplated hereby and the realization of the business goals. Tower and CPH
shall negotiate in good faith to create fair and reasonable agreements between
the two organizations.


 


4.6           Corporate Governance Considerations


 


(a)           Both
Tower and CPH are committed to good corporate governance, compliance with Securities
and Exchange Commission and stock exchange listing requirements, adherence to
the applicable governing corporate laws, and satisfaction of state regulatory
laws regarding insurance company structure and related party transactions.
Tower and CPH have each adopted Corporate Governance Guidelines. CPH has
established an audit committee, a compensation committee and a corporate
governance and nominating committee, each which must be comprised solely of
independent directors as that term is defined in the NASDAQ Stock Market, Inc.,
the stock exchange on which Tower is currently listed. CPH has also established
an executive committee which need not be comprised of independent directors.
Each committee has adopted a charter. CPH may establish such other
committees of the board that the board deems appropriate. CPH has also adopted
a Code of Business Conduct and Ethics.


 


(b)           Both
Tower and CPH further recognize that because Tower is a sponsor of CPH, because
after the Effective Time Tower will own up to 15% of CPH’s issued and
outstanding shares on a fully diluted basis and CPH will likely have to be


 


29

















 


reported in Tower’s holding company system act filings, and because
Tower and CPH will share members of management and board of directors, activities
of each that impact the other will attract special scrutiny from interested
parties and demand special scrutiny from Tower’s and CPH’s management and
boards of directors. Accordingly, both CPH and Tower have adopted various
rigorous internal processes and procedures to prevent violations of the duty of
loyalty owed to each organization, to address conflicts of interest that may arise
between the two organizations and related parties (i.e., members of the board
of directors and management and large shareholders), and to ensure that
transactions between the two organizations and their related parties are fair
and reasonable to both. No independent director of CPH shall beneficially own
any securities of Tower Group, Inc. or any of its subsidiaries.


 


(c)           The
charter of CPH’s audit committee shall provide that any transaction to which
Tower and CPH are parties or involve related parties must be reviewed and
approved by a majority of the members of the audit committee prior to any
agreement becoming effective. Likewise, any transaction to which Tower and CPH
are parties or involve related parties must be reviewed and approved by a
majority of the independent directors of Tower. Each committee charter shall
provide that the committee may retain at company expense such experts as
the committee believes necessary, including attorneys, accountants, and
actuaries, to help the committee evaluate whether the proposed transaction is
fair and reasonable.


 


(d)           Each
organization shall further require that business opportunities that arise will
be pursued by the company whose expected activities as set forth in this
Agreement are most similar, unless the audit committee of each approves that
the other


 


30

















 


organization pursue that business for sound reasons such as financial
resources, geography, technical expertise and licensing. To the extent that a
new business opportunity is not similar, the audit committee of each shall
agree in good faith which organization shall pursue that opportunity, again
based on the aforementioned factors.


 


(e)           The
transactions accomplished to date between Tower and CPH as described herein
have been approved by both the audit committee of CPH and a committee comprised
of solely the independent directors of the Tower board and the transactions
contemplated herein between Tower and CPH to occur after the date of this
Agreement will be similarly approved.


 


Article V


 


INFORMATION


 


5.1           Disclosure            Tower
has or shall have, as soon as practicable, but in any event by the date of this
Agreement (unless another date otherwise be specified herein), delivered or
caused to be delivered to CPH true, correct and complete copies of the
documents listed on Schedule 5.1 (“Disclosure Schedule”) (all such
documents and the Disclosure Schedule, together with the information, data and
other materials being provided, obtained by or furnished to CPH or its
representatives pursuant to or in connection with this Agreement, including
those delivered or provided prior to the date hereof, being herein collectively
referred to as the “Disclosure Documents”).


 


31














 


ARTICLE VI


 


REPRESENTATIONS
AND WARRANTIES OF TOWER


 


 Notwithstanding any independent investigation
or verification undertaken by CPH or its representatives, Tower hereby
represents and warrants to CPH the following:


 


6.1           Organization and Corporate Power.


 


(a)           TICNY
is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York having all corporate power and authority
necessary to own its property and operate its businesses as now conducted. It
has all corporate power, authority and legal right necessary to execute and
deliver this Agreement and, subject to receipt of the regulatory actions,
approvals and consents described in Section 6.8 hereof, to perform and
carry out the transactions contemplated hereby pursuant to the terms and
conditions of this Agreement.


 


(b)           TNIC
is a corporation duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts having all corporate power and
authority necessary to own its property and operate its businesses as now
conducted. It has all corporate power, authority and legal right necessary to
execute and deliver this Agreement and, subject to receipt of the regulatory
actions, approvals and consents described in Section 6.8 hereof, to perform and
carry out the transactions contemplated hereby pursuant to the terms and
conditions of this Agreement.


 


(c)           TGI
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware having all corporate power and authority
necessary to own its property and operate its businesses as now conducted. It
has all


 


32

















 


corporate power, authority and legal right necessary to execute and
deliver this Agreement, and, subject to receipt of the regulatory actions,
approvals and consents described in Section 6.8 hereof, to perform and
carry out the transactions contemplated hereby pursuant to the terms and
conditions of this Agreement.


 


6.2           Authorization and Effect. This
Agreement and the performance of the actions provided for herein have been duly
and validly authorized by all necessary corporate action on the part of
TGI, TICNY and TNIC, including approval by a majority of a committee consisting
entirely of independent directors. This Agreement has been executed and
delivered by duly authorized and acting officers of TGI, TNIC and TICNY, and
assuming the due authorization, execution and delivery of this Agreement by
CPH, constitutes a legal, valid and binding obligation of TGI, TICNY, and TNIC,
enforceable in accordance with its terms subject to (i) laws relating to
bankruptcy, fraudulent conveyances, reorganization, liquidation, moratorium and
other similar laws affecting creditor’s rights generally, (ii) general principles
of equity (regardless whether enforceability is considered in a proceeding in
equity or at law), (iii) standards of commercial reasonableness and good
faith, (iv) public policy and (v) concepts of comity. Other than for
the regulatory actions, approvals and consents referred to in Section 6.8
hereof, no authorization or approval from any party, governmental agency,
public or quasi-public body or authority of the United States, any state
thereof, is necessary for the due execution and delivery by TGI, TICNY and TNIC
of this Agreement, or for the validity or enforceability of all the provisions
of this Agreement against TGI, TICNY and TNIC or for the transfer of the
business contemplated by this Agreement to CPH, or any other action on the part of
the, TGI, TICNY and TNIC or any affiliate of Tower, contemplated by this
agreement.


 


33

















 


6.3           Financial Statements. The Statutory
Financial Statements and Interim Statutory Financial Statements of Tower, and
other financial information, including those indicating that Tower has
generated an average loss ratio of 60% for the three years ending December 31,
2005, delivered or to be delivered to CPH by Tower are, and, in the case of
those delivered subsequent to the date hereof, will be true, correct and
complete in all material respects, and fairly present the financial,
operational and other positions of Tower as of the dates indicated. The
Statutory Financial Statements and Interim Statutory Financial Statements, and
such other statutory financial information, have been prepared in conformity
with accounting practices prescribed or permitted by the insurance departments
of New York and Massachusetts, and fairly present all the information therein
included in accordance with such basis of accounting. The consolidated balance
sheets of Tower and its subsidiaries and the related consolidated statements of
income and net income, changes in stockholders’ equity and cash flow have been
prepared in conformity with accounting principles generally accepted in the
United States, and fairly present all the information included therein in
accordance with such basis of accounting. There has been no material adverse
change in the operation or condition, financial or otherwise, of Tower from
that set forth in the audited Statutory Financial Statements as of and for the
three years ended December 31, 2005, or the audited financial statements
included in Tower’s public filings with the United States Securities and
Exchange Commission.. For the purposes of this Section 6.3 “material
adverse change” shall mean a net adverse change of $150,000 or greater.


 


6.4           Litigation and Investigations. (a) There
are no actions, suits, proceedings, claims, investigations or examinations,
pending or threatened (or any basis therefor known


 


34

















 


to Tower) against or affecting the contemplated transactions; (b) there
are no unsatisfied judgments, orders, writs, decrees, injunctions or the like
issued by any court, governmental authority or administrative body, domestic or
foreign, against or affecting the contemplated transactions; and (c) to
the best of Tower’s knowledge there are no existing violations by Tower of any
federal, state, foreign or local law, regulation or order which has or could
have a materially adverse effect upon the transactions contemplated by this
transaction.


 


6.5           Conduct of Business. Between September 30,
2005 and the date of this Agreement, Tower has conducted its business only in
the usual and ordinary course consistent with past practices, and since that
date there has not been any material, adverse change to its business.


 


6.6           Brokerage. Tower and its respective
officers, directors, employees, agents or representatives, has not employed any
broker, finder or agent, or entered into any agreement with any person to pay a
brokerage fee, allowance or commission on account of or in respect to this
agreement or the transactions contemplated hereby.


 


6.7           Full Disclosure. None of the Disclosure Documents,
as defined in Section 5.1, and as set forth in Schedule 5.1, nor any
certificate, report, statement or memorandum made or to be made or furnished or
to be furnished to CPH in connection with the negotiation and consummation of
the transfer by Tower to CPH of the business contemplated by this Agreement,
including those documents, materials, disclosures and listings set forth in Schedule 5.1,
nor any representation or warranty of Tower contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein or herein not misleading. To
the knowledge of each of the officers of Tower, Tower has disclosed to CPH all


 


35

















 


known or reasonably foreseeable material risks and
liabilities relating to its operations which are relevant to the transactions
contemplated by this Agreement. The Disclosure Documents are and will be
accurate and complete in all material respects. The information provided to CPH
and set forth on Schedule 5.1 on the (i) historical results of Tower’s
insurance segment for the three years ended December 31, 2005, (ii) the
average gross loss ratio for Tower’s Brokerage Business and Traditional Program
Business for the three years ended December 31, 2005, and (iii) Tower’s
gross written premiums and ceded gross premiums assumed by reinsurers in its
insurance segment for the three years ended December 31, 2005 is true,
accurate and complete.


 


6.8           Regulatory
Approvals. Except for consents and approvals of various intercompany
transactions which may be required by the laws of the States of New York
and Massachusetts, no consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement. Tower is
not aware of any reason why all consents, approvals and authorizations required
to permit the performance of the transactions as contemplated herein would not
be obtained.


 


36

















 


ARTICLE VII


 


REPRESENTATIONS
AND WARRANTIES OF CPH


 


Notwithstanding any independent investigation
or verification undertaken by Tower or its representatives, CPH hereby
represents and warrants to Tower the following:


 


7.1           Organization and Corporate Power. CPH
is a corporation duly organized, validly existing and in good standing under
the laws of Bermuda having all corporate power and authority necessary to own
its property and operate its businesses as now conducted. It has all corporate
power, authority and legal right necessary to execute and deliver this
Agreement and, subject to receipt of the regulatory actions, approvals and
consents described in Section 7.6 hereof, to perform and carry out
the transactions contemplated hereby pursuant to the terms and conditions of
this Agreement.


 


7.2           Authorization and Effect. This
Agreement and the performance of the actions provided for herein have been duly
and validly authorized by all necessary corporate action on the part of
CPH, including approval by a majority of members of the Audit Committee which
consists entirely of independent directors. This Agreement has been executed
and delivered by duly authorized and acting officers of CPH, and assuming the
due authorization, execution and delivery of this Agreement by Tower,
constitutes a legal, valid and binding obligation of CPH enforceable in
accordance with its terms, subject to (i) laws relating to bankruptcy,
fraudulent conveyances, reorganization, liquidation, moratorium and other
similar laws affecting creditor’s rights generally, (ii) general
principles of equity (regardless whether enforceability is considered in a
proceeding in equity or at law), (iii) standards of commercial
reasonableness and good faith, (iv) public policy and (v) concepts of
comity.


 


7.3           Organization and Corporate Power. CPM
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware


 


37

















 


having all corporate power and authority necessary to own its property
and operate its businesses as now conducted. It has all corporate power,
authority and legal right necessary to execute and deliver this Agreement and,
subject to receipt of the regulatory actions, approvals and consents described
in Section 7.6 hereof, to perform and carry out the transactions
contemplated hereby pursuant to the terms and conditions of this Agreement.


 


7.4           Authorization and Effect. This
Agreement and the performance of the actions provided for herein have been duly
and validly authorized by all necessary corporate action on the part of
CPM. This Agreement has been executed and delivered by duly authorized and
acting officers of CPM, and assuming the due authorization, execution and
delivery of this Agreement by Tower, constitutes a legal, valid and binding
obligation of CPM enforceable in accordance with its terms, subject to (i) laws
relating to bankruptcy, fraudulent conveyances, reorganization, liquidation,
moratorium and other similar laws affecting creditor’s rights generally, (ii) general
principles of equity (regardless whether enforceability is considered in a
proceeding in equity or at law), (iii) standards of commercial
reasonableness and good faith, (iv) public policy and (v) concepts of
comity.


 


7.5           Litigation and Investigations. (a) There
are no actions, suits, proceedings, claims, investigations or examinations,
pending or threatened (or any basis therefor known to CPH) against or affecting
the contemplated transactions; (b) there are no unsatisfied judgments,
orders, writs, decrees, injunctions or the like issued by any court,
governmental authority or administrative body, domestic or foreign, against or
affecting the contemplated transactions; and (c) to the best of CPH’s
knowledge there are no existing violations by CPH of any federal, state,
foreign or local law, regulation or order which has or could have a materially
adverse effect upon the transactions contemplated by this Agreement.


 


38

















 


7.6           Regulatory Approvals. Except for
the consents and approval of (a) various intercompany transactions which may be
required by (i) the insurance regulators of the State of New York and
Commonwealth of Massachusetts or any other states, if any, in which TNIC and
TICNY are commercially domiciled, or (ii) the insurance regulators of any
states in which CPIC may be domiciled or does business or in connection with
the acquisition of CPIC, and (b) any registrations or licenses required for CPM
and CPRe, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required by CPH
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby


 


7.7           Brokerage. Except for its retention
of FBR, neither CPH, nor any of its officers, directors, employees, agents or
representatives has employed any broker, finder or agent, or entered into any
agreement with any person to pay a brokerage fee, commission or allowance on
account of or in respect to this Agreement or the transactions contemplated by
this Agreement.


 


7.8           Material Misstatements and Omissions.
No representation or warranty made by CPH contained in this Agreement or the
exhibits hereto, and certificates made or furnished, or to be made or furnished
hereafter, by CPH or any officer of CPH pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact or, taken as a whole, omits to state a material
fact necessary to make the representations or warranties contained herein not
misleading.


 


39

















 


ARTICLE VIII


 


ADDITIONAL
COVENANTS OF THE PARTIES


 


8.1           Current Information.


 


(a)           During the term of this
Agreement, Tower shall make available information on the transactions
contemplated by this Agreement, as well as to the status of the regulatory
filings, approvals and consents contemplated herein, and such relevant
information as CPH may reasonably request. Tower will promptly notify CPH of
the occurrence of any event which could materially and adversely affect a
transaction or impact adversely the ability of Tower to complete the
transactions as contemplated herein.


 


(b)           During the term of this
Agreement, CPH shall make available information on the transactions
contemplated by this Agreement, as well as to the status of the regulatory
filings, approvals and consents contemplated herein, and such relevant
information as Tower may reasonably request. CPH will promptly notify Tower of
the occurrence of any event which could materially and adversely affect a
transaction or impact adversely the ability of CPH complete the transactions as
contemplated herein.


 


8.2           Regulatory Matters. The parties
hereto will cooperate with each other in the preparation and submission of
those filings and documents necessary to obtain the permits, consents,
approvals and authorizations of governmental bodies necessary to consummate the
transactions contemplated by this Agreement. Tower and CPH will furnish the
other all information concerning itself and such other matters and things as
may be necessary, prudent or advisable in connection with any statement or
application made by or on behalf of Tower or CPH to any governmental body in
connection with any of the transactions contemplated herein.


 


40

















 


8.3           Further Assurances. Subject to the
terms and conditions hereof, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do or
cause to be done all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as possible. If at any time
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the parties hereto shall take
all such reasonably necessary action.


 


8.4           Notices to Insureds. Tower shall
fully cooperate with CPH in drafting all notices to policyholders and insurance
agents of Tower required by the transactions contemplated by this Agreement,
which notices shall be drafted to the reasonable satisfaction of CPH. Tower
shall provide to CPH as soon as possible after execution of this Agreement, but
no later than one-hundred-and-twenty (120) days prior to renewal, with respect
to all its policyholders for whom CPH shall have an obligation to issue renewal
policies:  1) all individual policyholder
data, and 2) information about every insurance agency with in-force exposures
with Tower during the term of this Agreement including name, address, contracts
and commission rates.


 


8.5           Tower’s Actions Relating to Insurance Policies
Transferred.  Because transfers of policies between carriers are
often subject to regulatory review, Tower shall during the term of this
Agreement, subject to any modifications to such obligations as may be consented
to by Tower and CPH:  (1) deliver
appropriate notices to all boards, bureaus, and associations, as may be
required or appropriate, that Tower will no longer write certain insurance
products; (2) forward to CPH within ten (10) days of receipt any premium
payment received by Tower relating to a renewal policy issued by CPH; (3)


 


41

















 


notify CPH as soon as possible of any notice relating to a policy
issued by Tower, including without limitation notice of a claim or change in
coverage or conditions, that is received by Tower; (4) continue to provide all
services necessary or appropriate relating to all policies issued by Tower,
including without limitation policy processing, issuance of endorsements,
billing, and adjustment of claims; and (5) cooperate fully and in good faith
with CPH in order to achieve the timely and efficient implementation of the
transactions contemplated by this Agreement in compliance with applicable law.


 


8.6           CPH’s Actions Relating to Insurance Policies
Transferred. Because transfers of policies between carriers are
often subject to regulatory review, CPH shall during the term of this
Agreement, subject to any modifications to such obligations as may be consented
to by CPH and Tower: (1) cause a joint letter from Tower and CPH to be issued
at least ninety (90) days prior to its expiration (or such earlier time as may
be required by the applicable regulatory authority) to each holder of a policy
transferred to CPH for the purpose of explaining the impact of the transfer on
such policyholder; (2) cause an official non-renewal notice on behalf of Tower,
to be issued, at least sixty (60) days prior to policy expiration, to each
holder of a policy transferred to CPH ; (3) cause an offer of renewal coverage
by CPIC to be issued to transferred policies at least sixty (60) days prior to
policy expiration; (4) notify Tower as soon as possible of any notice relating
to a policy issued by Tower, including without limitation notice of a claim or
change in coverage or conditions that is received by CPH; (5) provide all
services necessary or appropriate relating to all policies issued by CPH in
connection with the transfer, including without limitation policy processing,
issuance of endorsements, billing, and adjustment of claims; and (6) cooperate
fully and in good faith with Tower in


 


42

















 


order to achieve the timely and efficient implementation of the
transactions contemplated by this Agreement in compliance with applicable law.


 


8.7           Access to Records. Each party to
this Agreement will promptly provide access to relevant books, records, or
documents in its possession or control as reasonably requested by another party
for the purpose of implementing the transactions contemplated herein, and
carrying out the provisions of this Agreement.


 


8.8           Conduct of Business. From the date
hereof to the date of the last renewal, except as otherwise expressly provided
herein, Tower:


 


(a)           Except as specifically
contemplated by this Agreement, shall conduct its business only in the ordinary
and regular course of business consistent with past practices;


 


(b)           in conducting its
business, shall not take, or permit others to take, any actions which are
reasonably likely to result in any materially adverse change in the written
premiums of the business upon which the parties have based the transactions
contemplated herein, including, without limitation, Tower’s Specialty Program
Business and assumed reinsurance agreements that CastlePoint will manage; and


 


(c)           promptly inform CPH in
writing upon becoming aware of any material breach of or change in the
representations and warranties contained in or made pursuant to or in
connection with this Agreement;


 


43

















 


ARTICLE IX


 


CONDITIONS
TO CONSUMMATION OF TRANSACTIONS


 


9.1           General Conditions. The obligations
of the parties to complete the various transactions contemplated by this
Agreement shall be subject to the satisfaction of the following terms and
conditions, except as otherwise specifically provided herein:


 


(a)           receipt of all
necessary regulatory approvals, without material or substantial qualification
or condition, as are required to consummate a transaction contemplated hereby
(except where the failure to obtain any such approval would not render the
transaction contemplated hereby illegal or otherwise deprive either party of
the material benefits of this Agreement or be materially inconsistent with the
conditions set forth above), and such shall remain in full force and effect,
and all statutory waiting periods in respect thereof shall have expired;


 


(b)           neither Tower nor CPH
shall be subject to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation of any
transaction contemplated hereby, nor shall there be pending a suit or
proceeding by any governmental authority which seeks injunctive or other relief
in connection with any of the transactions contemplated hereby.


 


9.2           Conditions to the Obligations of CPH.
The obligation of CPH under this Agreement to execute each transaction
contemplated hereby is subject to the satisfaction, or waiver by CPH, of the
following conditions:


 


(a)           the obligations of
Tower required to be performed pursuant to the terms of this Agreement shall
have been duly performed and complied with in all respects;


 


44

















 


(b)           the representations and
warranties of Tower contained in this Agreement shall be true and correct in
all respects as of the effective date of each transaction contemplated hereby
as though made at and as of such date; and


 


(c)           the receipt by CPH, in
form and substance satisfactory to its counsel, of the following:


 


(i)    a
certificate executed by a Vice President of Tower to the effect that:


 


A.    the
representations and warranties made herein by Tower are true and correct on and
as of the effective date of the transaction with the same effect as though made
on and as of such date;


 


B.    Tower
has performed and complied in all material respects with the agreements,
conditions, terms and undertakings required to be performed and complied with
by them prior to or on the effective date of the transaction;


 


C.    none
of the documents described in Schedule 5.1 or any Disclosure Document, except
as authorized in writing by CPH, shall have been amended, repealed or rescinded
and all such documents remain in full force and effect on and as of the
effective date of the transaction;


 


D.    Tower
has performed and complied with all conditions precedent to CPH’s obligations;


 


(ii)   a
certificate executed by a Vice President of Tower that there shall not, on the
effective date of the transaction exist any pending or threatened litigation
pertaining to this Agreement or the transactions contemplated hereby; and


 


45

















 


(iii)  a
certificate executed by a Vice President of Tower on the effective date of each
transaction contemplated hereby to the effect that there has not been a
material adverse change in Tower’s operation or condition (financial or
otherwise) since the date of this Agreement.


 


9.3           Conditions to the Obligations of Tower.
The obligations of Tower under this Agreement shall be subject to the
satisfaction or waiver by Tower at the effective date of each transaction
contemplated hereby of the following conditions:


 


(a)           That the obligations of
CPH required to be performed by it at or prior to the effective date of the
transaction pursuant to the terms of this Agreement shall have been duly
performed and complied with in all material respects;


 


(b)           The representations and
warranties of CPH contained in this Agreement are true and correct in all
respects as of the effective date of the transaction as though made at and as
of such date; and


 


(c)           The receipt by Tower,
in a form and substance satisfactory to its counsel, of the following:


 


(i)    A
certificate executed by the President of CPH to the effect that the
representations and warranties made herein by CPH are true and correct on and
as of the effective date of the transaction with the same effect as though made
on and as of such date and that;


 


A.    CPH
has performed and complied in all material respects with the agreements,
conditions, terms and undertakings required to be performed and complied with
by CPH prior to or on the effective date of the transaction; and


 


46

















 


B.    CPH
has performed and complied with all conditions precedent to Tower’s
obligations;


 


(ii)   A
certificate executed by the President or Senior Vice President of CPH that
there shall not, on the effective date of the transaction exist any pending or
threatened litigation pertaining to this Agreement or the transactions
contemplated hereby.


 


ARTICLE X


 


TERMINATION,
AMENDMENT AND WAIVER


 


10.1         Termination. This Agreement may be
terminated at any time prior to its expiration:


 


(a)           by the written consent
of Tower and CPH;


 


(b)           by CPH if there shall
have been any material misrepresentation in this Agreement by Tower or any
material breach of any covenant of Tower hereunder and such breach shall not
have been remedied after receipt by Tower of notice in writing from CPH
specifying the nature of the breach and requesting such be remedied;


 


(c)           by Tower if there shall
have been any material misrepresentation in this Agreement by CPH or any
material breach of a covenant of CPH hereunder and such breach shall not have
been remedied after receipt by CPH of notice in writing from Tower specifying
the nature of the breach and requesting such be remedied; and


 


(d)           by either Tower or CPH
if the capital as contemplated herein is not raised within six months from date
of this Agreement, and (i) the party seeking to terminate has performed all of
its obligations, and (ii) the other party has not performed its obligations.


 


47

















 


10.2         Effect of Termination. In the event
that this Agreement is terminated as provided in Section 10.1 above, this
Agreement shall forthwith become void (other than this Section 10.2, and
sections 11.1, 12.1 through 12.3, and 12.5 through 12.15, hereof which shall
remain in full force and effect) and there shall be no further liability on the
part of Tower or CPH. Nothing contained in this Section 10.2 shall relieve any
party hereto from liability for its breach of this Agreement.


 


10.3         Amendment,
Extension and Waiver. At any time during the term of this Agreement, the
parties hereto may: (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (c) waive any inaccuracies in the representations and warranties herein
or in any document delivered pursuant hereto, or (d) waive compliance with any
of the agreements or conditions herein except where waiver of such condition
would result in a violation of law. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.


 


ARTICLE XI


 


INDEMNIFICATION


 


11.1         Indemnification. Each party to this Agreement shall
indemnify any other party against, and hold it harmless from, all losses,
damages, and liabilities incurred by


 


48

















 


such party arising from any material breach of any representation or
warranty made herein or of any material failure to fulfill its obligations as
set forth in this Agreement by the party against which such indemnification is
sought. All representations and warranties and indemnification obligations made
in this Agreement shall survive the implementation of the transactions contemplated
hereby.


 


ARTICLE XII


 


MISCELLANEOUS


 


12.1         Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.


 


12.2         Notices. All notices or other communications
required to be given hereunder shall be in writing and delivered personally or
mailed by prepaid registered or certified mail (return receipt requested) or by
telegram or telefax to the following addresses:


 


(a)           If to CPH


 


Joel Weiner


Sr. Vice-President


CastlePoint Holdings, Ltd


Clarendon House


2 Church Street


Hamilton, Bermuda


With a copy to:


 


Baker & Mckenzie LLP


1114 Avenue of the Americas


New York, New York 10016


Attention: Roslyn Tom


 


49

















 


(b)           If to Tower:


 


Steven
Fauth, Esq.


Sr VP, General Counsel & Secretary


Tower Group, Inc.


120 Broadway


New York, New York


 


12.3         Parties
in Interest.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.


 


12.4         Survival
of Covenants, Representations and Warranties. The representations and warranties
contained herein shall survive throughout the course of the transactions
contemplated hereby and may be enforced by the parties hereto. The covenants
shall survive according to their individual terms.


 


12.5         Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and each of which shall be deemed an original.


 


12.6         Headings. The article and section headings
used in this agreement have been inserted for convenience of reference only and
shall not be construed to affect the meaning or interpretation of any
provision, term or condition hereof.


 


12.7         Jurisdiction. This Agreement shall be construed
and enforced in accordance with the laws and decisions of the State of New York
without giving effect to the principles of conflicts of laws thereof.


 


50

















 


12.8         Entire
Agreement; Modification. This Agreement represents the entire agreement
between the parties and supersedes all prior written or oral agreements
relating to the transactions contemplated hereby, provided, however, that this
Section does not prohibit Tower from completing and updating any Schedules
during the term of this Agreement.


 


12.9         Severability
of Invalid Provision. If any one or more covenants or agreements provided
in this Agreement should be contrary to law, then such covenant or covenants,
agreement or agreements shall be null and void and shall in no way affect the
validity of the other provisions of this Agreement.


 


12.10       Assignment
of Agreement.
This Agreement may not be assigned without the written consent of all parties
to it. This Agreement shall insure to the benefit of, and be binding upon, the
successors of each party. This Agreement shall be for the sole benefit of the
parties to this Agreement and their respective heirs, successors, assigns and
legal representatives and is not intended, nor shall be construed, to give any
person, other than the parties hereto and their respective heirs, successors,
assigns and legal representatives, any legal or equitable right, remedy or
claim hereunder.


 


12.11       Waiver. No party to this Agreement shall be
deemed to have waived any rights or remedies under this Agreement unless such
waiver is expressly made in writing and signed by such party. No delay or
omission by any party in exercising any such right or remedy shall operate as a
waiver of such right or remedy.


 


51

















 


12.12       Arbitration
and Venue.


 


(a)           Any dispute, contest or
claim arising among the parties out of or under this Agreement shall be finally
determined by arbitration conducted in the State of New York within 50 miles of
New York City, provided that each party shall retain its right to commence an
action to obtain specific performance or other equitable relief with respect to
a breach or threatened breach of this Agreement or with respect to any matter
arising out of or under this Agreement. The party seeking arbitration shall
give written notice thereof to the other party. If CPH and Tower are unable to
resolve the dispute within ten (10) days of the giving of such notice of
arbitration, they shall then promptly mutually select an arbitrator who shall
be experienced in insurance and reinsurance to resolve the dispute, provided
that if they failed to do so within thirty (30) days after the giving of the
notice of arbitration, either party may apply to the nearest office of the
American Arbitration Association for the appointment of the arbitrator. The
arbitrator so designated shall resolve the matter in dispute within sixty (60)
days after such designation, or as soon thereafter as possible, by means of a
written decision. Any such resolution shall be final and binding upon the
parties. In making his or her determination, the arbitrator shall not subtract
from, add to, or otherwise modify any of the provisions of this Agreement. Each
party may, at its own expenses, be represented by counsel and employ expert
witnesses in any such arbitration. Each party shall share equally the
arbitrator’s fees and expenses. The arbitration shall be held in accordance
with the rules of the American Arbitration Association, except as otherwise
specifically provided in this Agreement.


 


(b)           All suits, actions and
other proceedings arising out of or under this Agreement shall be brought
exclusively in the state or federal courts in the State of New York,


 


52

















 


and for this purpose, each party hereby consents to the personal
jurisdiction of such courts and waives any defense or claim based upon improper
venue or an inconvenient forum. Nothing in this subsection (b) shall expand the
right of any party to bring such a suit, action or other proceeding pursuant to
subsection (a) above.


 


12.15       Press
Releases.
In the event that any party desires to issue a press release describing any or
all of the transactions contemplated hereby, the party desiring to issue such
release shall consult in good faith with the other party hereto with respect to
the form and substance of such release prior to the public dissemination
thereof.


 


[Next pages are signature pages]


 


53

















 


IN WITNESS WHEREOF, the parties to this Agreement have caused
it to be executed by their respective undersigned officers, each thereunto duly
authorized,


 


 


	
   

  	
  Tower Group, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Francis Colalucci

  	
   

  
	
   

  	
   

  	
    Name: Francis M. Colalucci

  
	
   

  	
   

  	
    Title:
  Senior Vice President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tower Insurance Company of New York

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Francis Colalucci

  	
   

  
	
   

  	
   

  	
    Name: Francis M. Colalucci

  
	
   

  	
   

  	
    Title: Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tower National Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Francis Colalucci

  	
   

  
	
   

  	
   

  	
    Name: Francis M. Colalucci

  
	
   

  	
   

  	
    Title: Chief Financial Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CastlePoint Holdings, Ltd

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ Joel S. Weiner

  	
   

  
	
   

  	
   

  	
    Name: Joel S. Weiner

  
	
   

  	
   

  	
    Title:

  	
  Senior Vice President and Chief Financial Officer

  
					



 


[SIGNATURE PAGE TO MASTER AGREEMENT]


 

















 


	
   

  	
  CastlePoint Management Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
    /s/ James Dulligan

  	
   

  
	
   

  	
   

  	
    Name: James Dulligan

  
	
   

  	
   

  	
    Title: Vice President and Controller

  



 


[SIGNATURE PAGE TO MASTER AGREEMENT]