Exhibit 10.53


MANAGEMENT AGREEMENT


between


CastlePoint Insurance Company


and


Tower Risk Management Corp.


                This Agreement,
entered into as of June , 2007 (the “Agreement”) by and between CASTLEPOINT INSURANCE
COMPANY, a property and casualty insurance company domiciled in New York (the “Company”),
and TOWER RISK MANAGEMENT CORP., a New York corporation (“Manager”), each
having offices located at 120 Broadway, New York, N.Y. 10271.


PREAMBLE


                WHEREAS, Company
desires to appoint Manager as its manager for performing underwriting and
claims and other services with respect to certain business as set forth in this
Agreement; and


                WHEREAS, Manager
desires to perform such responsibilities;


                NOW,
THEREFORE, Company and Manager, in consideration of the mutual promises herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, agree as follows:


1.             Appointment.


                Company
does hereby nominate, constitute, and appoint Manager as non-exclusive manager
for: (i) the soliciting, underwriting, quoting, binding, issuing, and servicing
of such of the  Company’s insurance
policies as the Company determines for time-to-time on Exhibit A  (such insurance and any policies, contracts,
binders, endorsements, certificates, agreements, or evidence of insurance,
individually and collectively, will be referred to as “Policy” or “Policies”
hereunder).


2.             Authority.  Manager is authorized to:


                2.1           Issue,
or direct Company to issue, Policies subject to: (i) the scope and limits granted
in Exhibit A attached hereto; (ii) the terms and conditions (including
exclusions) of forms of Policies prescribed by Company; (iii) applicable state
insurance laws, rules, and regulations; (iv) the underwriting guidelines
approved by Company; (v) Company’s ultimate right to veto the solicitation,
underwriting, quoting, binding, and issuing of any Policy by Manager; (vi)
Company’s ultimate right to cancel any Policy subject to applicable
governmental regulatory requirements for cancellation and non-renewal; (vii)
Company’s ultimate right to veto the appointment by Manager of any agent,
broker or producer, and the ultimate power of Company to cancel any such agency
pursuant to Section 2.4; (viii) Company’s right to approve all advertising with
respect to the Policies in which Company’s name is used.





















                2.2           Collect,
account, receipt for, and remit premiums on Policies that Manager writes on
behalf of Company in accordance with Section 2.1 and to retain its provisional
management fee and policy billing fees, if any,  out of premiums so collected.  Manager agrees to pay all costs and expenses
of collection from insureds where premiums to be received by Manager pursuant
to this Agreement are not paid in full by the insured.  Manager agrees that all premiums, including
return premiums received by Manager, are Company’s property and will be paid
over to the Company.


                2.3           Secure
or obtain agents and producers to produce business.  Company appointments will follow upon Manager
providing evidence that the agents and producers are lawfully licensed to
transact the type of insurance they are expected to write, are not serving on
Company’s or Manager’s board of directors and complete Company’s appointment
process.  The agents and producers must
meet the applicable compliance regulations for licensure.


                2.4           Terminate
agents and producers.


                2.5           Investigate
and settle claims as provided in Section 10 below and establish reserves for
such claims.


                2.6           Purchase
and maintain in effect treaty and facultative reinsurance to limit Company’s
exposure on the Policies to the net amounts outlined in Exhibit A.  Company shall pay to Manager Company’s
proportionate share (up to 15%) of catastrophe reinsurance costs attributable
to the business written by it.


3.             Performance.


                3.1           Manager hereby accepts the foregoing appointment and
agrees faithfully to perform the duties thereof in a professional manner as an
agent of Company and to obey promptly such reasonable instructions as it may
receive from time to time from Company in accordance with this Agreement.


                3.2           If Manager commits a material breach of this Agreement,
Company may, as one remedy but not as an exclusive remedy, require its own
employees or designated representatives to carry out Manager’s duties
hereunder.  Manager shall reimburse
Company for Company’s reasonable expenses, including salaries, incurred for
having Company’s employees or representatives perform such duties or, at
Company’s option, Manager shall pay such employees or representatives
directly.  Such reimbursement or direct
payments shall be made by Manager within five (5) days after Manager’s receipt
of invoices of such expenses.


4.             Fees.


                 Manager shall receive a management fee quarterly
for the foregoing services (“Management Fees”) during each calendar year of this
agreement (or part thereof) equal to (A) the management fee percentage for such
year (as set forth below) (the “Management Fee Percentage”) times (B) the
amount of Subject  Written Premium on
Policies managed by Manager for Company, net of return premiums. “Subject  Written Premium” shall mean  direct written premium net of  specific, aggregate and property catastrophe
excess of loss reinsurance costs. It is expressly agreed that the Management
Fee Percentage payable to the manager shall be 


 


 


 


 


2

















 


reduced
by any expenses attributable to boards, bureaus and taxes that are required to
be paid by Company. The provisional Management Fee Percentage shall be 34%.


 


                Such Management
Fee Percentage shall be subject to adjustment until all losses for a given year
have been settled (or deemed settled as set forth below).  Within sixty (60) days following the end of
each year, Company shall calculate the Net Loss Ratio for each year that remains
open and shall forward copies of such calculations to Manager. The Management
Fee Percentage shall be increased nine-tenths of a percentage point for every
percentage point by which the Net Loss Ratio is below 61% up to a maximum
Management Fee Percentage of 36%, and decreased nine-tenths of a percentage
point for every percentage point by which the Net Loss Ratio exceeds 61%,
subject to a minimum Management Fee Percentage 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

  	
   

  



 


The parties 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 parties.


                For the purposes
of this paragraph 4, “Net Loss Ratio” shall mean, for any period of time, the
ratio of Net Losses incurred during such period to Net Premium Earned for such
period, where “Net Losses” means, for any period of time, any and all amounts
that the Company is required to pay to or on behalf of insureds for insurance
claims made under its Policies including loss adjustment expenses, after the
application of any applicable reinsurance.


5.             Territory.


                Manager’s
authority to solicit, quote, underwrite, bind, issue, or service Policies
extends only to insureds or prospective insureds located in the states
specified in Exhibit A attached hereto, subject to: (i) the applicable
licensing authority of Company, (ii) Company having made and received approval
of all necessary regulatory filings and (iii) Manager obtaining licenses if
required for activities conducted by Manager pursuant to this Agreement.


6.             Representations and Warranties of Manager.  On the effective date hereof,
during the term of this Agreement, and for any period described in Section 14.5,
Manager hereby represents and warrants to Company as follows:


 


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                6.1           Laws
and Licenses.  Manager has complied
and will comply with all applicable laws, rules, and regulations.  Manager shall provide current copies of
Manager’s licenses, which will be maintained in Company’s records.  Company will appoint Manager in all
applicable states.  Manager will obtain
and maintain at its own expense all licenses required for it to perform this
Agreement.


                6.2           No
Breach.  This Agreement is a valid
and binding obligation of Manager.  The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not breach or conflict with Manager’s
by-laws or certificate of incorporation, nor with any agreement, covenant, or
understanding (oral or written) to which Manager is bound, and will not adversely
affect the application for issuance or the validity of any license of Manager.


                6.3           Status.  Manager is a duly organized and validly
existing corporation in the State of New York.


                6.4           Authorization.  The execution, delivery, and performance of
this Agreement by Manager have been duly and properly authorized by it.


7.             Representations
and Warranties of Company.  On the effective date hereof, during the term
of this Agreement, and for any period described in Section 14.5, each Company
hereby represents and warrants to Manager as follows:


                7.1           Laws
and Licenses.  Company has complied
and will comply with all applicable laws, rules and regulations and shall,
whenever necessary, obtain and maintain at its own expense all licenses
required for it to perform this Agreement.


                7.2           No
Breach.  This Agreement is a valid
and binding obligation of Company.  The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not breach or conflict with Company’s
by-laws or articles of incorporation, nor with any agreement, covenant, or
understanding (oral or written) to which Company is bound, and will not
adversely affect the application for issuance or the validity of any license of
Company.


                7.3           Status.     
Company is a duly organized and validly existing corporation in the
State of New York.


                7.4           Authorization.  The execution, delivery, and performance of
this Agreement by Company have been duly and properly authorized by it.


8.             Duties and Responsibilities.
 Subject to Company’s supervision
and instructions, Manager agrees to perform the following duties and services
in addition to those otherwise enumerated in this Agreement with regards to
Policies it manages hereunder:


                8.1           Solicit,
underwrite, quote, bind, issue, secure proper countersignature when required by
applicable laws, and service Policies on behalf of Company.


 


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                8.2           Cancel
Policies issued or underwritten by Manager in accordance with the terms of the
Policies and applicable state regulations.


                8.3           Issue
Policies only on forms approved by Company and filed with and approved by
regulatory authorities wherever such filing and approval is required.


                8.4           Underwrite
and issue Policies in accordance with the premium rates and underwriting
criteria and guidelines as approved by Company.


                8.5           Investigate
and settle claims as provided in Section 10 below and establish reserves for
such claims.


                8.6           Maintain
at Manager’s expense data processing systems and equipment, an office or
offices and a staff of employees sufficient in number and qualifications to
perform the duties set forth in this Agreement.


                8.7           Pay
to Company any fines imposed by regulatory authorities, taxation authorities,
and their agents for data collection and advisory organizations, due to late
filing or poor quality of data provided by Manager.


                8.8           Pay
to Company any fines imposed by regulatory authorities upon Company due to the
use of unapproved forms or rates by Manager or due to other market conduct
violations caused by Manager’s willful misconduct.


                8.9           Maintain
separately for Company and each other insurer with which Manager does business,
complete and current records and accounts, including underwriting files, which
Manager shall retain in accordance with Section 12 and any applicable laws.


                8.10         Refund
within sixty (60) days of the end of each calendar month, return commissions on
Policy cancellations or premium reduction, in each case at the same rate at
which such commissions were originally retained.


                8.11         Collect,
account and receipt for  premiums on
Policies that Manager writes on behalf of Company in accordance with Section
2.1, and return premiums to policyowners, as necessary.  Manager shall promptly remit premiums
collected on Company’s behalf, less return premium, reinsurance costs and
Management Fees, to Company.


                8.12         Hold
all monies, including premiums, return premiums, and monies received by
Manager, in a fiduciary capacity for Company. Except as otherwise authorized by
this Agreement, Manager shall maintain such monies in a separate and segregated
bank account in a bank that is a member of the Federal Reserve System and is
insured by the Federal Deposit Insurance Corporation. This account shall not be
used for any purpose other than payments to or on behalf of Company. Any
investment income produced from this bank account is the property of Manager.


                8.13         Comply
with all regulatory requirements including, but not limited to, the
cancellation, non-renewal, or conditional renewal of policies.


 


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                8.14         Return
upon demand after termination of this Agreement, all unused Policies, forms,
and other property furnished to Manager by Company. Such items remain the
property of Company. Manager shall fully cooperate with and assist Company in
recovering such items from third parties, if any.


                8.15         Exercise
Manager’s authority through authorized employees of Manager or its affiliates.


                8.16         Exercise
exclusive and independent control of Manager’s time and conduct.


9.             Limitations of Authority.


                Notwithstanding the foregoing, all underwriting
services provided to Company by Manager shall be based upon the written
criteria, standards and guidelines of Company which shall retain the final
authority over underwriting decisions including, but not limited to, acceptance,
rejection, cancellation and termination of risks.


10.          Claims.


 


                10.1         Manager shall or shall arrange to
investigate, negotiate, and settle all Policy claims or losses on behalf of
Company; however, Manager shall obtain the prior approval of Company before
handling and settling any Policy claim or loss which is in excess of One
Hundred  Thousand Dollars ($100,000)
gross incurred loss.  Manager shall
determine coverage for claims; however, Manager shall obtain the prior written
approval of Company for the handling of litigation in which the Company is
named as a defendant or claims in which Manager seeks declaratory relief on
behalf of Company.  All claims or losses
shall be reported in monthly statements pursuant to Section 11 below.  In addition, Manager shall immediately notify
Company in writing of any claim or loss as Company requests upon receiving
notice or knowledge of: (i) any Policy claim or loss in excess of Two Hundred
Fifty Thousand Dollars ($250,000) gross incurred loss; or (ii) any loss
regardless of incurred dollar amount involving the following: fatalities; brain
stem/brain damage injuries; spinal cord injuries; heart attacks; severe,
non-accumulative hearing loss; severe, non-accumulative vision loss; amputation
of major body part; paraplegia; quadriplegia; serious burns (i.e. second or
third degree and/or burns over 50% of the body); non-union, compound,
comminuted, serious fractures; injury to the spine or pervasive nerve damage;
class action suits; allegations of criminal conduct by an insured or
allegations of criminal conduct by an insured or allegations of criminal
conduct on the insured’s premises; bad faith claims or suits; demands in excess
of policy limits; actual or alleged violations of the Deceptive Trade Practices
Act; actual or alleged violations of the applicable State Insurance Codes;
actual or alleged violation of law by Manager; or litigation naming Company as
a defendant.  In determining gross
incurred loss, Manager shall consider the facts and circumstance of the claim
or loss, Manager’s analysis of the insured’s liability for the claim or loss,
Manager’s analysis of damages resulting from the claim or loss and Manager’s
analysis of the applicability of coverage for the claim or loss.  These individually reported claims or losses
should be updated semi-annually and more frequently upon the occurrence of any
material change in any claim or loss or any information previously reported to
Company.  Company shall be immediately
notified if Manager is closing a file on a reported claim or loss and of the
reason for this file closure.  Failure to
promptly notify Company of claims under this Section 10.1 shall 


 


6





















be considered a material breach of this Agreement
and subject to all the remedies provided herewith.


                10.2         Whenever Manager shall deem it prudent to engage
legal counsel or loss adjusters to protect Company’s interest regarding claims
or losses, such services shall be provided only by qualified attorneys-at-law
and/or licensed loss adjusters selected by Manager, who have substantial
experience in the handling of claims litigation of the type involved. Upon
execution of this Agreement, Manager shall submit to Company for approval a list
of the attorneys and loss adjusters it intends to use. Such list shall be
considered approved unless Company objects to any of such firms or individuals
within fourteen (14) days after receipt of such list. Any provision hereof to
the contrary notwithstanding, it is agreed that, with respect to any claim or
loss of any amount, Manager shall promptly furnish Company, or its designee,
any additional claim or loss information requested by Company with respect to a
claim or loss pertaining to any Policy covered by this Agreement, and it is
further agreed with respect to any claim or loss of any amount as follows:


                                                                a.             Company may assign an attorney of its own choice to
assume the defense of any claim or loss reported to Company and, in the event
an attorney has already been employed by Manager, the service of such attorney
which has already been employed by Manager shall be terminated by Manager
forthwith and Manager shall waive any conflict of interest that may have been
created by such attorney’s employment by Manager.


                                                                b.             In the event that Company is named as a defendant in any
lawsuit, Manager shall, as soon as it has notice or knowledge of such lawsuit,
immediately give written notice thereof to Company accompanied by a copy of the
complaint and any court papers related to such lawsuit.


                10.3         All claims services provided to Company by Manager
shall be based upon the written criteria, standards and guidelines of Company
which shall retain the final authority over claims decisions including, but not
limited to, payment and non-payment of claims.


                10.4    The
Company will establish a bank account to fund claim payments on its policies
managed by Manager.  Manager shall be made
an authorized signatory on, and shall pay claims out of such account.  Manager shall not be obligated to pay claims
unless such account is sufficiently funded by the Company.


 


11.          Accounting and
Reporting Procedures.  Manager
shall:


                Within thirty (30)
days after the end of each month, remit to Company all premiums collected on
Policies issued under the terms of this Agreement, less the provisional
management fee due to Manager in accordance with Exhibit A attached hereto.  Manager may not offset balances due to
Company hereunder against balances due Manager under any other contract with Company;


                On behalf of
Company supply accounting, underwriting, and claim bordereaux with copies to
Company, pursuant to these terms and conditions;


 


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                With regard to
business placed by Manager with Company hereunder, furnish to Company, in
electronic format, within thirty (30) days after the end of each quarter a
report of  written, earned, and unearned
premiums; losses and loss adjustment expenses paid and outstanding; loss and
loss adjustment expenses incurred; commissions earned by Manager;


                Provide detail and
summary reports, in an electronic or printed medium, as are required to meet
all reporting requirements of state regulatory or taxation authorities, their
managers for data collection, and advisory organizations including but not
limited to:


                a.             Within thirty (30) days of the close of the calendar
quarter:  direct premiums (written and
earned); in force premiums; policy counts (written and in force); direct losses
and loss adjustment expenses including subrogation (paid and reserved); number
of claims open, closed with payment, and closed without payment; as prescribed
by state regulatory authorities.


                b.             Within thirty (30) days of the close of the calendar
quarter:  direct written premium, losses,
and loss adjustment expense including subrogation (paid and reserved)
transaction data as prescribed by advisory organizations providing loss cost
and policy forms.


                c.             Thirty (30) days prior to the prescribed deadline:  the reports of direct premiums (written and
earned), losses, and loss adjustment expenses including salvage and subrogation
(paid and reserved) as required by state regulatory data collection agents,
including but not limited to financial calls, unit statistical data, summary
statistical data, and detailed claim information for National Council on
Compensation Insurance (NCCI), Insurance Services Office (ISO), and National
Association of Independent Insurers (NAII), and various state-specific
reporting requirements as necessary.


                By the first business
day of February of each year, Manager shall provide Company with any
information Company may require in order to complete its statutory financial
statements for the prior year. Company shall notify Manager of the material
information required by December 31 of the prior year.


12.          Books
and Records.


 


                Manager shall keep
such books and records as may be (i) reasonably requested by Company; or (ii)
required by law, rulings, or orders of the insurance departments of the states
having jurisdiction over: (a) Manager or Manager’s business or (b) any
Policies.  Manager shall make such books
and records available for examination, audit, and copying by the insurance
departments of such states and by Company, or by their authorized representatives.  Company shall have the right to examine and
review at any reasonable time all books, records, files, and papers, including,
but not by way of limitation, claim files and underwriting files maintained and
kept by Manager which relate to this Agreement and the Policies.  Manager shall institute and maintain
retention and disposal systems for claim files and underwriting files in
accordance with procedures and requirements as prescribed by law. All books and
records of Manager shall be maintained at the principal place of business of
Manager and shall be complete, accurate, and up-to-date, and shall reflect all
monies paid or received by Agent and all transactions of Manager 


 


8

















pursuant to this Agreement. Anything to the contrary notwithstanding,
all of the books, records, files, and papers maintained and kept by Manager
relating to underwriting and claims matters involving this Agreement or the
Policies, shall be and remain the sole and exclusive property of Company except
that upon termination of this Agreement, all right, title, and interest in and
to all Policy renewals or expirations and all records with respect to renewals
and expirations shall automatically and irrevocably transfer to and vest in
Manager provided Manager has accounted for and has made payments of all amounts
due Company and continues to do so.


13.          IndemnificationTitle.


                13.1         Manager shall indemnify and hold
harmless Company from and against all losses, damages, costs, expenses, claims,
fines, penalties, or liabilities of any description suffered by Company with
respect to Manager on any Policies issued or underwritten by Manager,
including, without limitation, any attorney’s fees, in connection with or
arising out of: (i) any violations by Manager of laws, rules, or regulations to
which it is subject; (ii) any material breach of any warranty or representation
of Manager made in this Agreement or any other material breach of this
Agreement by Manager; or (iii) any willful misconduct, gross negligence, or misrepresentation,
of Manager or of it officers, directors, employees, agents, sub-producers, or
independent contractors.


                13.2         Company shall indemnify and hold
harmless Manager from and against all losses, damages, costs, expenses, claims,
fines, penalties, or liabilities of any description suffered by Manager with
respect to Company on any Policies issued or underwritten by Company,
including, without limitation, any attorney’s fees, in connection with or
arising out of: (i) any violations by Company of laws, rules, or regulations to
which it is subject; (ii) any breach of any warranty or representation of
Company made in this Agreement or any other breach of this Agreement by
Company; or (iii) any alleged or actual misconduct, negligence, misrepresentation,
or other acts or failures to act of Company or of it officers, directors,
employees, agents, sub-producers, or independent contractors.


14.          Termination
of Agreement.


 


14.1         This Agreement shall continue until
terminated in accordance with Sections 14.2 through 14.5 below.


14.2         This Agreement may be terminated
immediately by either party upon giving written notice to the other party via
electronic, certified or registered mail in the event of:


                a.             The misappropriation by either party of any funds or
property belonging to the other party;


                b.             The fraud, gross negligence, or willful misconduct of
the other party;


                c.             The license or certificate of authority of the other
party in their state of domicile is canceled, non-renewed or suspended by any
public authority;


                d.             An assignment by the other party for the benefit of
creditors; the dissolution or liquidation of the other party; the appointment
of a conservator, receiver, or 


 


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liquidator
for a substantial part of the other party’s property; the institution of
bankruptcy, insolvency, or similar proceedings by or against the other party;


                e.             Material breach by the other party of any provision of
this Agreement;


                f.              If any law or regulation of the federal, state, or
local government of any jurisdiction in which the other party is doing business
shall render illegal or invalid any transaction contemplated by this Agreement,
or any term of this Agreement, this Agreement may be terminated insofar as it
applies to such jurisdiction by either party giving notice to the other party
to such effect or by either party giving notice to the other party to such
effect;


                g.             Change in ownership of ten percent (10%) or more of the
outstanding voting stock of the other party, sale or transfer of the other
party’s assets, merger of the other 
party, or change or resignation of any principal officer or director of
the other party;


                h.             The licenses required of the other party for it to
perform under this Agreement expire, are terminated, or are not valid pursuant
to the law of the State in which the other party is transacting business on
behalf of either party.


                i.              Reinsurance covering the business under this agreement
is cancelled, terminated or expired.


14.3         This Agreement may be terminated at any
time by mutual written agreement, or upon sixty (60) days prior written notice
by either Company or Manager.


14.4         If at any time either party sends
notice of termination to the other party as provided in Section 14.2 above or
the Agreement is otherwise terminated as provided herein, the Manager shall not
solicit, underwrite, quote, bind, or issue any Policies or renew any existing
Policies for which the inception date or renewal date falls after the effective
date of termination of this Agreement, nor shall Manager cancel and rewrite any
existing Policies.


14.5         Unless otherwise indicated by this
Agreement or either party otherwise notifies the other party in writing,
Manager’s duties and responsibilities under this Agreement shall survive
termination of this Agreement until such time as all Policies issued,
underwritten, or serviced by Manager pursuant to this Agreement have expired
and all known losses under such Policies have been paid or settled, have run
off or otherwise have been disposed of in the judgment of Company, all incurred
but not reported loss reserves have been reduced to zero, and any amounts owed
to Company by others has been paid. The only compensation Manager shall receive
for its performance of its duties hereunder (both during and after the term of
this Agreement) is set forth in Section 4.


14.6         Upon termination of the Agreement, Manager
shall, unless notified in writing to the contrary by Company:


a.             Continue to
represent Company for the purpose of servicing Policies placed by Manager with
Company which are in force on, or renewed at Company’s 


 


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election,
or as required by law, after the date of termination of this Agreement, and
Manager shall continue to receive its normal compensation for such services.


b.             Issue and
countersign appropriate endorsements on Policies in force, provided that
without prior written approval of Company, such endorsement shall not increase
nor extend Company’s liability nor extend the term of any Policy.


c.             Collect and receipt
for premiums and retain commissions out of premiums collected as full
compensation.


14.7         Any notice issued pursuant to this
Section shall be effective on the day after it is received by Manager.


15.          Suspension
of Manager’s Authority.


 


15.1         In lieu of terminating this Agreement,
Company may give written notice to Manager that Company is immediately
suspending Manager’s authority in its entirety or in any particular state to
bind new or renewal business, change any existing Policy and/or settle any
claim during the pendency of any of the following events:


a.             Manager is
delinquent in payment of any monies due Company;


b.             Any dispute exists
between Manager and Company regarding the existence of any of the events listed
in Section 14.2;


15.2         Such suspension shall remain in effect
until such delinquency is cured or dispute is resolved and Manager receives
written notification from Company to that effect. If such delinquency is not
cured within fifteen (15) days from the date of receipt of written notification
by Manager of such delinquency, Company may exercise its right to terminate
this Agreement under Section 14.2.


15.3          Unless otherwise notified in writing
to the contrary by Company, Manager’s obligation under this Agreement shall
continue during the suspension of Manager’s authority under this Agreement.


15.4          Any notice of suspension issued
pursuant to this Section shall be effective immediately.


16.          Ownership
of Expirations.


 


                The use and
control of expirations of the Policies will remain the property of Manager; and
Company will not, without consent of Manager, (a) refer or communicate to any
other agent or broker, Company’s records of insureds, expiration dates and
other material information relating to specific risks except for loss or claims
information specifically requested by the insured or the insured’s authorized
representative nor (b) use such material information relating to specific risks
for purposes of solicitation.


17.          Mediation;
Arbitration and Injunctive Relief.


 


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                17.1         If any dispute arises between Company
and Manager with reference to the interpretation, performance, or breach of
this Agreement (whether the dispute arises before or after termination of this
Agreement) such dispute, if not resolved by the parties, must be submitted to
non-binding mediation.  If such dispute
is not resolved by non-binding mediation within sixty (60) days it will then be
submitted for decision to a panel of three arbitrators.  Notice requesting arbitration will be in
writing and sent certified or registered mail, return receipt requested.


                17.2         One arbitrator shall be chosen by each
party and the two arbitrators shall, before instituting the hearing, choose an
impartial third arbitrator who shall preside at the hearing.  If either party fails for any reason to
appoint its arbitrator within thirty (30) days after being requested to do so
by the other party, the latter, after ten (10) days notice by certified or
registered mail of its intention to do so, may appoint the second
arbitrator.  If the two arbitrators are
unable to agree upon the third arbitrator within thirty (30) days of their
appointment, the third arbitrator shall be selected from a list of six
individuals (three named by each arbitrator) by a judge of the United States
District Court having jurisdiction over the geographical area in which the
arbitration is to take place, or if that court declines to act, the state court
having general jurisdiction in such area.


                17.3         All arbitrators shall be active or
retired disinterested officials of insurance or reinsurance companies not under
the control or management of either party to this Agreement and will not have
personal or financial interests in the result of the arbitration.


                17.4         Within thirty (30) days after notice of
appointment of all arbitrators, the panel shall meet and determine timely
periods for briefs, discovery procedures, and schedules for hearings.


                17.5         The panel shall be relieved of all
judicial formality and shall not be bound by the strict rules of procedure and
evidence.  Arbitration shall take place
in New York, New York.  Insofar as the
arbitration panel looks to substantive law, it shall consider the law of the
State of New York.  The decision of any
two arbitrators when rendered in writing shall be final and binding.  The panel is empowered to grant interim
relief as it may deem appropriate.


                17.6         The panel shall interpret this
Agreement as an honorable engagement rather than merely a legal obligation and
shall make its decision considering the custom and practice of the applicable
insurance and reinsurance businesses within sixty (60) days following the
termination of the hearing unless the parties consent to an extension.  Judgment upon the award may be entered in any
court having jurisdiction thereof.


                17.7         Punitive damages will not be
awarded.  The arbitrators may, however,
at their discretion award such other costs and expenses as they deem
appropriate, including but not limited to attorneys’ fees, the cost of arbitration,
and arbitrators’ fees, to the extent permitted by law.


                17.8         It is understood and agreed that in the
event of any breach or threatened breach, Company may apply to a court of
competent jurisdiction for, and shall be entitled to, injunctive relief from
such court, without the requirement of posting a bond or proof of damages,
designed 


 


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to cure existing breaches and to prevent a future occurrence or
threatened future occurrence of like breaches on the part of Manager.  It is further understood and agreed that the
remedies and recourses herein provided shall be in addition to, and not in lieu
of, any other remedy or recourse which is available to Company either at law or
in equity in the absence of this paragraph including without limitation the
right to damages.


18.          Miscellaneous.


 


18.1         This Agreement may be revised by mutual
agreement of Manager and Company and such revision shall be evidenced by a
written agreement duly executed by authorized representatives of Manager and
Company, which specifies the effective date thereof.


18.2         Manager shall not have authority to
represent Company on any exclusive basis with respect to any policy form, line,
or class or subclass of business, unless otherwise authorized in writing by
Company.


18.3         Manager shall not
commit Company to any expenses or obligations not specifically provided for
herein without the prior written permission of Company.  Company shall reimburse Manager for expenses
and costs incurred by Manager which are not in the ordinary course of business
and which Company has specifically approved.


18.4         Company shall have
the right to oversee and supervise the operation of this Agreement, including
but not limited to the right at all reasonable times to have access to and to
copy at Company’s expense Manager’s books and records as they relate to this
Agreement, which rights shall survive the termination or expiration of this
Agreement. The director or commissioner of insurance of any state where Manager
issues Policies on behalf of Company shall have at all reasonable times the
right of access to all books, records, and bank account of Manager in a form
usable by such official.


18.5         During the term of
this Agreement, Manager shall obtain and maintain in full force and effect, at
its expense, fidelity insurance with a minimum policy limit of $1,000,000,
errors and omissions insurance with a minimum policy limit of $2,000,000,
directors and officers insurance with a minimum policy limit of $2,000,000, and
general liability insurance with a minimum policy limit of $1,000,000 and on
such terms as are reasonably acceptable to Company.  Manager shall furnish Company with copies of
the certificates of insurance for such insurance, and shall not cancel or amend
any such insurance without Company’s prior written consent.


18.6         Manager shall provide
to Company, copies of its quarterly financial reports and annual audited
financial reports.


18.7         If Manager fails in
any respect to fulfill its duties and responsibilities under this Agreement,
then the expense incurred by Company in order to fulfill Manager’s duties and
responsibilities under this Agreement will be fully reimbursed by Manager.


18.8         This Agreement may
not be directly or indirectly assigned by either party in whole or in part, nor
may Manager appoint a sub managing general Manager.


 


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18.9         Any provision of this
Agreement which conflicts with applicable law or regulation will be amended to
the minimum extent necessary to effectuate compliance with such law or
regulation.


18.10       Manager is an
independent contractor, not an employee of Company, and nothing in this
Agreement shall be construed to create an employer/employee relationship
between Company and Manager.


18.11       This Agreement shall
be construed in accordance with the laws of the State of New York.


18.12       Neither Company nor
Manager shall disclose material details of this Agreement and the Policies
without the prior consent of the other party. 
However, this restriction will not apply to disclosures made by Company
or Manager to its agents, producers, shareholders, policyholders, auditors,
accountants, arbitrators, legal counsel, or other third parties as required in
the ordinary course of business, nor to disclosures required by arbitration
panels, governmental agencies, regulatory authorities, or courts of law.


18.13       Failure of either
party to enforce compliance with any term or condition of this Agreement shall
not constitute a waiver of such term or condition.  No waiver of any breach or default hereunder
shall be valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.


18.14       Manager acknowledges
and agrees that it will benefit from this Agreement and that a breach by it of
the covenants contained herein would cause Company irreparable damages that
could not adequately be compensated for only by monetary compensation.  Manager shall notify Company in writing via
electronic, certified or registered mail, within five (5) days if there is a
change in ownership of ten percent (10%) or more of the outstanding voting
stock of Manager, sale or transfer of all Manager’s assets, merger of Manager,
or change of any principal officer or director of Manager including, but not
limited to, resignation.


18.15       Any notice or other
communications required or permitted hereunder shall be sufficiently given if
sent by electronic, certified or registered mail, postage prepaid, if to
Company, addressed to Tower Risk Management Corp., 120 Broadway, 31st Floor,
New York, New York, 10271, Attention: Stephen Kibblehouse, General Counsel, and
if to Company addressed to CastlePoint Insurance Company., 120 Broadway, 30th Floor,
New York, NY 10271, Attention: General Counsel or such other address as
notified by either party to the other.


18.16       Notwithstanding any
other provisions of this Agreement, the business and affairs of Company shall
be managed by its board of directors, and, to the extent delegated by the
board, by its appropriately authorized officers. The board of directors and
officers of Manager shall not have any management prerogatives with respect to
the business affairs and operations of the Company.


 


14





















IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first written
above.


	
   

  	
  TOWER RISK MANAGEMENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CASTLEPOINT INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


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EXHIBIT A


SCHEDULE OF AUTHORITY


Manager is only authorized
to accept or bind business, as defined in Section A below, subject to the
amounts and stipulations indicated below. 
Amounts in excess of the authorized limits or classifications must be
referred to Company for review and approval prior to binding.


 


A.            GROSS NET WRITTEN PREMIUM LIMIT.   A maximum of $100,000,000 unless Manager
obtains the prior written consent of Company. 
Gross Net Written Premium shall mean gross written premium of Company
less returned premium for cancellations and reductions.


B.            POLICY LIMITS, COVERAGE CLASSIFICATIONS AND MAXIMUM NET
LINES (after treaty and facultative reinsurance).


 


	
  Coverage

  	
   

  	
  Limit

  	
   

  	
  Maximum Net Lines

  
	
  Property

  (including Equipment Breakdown)

  	
   

  	
  $50
  Million or TBA

  	
   

  	
  $1
  Million per risk/per occurrence

  
	
  General
  Liability and Auto Liability

  	
   

  	
  $1
  Million per Occurrence / $2 Million Aggregate

  	
   

  	
  $1
  Million per occurrence

  
	
  Workers’
  Compensation

  Employer’s Liability

  	
   

  	
  Statutory

  $1 Million

  	
   

  	
  $1
  Million per occurrence

  
	
  Excess
  and Umbrella Liability

  	
   

  	
  $10
  Million

  	
   

  	
  $250,000
  per occurrence

  



 


The above coverages are
provided on ISO forms and on certain independent manuscript forms to be agreed.


Other classifications of
insurance may be written on Company’s insurance policies subject to Company’s
prior approval.


C.            TERRITORIAL LIMITATIONS.   Manager shall not issue any policy in any
jurisdiction other than the authorized states defined as those states in which
Company is licensed and has filed and approved rates and policies.  Company at its own discretion may limit or
revoke Manager’s authority as regards any particular state.


 


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