EXHIBIT 10.50


 


SERVICE AND EXPENSE SHARING AGREEMENT


 


This
(“Agreement”) is entered into as of January 1, 2007 by and between Tower
Insurance Company of New York (“TICNY”), a property and casualty insurance
company domiciled in New York with offices located at 120 Broadway, New York,
N.Y. 10271 and CastlePoint Management Corp. (“CPM”), a Delaware corporation
with offices located at 120 Broadway, New York, N.Y. 10271.


 


RECITALS


 


WHEREAS, TICNY and CPM entered
into a Service and Expense Sharing 
Agreement dated April 4, 2006, but now find it advisable to amend and
restate such agreement; and


 


WHEREAS,
CPM has acquired a property/casualty company named CastlePoint Insurance
Company (“CPIC”) and plans to acquire one or more additional property and
casualty insurance companies (not yet identified); (and


 


WHEREAS,
TICNY plans to underwrite Brokerage Business, 
on behalf of itself and CPIC; and


 


WHEREAS,
CPM plans to manage Specialty Program Business and Insurance Risk Sharing
Business and Traditional Program Business  on behalf of TICNY pursuant to a Program
Management Agreement between CPM and TICNY; and


 


WHEREAS,
CPIC plans to underwrite Specialty Program Business and Insurance Risk Sharing
Business and Traditional Program Business on behalf of itself and underwrite
Specialty Program Business and Insurance Risk Sharing Business and Traditional
Program Business (on behalf of and through TICNY); and


 


WHEREAS,
TICNY and CPM are desirous of entering into an agreement whereby TICNY provides
services to CPM at its request (other than services provided in its role as the
manager of the Brokerage Business) and to provide a method for charging those
expenses relating to services 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, TICNY and CPM agree as follows:


 


ARTICLE
1 – PERFORMANCE OF SERVICES 


 


1.01                           In
addition to the services that TICNY may provide to CPIC in managing the
Brokerage Business TICNY shall, if requested, provide various insurance
companies services to CPM on the terms and conditions set forth herein. The
services provided shall be:


 


•                  Underwriting
and marketing services


•                  Policy
issuance, billing and collection services


•                  State
filing and regulatory compliance services


•                  Loss
prevention and premium audit services


•                  Claims
services


 

















 


•                  Administrative
services such as human resources and IT


•                  Facilities


 


ARTICLE
2 – COMPENSATION 


 


2.01                           Any amounts paid by CPM to TICNY for services rendered hereunder must
be on an actual cost basis, but in no case should the amounts paid be greater
than TICNY would expend in providing such services for itself.


 


2.02                           Expenses for the services rendered by TICNY to CPM shall be allocated
and reported in accordance with NY Department’s Regulation 30 and any other
applicable regulation.


 


2.03                           With respect to claims services, CPM shall pay TICNY for the loss
adjustment expenses incurred by TICNY in adjusting and defending claims on
behalf of CPM at the hourly billing rate established by TICNY which shall be the
same billing rate or method of payment established to allocate or assign allocated
and unallocated expenses to adjust and defend TICNY’s claims.


 


2.04                           Settlement of Accounts


 


(a)          TICNY
shall submit to CPM within thirty (30) days of the end of each calendar month a
detailed written estimate of the amount owed for services and the use of
facilities pursuant to this Agreement in that calendar month, and CPM shall pay
to TICNY within fifteen (15) days following receipt of such estimate the amount
set forth in the estimate.


 


(b)         Within
thirty (30) days of the end of each calendar quarter, TICNY shall submit to CPM
a detailed written statement of the amount owed for services and the use of the
facilities for that calendar quarter with a true-up of the monthly estimates
and CPM shall pay to TICNY within fifteen (15) days following receipt of such
written statement the amount set forth in the statement.


 


2.05         Profit Sharing


 


CPM
and TICNY agree to share equally in profits and losses realized from providing
insurance company services to CPM’s or CPIC’s clients in connection with management
of the Specialty Program Business and Insurance Risk Sharing Business and
Traditional Program Business.


 


ARTICLE 3 – TERM, SUSPENSION AND TERMINATION


 


3.01         Original Term


 


The
term of this Agreement will begin on the date of this Agreement and will
continue for a period of four (4) years, after which this Agreement will
terminate unless the parties agree to extend the term of this Agreement. This
Agreement may be terminated at any time by mutual consent of both parties, by
either party upon sixty (60) days written notice to the other party, or upon
the placement of TICNY or CPM into rehabilitation or liquidation by regulatory
authorities or upon the declaration of bankruptcy of either company.


 


3.02                           Agreement


 


Services
and facilities shall be provided to CPM by TICNY only to the extent that such
arrangements do not impede either company’s business or operations.


 


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TICNY
and CPM shall act hereunder so as to assure the separateness of their
respective operating identities. Books and records shall be maintained
separately for each party for services provided by this Agreement.


 


This
Agreement may not be assigned, terminated or amended by either party without
the prior written consent of the New York Superintendent and any other
regulatory body required to provide such consent.


 


3.03                           Rights Regarding Termination


 


A.                       This Agreement
may be terminated at any time by the mutual agreement of the parties, or by
either party for any of the following reasons:


 


(1)                      Immediately
by either party in the event of bankruptcy, insolvency, liquidation or
assignment for the benefit of creditors by the other party;


 


(2)                      Upon sixty
(60) days written notice by either party in the event of any material change in
the ownership or control of the other party;


 


(3)                      Immediately by either party in the event any law or regulation of a
federal, state or local government has rendered this Agreement illegal, but
only insofar as that law or regulation applies to this Agreement;


 


(4)                      Immediately
by either party in the event of fraud, abandonment, gross or willful
misconduct, insolvency, or lack of legal capacity to act on the part of either
party;


 


(5)     Upon sixty (60) days written notice by
either party in the event of default in any material term of this Agreement,
unless the default is cured prior to the end of the end of the sixty (60) day
period.


 


B.        In the event of termination of this Agreement:


 


(1)                      TICNY
shall promptly cease performing any services called for under this Agreement;


 


(2)                      Neither
party shall have any claim against the other for loss of prospective profits or
fees or damage to business arising there from;


 


(3)                      Notwithstanding
the termination of this Agreement, TICNY shall continue to perform such
services under this Agreement in settlement of accounts or winding up of
affairs between TICNY and CPM if so requested by CPM. Expenses for the services
rendered by TICNY shall be allocated in accordance with NY Department’s
Regulation 30 and any other applicable regulation;


 


(4)                      Notwithstanding the termination of this Agreement, TICNY shall continue
to provide the claims and legal defense under this Agreement with respect to
all claims reported to either prior to the effective date of any termination in
accordance with the terms of this Agreement. In consideration for performing
its services as set forth herein, CPM will continue to compensate TICNY in the
manner set forth in Article 2 of this Agreement. In the event CPM assumes the
handling of its own claims after 


 


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termination,
each party agrees to cooperate with and instruct its respective employees to
cooperate in such transition.


 


ARTICLE
4 – MAINTENANCE CONTROL AND OWNERSHIP OF RECORDS


 


4.01         Maintenance of Records


 


TICNY and CPM will maintain all appropriate records,
files, ledgers and reports so as to accurately reflect at all times the
financial transactions with one another.


 


4.02         Ownership of Records


 


All books, records, and files established and
maintained by TICNY or CPM by reason of its performance under this Agreement
which, absent this Agreement, would have been held by TICNY or CPM respectively
shall (i) be deemed the joint property of each party, (ii) be maintained in
accordance with all other applicable law and regulation and (iii) be subject to
examination at all times by CPM or TICNY and persons authorized by it or any
governmental agency having jurisdiction over CPM or TICNY.


 


Each party is the owner of all records related to its
company regardless of in whose possession those records may be at any time.


 


ARTICLE
5 – GENERAL REQUIREMENTS


 


5.01         TICNY’s General Duties


 


TICNY
is responsible to perform the duties assumed under this Agreement in accordance
with the standards it would apply for the performance of such duties for itself.


 


ARTICLE
6 – MISCELLANEOUS 


 


6.01         Notices


 


All
notice requirements and other communications indicated shall be deemed given
when personally delivered or on the third succeeding business day after being
mailed by registered or certified mail, return receipt requested, to the
appropriate party at its address below or at such other address as shall be
specified by notice given hereunder.


 


	
  CPM:

  	
   

  	
  CastlePoint
  Management Corp.

  
	
   

  	
   

  	
  120
  Broadway, 30th Floor

  
	
   

  	
   

  	
  New
  York, NY 10271

  
	
   

  	
   

  	
  Attn:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  TICNY:

  	
   

  	
  Tower
  Insurance Company of New York

  
	
   

  	
   

  	
  120
  Broadway, 31st Floor

  
	
   

  	
   

  	
  New
  York, NY 10271

  
	
   

  	
   

  	
  Attn:
  Chief Financial Officer

  



 


6.02         Binding Effect and Assignment


 


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This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, representatives, successors and assigns. This
Agreement may not be assigned without mutual consent of the parties, but such
consent shall not be unreasonably withheld. This paragraph may not be
implemented without the prior approval of the State of New York, Superintendent
of Insurance.


 


6.03         Amendment


 


This Agreement may not be amended, altered or modified
except in writing signed by the party against whom enforcement or any waiver,
change, discharge, alternation or modification is sought.


 


6.04         Invalidity


 


The invalidity of any provision of this Agreement shall
not affect the validity of the remainder of any such provision or the remaining
provisions of this Agreement.


 


6.05         Interpretation


 


The article, section and paragraph headings included
in this Agreement have been used solely for convenience and shall not be used
in the interpretation of this Agreement. References to articles, sections and
paragraphs shall refer to such provisions in this Agreement unless otherwise
stated.


 


6.06         Waiver


 


The failure of either party at any time to require
performance by the other party of any provision of this Agreement shall not be
deemed a continuing waiver of that provision or a waiver of any other provision
of this Agreement and shall in no way affect the full right to require such
performance from the other party at any time thereafter.


 


6.07         Severability


 


This Agreement and the transaction contemplated herein
constitute one transaction and shall not be divisible in any manner. A breach
of any portion of this Agreement shall be deemed a breach of the whole
Agreement.


 


6.08         Counterparts


 


If photocopies or duplicates of the original of this
Agreement are signed by both parties, then each such originally signed document
shall be deemed to be an original of this Agreement.


 


6.09         Indemnification


 


CPM and TICNY shall hold harmless and defend and
indemnify the other party against any expenses, damages, liability, action,
cost or other claims, including attorney fees arising out of the other party’s
material breach of any duty or obligation hereunder or any claims made against
a party relating to, or arising out of, the other party’s willful misconduct or
gross negligence in performing, or in failing to perform, services hereunder.


 


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6.10         Arbitration


 


Any dispute or difference between CPM and TICNY
relating to the interpretation or performance of this Agreement, including its
formation or validity, or any transaction under this Agreement, whether arising
before or after termination, shall be submitted to arbitration.


 


Upon written request of any party, each party shall
choose an arbitrator and the two chosen shall select a third arbitrator. If
either party refuses or neglects to appoint an arbitrator within 30 days after
receipt of the written request for arbitration, the requesting party may
appoint a second arbitrator. If the two arbitrators fail to agree on the
selection of a third arbitrator within 30 days of their appointment, each of
them shall nominate three individuals, of whom the other shall decline two. The
current President of the National Association of Independent Insurers shall
appoint the third arbitrator from the two remaining nominees. All the
arbitrators shall be chosen from those submitted by the parties.


 


The parties hereby waive all objections to the
selection of the arbitrators, provided they are selecting in conformity with
this paragraph 6.10.


 


All
arbitrators shall be active or retired officers of insurance or reinsurance
companies, or Lloyd’s of London underwriters, and disinterested in the outcome
of the arbitration. Each party shall submit its case to the arbitrators within
30 days of the appointment of the third arbitrator.


 


The arbitrators shall have the power to determine all
procedural rules for the holding of the arbitration including but not limited
to inspection of documents, examination of witnesses and any other matter
relating to the conduct of the arbitration. The arbitrators shall interpret
this Agreement as an honorable engagement and not as merely a legal obligation;
they are relieved of all judicial formalities and may abstain from following
the strict rules of law. The arbitrators may award interest and costs. Each
party shall bear the expense of its own arbitrator and shall share equally with
the other party the expense of the third arbitrator and of the arbitration. The
arbitration shall occur in the State of New York and the arbitrators shall
apply the laws of the State of New York.


 


6.11                           Remittance
reports are to be furnished quarterly and settlement within 15 days of the
receipt of such reports. The report shall provide in reasonable detail the type
and nature of expenses.


 


6.12                           This
Agreement is entered into as of the date hereof by the parties hereto, but
implementation is subject in any case to the satisfaction of applicable
insurance regulatory requirements of New York, including any conditions such a regulator
may impose on the terms of this Agreement subsequent to the date hereof.


 


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


 


	
   

  	
  Tower
  Insurance Company of New York

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Francis M. Colalucci

  	
   

  
	
   

  	
   

  	
   Francis
  M. Colalucci

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CastlePoint
  Management Corp.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joel S. Weiner

  	
   

  
	
   

  	
   

  	
    Joel
  S. Weiner

  



 


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