WARRANT
EXCHANGE AGREEMENT





ThisWARRANT EXCHANGE AGREEMENT,
dated as of September 20, 2010 (this “Agreement”), is made
by and between Maiden Holdings Ltd., a Bermuda company (the “Company”), and
Michael Karfunkel (the “Warrant
Holder”).  The Company and Warrant Holder are each referred to
herein as a “Party” and collectively, as the “Parties.”





RECITALS





WHEREAS, the Warrant Holder holds that
certain Warrant, issued by the Company on June 7, 2007, to purchase 1,350,000 of
the Company’s common shares at $10.00 per share (the “Warrant”);





WHEREAS, the Company and the Warrant
Holder wish to exchange the Warrant in consideration for the issuance of certain
restricted stock;





WHEREAS, the Parties desire to enter
into this Agreement to set forth certain matters relating to such exchange (the
“Exchange”).





NOW, THEREFORE, in consideration of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:





ARTICLE
I





EXCHANGE





Section 1.1. Exchange of
Warrant.  Upon and subject to the terms and conditions set
forth herein, the Warrant Holder hereby surrenders to the Company for exchange,
the Warrant, together with all appropriate endorsements and instruments of
transfer, and, in exchange therefor, the Company shall issue to the Warrant
Holder 600,000 of the Company’s Common Shares (the “Shares”), which
Shares shall be subject to the provisions of that certain Lockup Agreement
attached hereto as Exhibit A (the “Lockup
Agreement”).





Section 1.2 Lockup
Agreement.  The Company and the Warrant Holder are concurrently
entering into the Lockup Agreement.





ARTICLE
II





REPRESENTATIONS
AND WARRANTIES OF THE COMPANY





Section 2.1. Representations and
Warranties of the Company. The Company hereby represents and warrants to
the Warrant Holder, as of the date hereof, as follows:





(a) Organization, Good
Standing. The Company is a company duly organized, validly existing and
in good standing under the laws of Bermuda.





(b) Power, Authorization,
Enforcement. The Company has the requisite corporate power and authority
to enter into and perform this Agreement and transactions contemplated herein,
including the Exchange.  The execution and delivery of this Agreement
by the Company has been duly and validly authorized by all necessary corporate
action, and no further corporate consent or authorization is required for the
Company to effect the transactions contemplated hereby.  This
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms.









(c) Issuance of Shares.
The Shares have been duly authorized by all necessary corporate action and, when
issued in accordance with the terms hereof upon surrender of the Warrant, the
Shares shall be validly issued and outstanding, fully paid and
non-assessable.





(d) No Conflicts. The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby does not and
will not (i) violate any provision of the Company’s Articles of Incorporation or
Bylaws, each as amended to date, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party or by which any of the Company’s properties or assets are bound, or
(iii) result in a violation of any federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected, except, in all cases,
other than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws) above, except, for such conflicts, defaults,
terminations, amendments, acceleration, cancellations and violations as would
not, individually or in the aggregate, have a material adverse effect on the
Company.





Section 2.2. Representations and
Warranties of the Warrant Holder. The Warrant Holder hereby represents
and warrants to the Company, as of the date hereof, as follows:





(a) Power, Authorization,
Enforcement. The Warrant Holder has full power and authority to enter
into and perform this Agreement, the Lockup Agreement and transactions
contemplated herein, including the Exchange.  This Agreement and the
Lockup Agreement constitute valid and legally binding obligations of the Warrant
Holder, enforceable in accordance with their terms.





(b) Title. The Warrant
Holder has record and beneficial ownership of the Warrant and is transferring
good and valid title to the Warrant to the Company, free and clear of any claim,
interest, mortgage, pledge, lien or security interest.





(c) Investment.  The
Warrant Holder (A) understands that the Shares have not been, and will not be,
registered under the Securities Act or under any state securities laws, and are
being offered and issued in reliance upon federal and state exemptions for
transactions not involving any public offering, (B) is acquiring the Shares
solely for his own account for investment purposes, and not with a view to the
distribution thereof, (C) is a sophisticated investor with knowledge and
experience in business and financial matters, (D) has received certain
information concerning the Company and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Shares, (E) is able to bear the economic risk and lack
of liquidity inherent in holding the Shares, and (F) is an accredited
investor, as defined in Regulation D under the Securities Act of 1933, as
amended.





(d) No Tax
Representations.  The warrant Holder understands the tax
consequences of the transactions contemplated by this Agreement.  The
Warrant Holder confirms that it is not relying on any statements or
representations of the Company or any of its agents with respect to the tax
effect of the transactions contemplated by this Agreement.  The
Warrant Holder has had the opportunity to consult with the Warrant Holder’s own
legal, accounting, tax, investment and other advisors, who are unaffiliated with
the Company or any affiliate of the Company, with respect to the tax treatment
of the transactions contemplated by this Agreement.  The Warrant
Holder also acknowledges that he is solely responsible for any tax liability
that may arise as a result of the transactions contemplated by this
Agreement.




2




ARTICLE
III





MISCELLANEOUS





Section 3.1. Fees and Expenses.
Each of the Parties will bear his or its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated
herein.





Section 3.2. Entire Agreement.
This Agreement (including the documents referred to herein) constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, among
the Parties with respect to the subject matter of this Agreement.





Section
3.3. Notices. All notices,
requests, demands, claims, and other communications hereunder will be in
writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given when personally delivered, one business day after it
is deposited with a nationally recognized courier for overnight delivery or two
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:




If
      to the Warrant Holder:
                Michael
      Karfunkel
                American
      Capital Acquisition Corporation
                59
      Maiden Lane
                New
      York, NY 10038If
      to the Company:
                Maiden
      Holdings, Ltd.
                131
      Front Street
                Hamilton
      HM12 Bermuda
                Attention:
      Secretary
                Fax:
      (441) 292-0471




Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.





Section 3.4. Amendments and
Waivers. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Parties. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.





Section 3.5. Headings. The section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this
Agreement.





Section 3.6. Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the Parties named herein and their respective successors and permitted assigns.
No Party may assign either this Agreement or any of his or its rights,
interests, or obligations hereunder without the prior written approval of the
other; provided, however, that the Company may (i) assign any or all of its
rights and interests hereunder to one or more of its affiliates, or
(ii) designate one or more of its affiliates to perform its obligations
hereunder (in any or all of which cases the Company nonetheless shall remain
responsible for the performance of all of its obligations
hereunder).




3




Section 3.7. No Third Party
Beneficiaries. This Agreement shall not confer any rights or remedies
upon any individual, partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture, unincorporated
organization, governmental entity (or any department, agency, or political
subdivision thereof) or any other entity, other than the Parties and their
respective successors and permitted assigns.





Section 3.8. Governing Law. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether of Bermuda or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New York.





Section 3.9. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.





Section 3.10. Severability. Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction.





Section
3.11. Certain
Interpretive Matters and Definitions.  (i) Unless the context
of this Agreement otherwise requires, (A) the terms “hereof,” “herein,” “hereby”
and derivative or similar words refer to this entire Agreement and not to any
particular provision of this Agreement; and (B) the term “Section” without any
reference to a specified document refer to the specified Section of this
Agreement.




(ii) The
words “including,” “include” and “includes” are not exclusive and shall be
deemed to be followed by the words “without limitation”; if exclusion is
intended, the word “comprising” is used instead.




(iii) The
word “or” shall be construed to mean “and/or” unless the context clearly
prohibits that construction.




(iv) Any
reference to any federal, state, local, provincial or foreign statute or law,
including any one or more sections thereof, shall be deemed also to refer to,
unless the context requires otherwise, all rules and regulations promulgated
thereunder, including Treasury Regulations.




(v) Any
representation or warranty contained herein as to the enforceability of a
contract, including this Agreement, shall be subject to the effect of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
affecting the enforcement of creditors’ rights generally and to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).




(vi) The
Parties have participated jointly in the negotiation and drafting of this
Agreement.  If an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions hereof.




[Signature
Page Next]




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IN
WITNESS WHEREOF, the parties hereto have executed this Warrant Exchange
Agreement as of the date first above written.




SHAREHOLDER
            
            THE
      COMPANY
              Maiden Holdings Ltd./s/
      Michael Karfunkel
            
            By:
            /s/
      Arturo M. RaschbaumMICHAEL
      KARFUNKEL
            
            Name:
            Arturo
      M. RaschbaumTitle:
            President
      and Chief Executive Officer