Exhibit 10.6


 


AMENDMENT
TO INVESTMENT MANAGEMENT AGREEMENT


 


WHEREAS, an investment management
agreement (the “Agreement”) dated April 1, 2008 was entered into by and
between Montpelier Reinsurance Ltd., a Bermuda corporation, located at
Montpelier House, 94 Pitts Bay Road, P.O. Box HM2079, Hamilton HR HX,
Bermuda (the “Client”), and KVO Capital Management, LLC, a Delaware limited
liability company, located at 33 S. Main Street, Suite 3, Hanover, NH
03755 (the “Adviser”); and


 


WHEREAS, the Client and the Adviser
now wish to amend the Agreement, effective as of March 11, 2010 to reflect
the addition of separate account runoff portfolios;


 


NOW, THEREFORE, pursuant to Section 15
of the Agreement, the Client and the Adviser hereby agree to amend the
Agreement as follows:


 


I.                                         The defined
term “Account” as used throughout the Agreement shall be replaced by the
defined term “Accounts”.


 


II.                                     Section 1 of the
Agreement shall be amended as follows:


 


The
word “One” shall be inserted prior to the defined term “Investment Account” and
the definition (“KVO Equity Portfolio”) shall be inserted after the defined
term “Investment Account”.


 


A
new paragraph shall be added to the end of Section 1 which reads as
follows:


 


“Other investment accounts (“Run-Off
Portfolio”) shall consist of securities in accounts intended to be liquidated.”


 


III.                                 Section 2 of the Agreement shall be
deleted in its entirety and replaced with the following:


 


2.                                       Services of Adviser  By
execution of this Agreement the Adviser accepts appointment as adviser for the
Investment Accounts with full discretion and agrees to supervise and direct the
investments of the Investment Accounts in accordance with the investment
objectives, policies and restrictions described in the investment guidelines
attached hereto as Schedule A (the “Investment Guidelines”).  Schedule A may be amended upon agreement of
both parties in writing.  The Adviser
agrees that Kernan V. Oberting shall be primarily responsible for directing the
investments of the Investment Account in accordance with the Investment
Guidelines.


 


(a)                In the performance of its services, the
Adviser and its employees (together the “Indemnified Persons”) will not
be liable to the Client for any error in judgment or any acts or omissions to
act in connection with the subject matter of this Agreement and the Investment
Guidelines as amended from time to time, except those resulting from (i) a
breach of the representations set forth in Sections 6(b), (ii) a direct
breach of the Investment Guidelines and/or (iii) an Indemnified Person’s
gross negligence, willful misconduct or malfeasance. Nothing herein shall in
any way constitute a waiver or limitation of any right of any person under the
federal securities laws.


 


(b)               Subject to and without prejudice to the
foregoing, the Client shall indemnify and keep indemnified each Indemnified
Person from and against any and 


 

















 


all
liabilities which may be suffered or incurred by or asserted against such
Indemnified Person arising out of or in connection with the performance of its duties
hereunder except such as may be due to (i) a breach of the representations
set forth in Section 6(b), (ii) a direct breach of the Investment
Guidelines and/or (iii) an Indemnified Person’s gross negligence, willful
misconduct or malfeasance.  If any action
or claim shall be brought against an Indemnified Person in respect of which it
appears that an indemnity may be sought from the Client, such Indemnified
Person shall as soon as reasonably practicable notify the Client in writing of
such action or claim, and the Client may give notice to such Indemnified Person
that it wishes to assume the defense thereof whereupon the Indemnified Person
shall, within five (5) business days after receipt of such notice elect by
notice to the Client to either (i) retain the conduct of the action and
waive any right to an indemnity under this provision or (ii) allow the
Client to assume the defense of such action and retain the right to an
indemnity under this provision.  The
indemnity shall not extend to any liabilities which may result from the
settlement or compromise of any action or claim brought against an Indemnified
Person made or effected without the prior written consent of the Client or any
legal expenses that may result from employment by the Indemnified Person of its
own legal adviser in connection with any action or claim against it after the
defense of such action or claim has been assumed by the Client.


 


IV.                                 Section 8 of the
Agreement shall be amended as follows:


 


The
defined term “Investment Account” as used throughout Section 8 shall be
deleted and replaced by the defined term “KVO Equity Portfolio Account”.


 


V.                                     Section 13
of the Agreement shall be deleted in its entirety and replaced with the
following:


 


13.         Investment by the Adviser for Its
Own Account  Nothing in
this Agreement shall limit or restrict the Adviser or any of its members,
managers, officers, employees or affiliates from buying, selling or trading any
securities for its or their own account or accounts.  The Client acknowledges that the Adviser and
its members, managers, officers, employees, affiliates and other clients may at
any time (a) have, acquire or increase (whether directly or through
derivative instruments) its holdings of securities which are at or about the
same time acquired or disposed of (whether directly or through derivative
instruments) for the Investment Accounts, and/or (b) decrease its holding
or dispose (whether directly or through derivative instruments) of securities
which are at or about the same time acquired or disposed of (whether directly
or through derivative instruments) for the Investment Accounts.  The Adviser shall have no obligation to
purchase or sell for the Investment Accounts or to recommend for purchase or
sale by the Investment Accounts any security that the Adviser or its members,
managers, officers, employees or affiliates may purchase or sell for itself or
themselves or for any other client.


 


VI.                                 Schedule A is amended by:


 


Inserting
the attached Schedule A(i)  prior to the “Guidelines for the KVO Equity
Portfolio”:


 

















 


VII.                             Schedule B is
amended by:


 


Inserting
the following prior to the “The Fee charged on the KVO Equity Portfolio”:


 


The Fee charged on the Run-Off
Portfolio will be as follows:


 


From the date of the
Agreement through December 31, 2010, the Adviser shall be paid a monthly
Management Fee (pro rated for periods less than a full month) equal to 0.000
basis points of the net asset value of the Investment Account (including
Designated Investments and without accrual of the Incentive Fee, if any).


 


 


IN
WITNESS WHEREOF, the Client and Adviser have caused this Amendment to
Investment Management Agreement to be duly executed on the dates noted below.


 


	
  ADVISER:

  	
   

  	
  CLIENT:

  
	
   

  	
   

  	
   

  
	
  KVO
  CAPITAL MANAGEMENT, LLC

  	
   

  	
  MONTPELIER
  REINSURANCE LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:  

  	
   

  	
  Name:  

  
	
  Title:  

  	
   

  	
  Title:  

  
	
  Date:

  	
   

  	
  Date:

  
					



 

















 


Guidelines for the The Run-Off
Portfolio are as follow:


 


INVESTMENT GUIDELINES WITH RESPECT TO THE


INVESTMENT MANAGEMENT AGREEMENT DATED APRIL 1, 2008 BETWEEN KVO CAPITAL
MANAGEMENT, LLC AND MONTPELIER RE HOLDINGS LTD. AND ITS SUBSIDIARIES.


 


A. Policy:


 


These
Guidelines pertain to the separate account (the “Run-Off Portfolio”) managed by
KVO Capital Management, LLC (the “Advisor”) for run-off of the account formerly
managed by a third party until March 11, 2010.


 


B. Investment Objective:


 


The
Investment Objective is to actively monitor the holdings within the investment
portfolio as inherited from Prospector Partners and to effect sales of the
assets as suitable market opportunities are identified.


 


C. Portfolio Constraints:


 


The
investment portfolio is to be liquidated within the following constraints:


 


1.               No purchase or short selling
for the investment portfolio is permitted. Use of Derivatives is permitted only
within the confines of item 2 and Section E below.


 


2.               Any Derivatives purchased
for the portfolio must be acquired solely for the purpose of hedging foreign
exchange exposure or optimizing the disposal of an existing Equity or group of
Equities within the portfolio.


 


D. Cash Equivalents


 


The
account will typically carry a cash account balance and, to the extent the cash
is no longer required for margin purposes it is to be returned to the Client on
a timely basis.


 


E. Derivative investments and short selling


 


Derivatives
are not permitted except upon receipt by the Investment Manager of prior
written consent by a duly authorized employee of Montpelier or its subsidiaries


 


a.               All derivatives must be
traded on a nationally or internationally recognized exchange.


 


b.              Derivatives may include
futures, forwards, swaps, or options. Traditional exchange traded securities,
such as convertible bonds, preferred stocks and exchange traded funds (ETF’s)
are not deemed to be derivatives.


 


c.               The principal derivative
used in the account will be exchange traded futures on the S&P 500.


 

















 


F. Leverage and the short selling of securities


 


No
leverage and no short selling is permitted.


 


G. Performance Evaluation


 


Not
applicable.


 


H. Guideline Compliance


 


The
Investment Manager will ensure compliance with these guidelines at all times.
If there is a variance from these guidelines, the investment manager will
immediately inform the Company and will provide a proposed remediation plan.
Each quarter the Investment Manager will provide the Company with a written
certification that the guidelines have been met, listing details of any
exceptions.


 


I. Reporting


 


The
Investment Manager will provide daily trade summaries, including derivative
transactions, to the Company’s investment accountant (currently General Re New
England Asset Management) and any additional information as requested.