Document:

REINSURANCE AGREEMENT

 Exhibit 10.10 
  
 EXECUTION COPY 
  
 REINSURANCE AGREEMENT 
  
 between 
  
 WINTERTHUR SWISS INSURANCE COMPANY 
  
 (hereinafter the
“Reinsurer”) 
  
 and 
  
 REPUBLIC UNDERWRITERS INSURANCE COMPANY 
  
 (hereinafter the “Company”) 
  

  
 This Reinsurance Agreement
(“Agreement”) is made and entered into by and between Winterthur Swiss Insurance Company, a foreign insurance company domiciled in Switzerland (“Reinsurer”), and Republic Underwriters Insurance Company, an insurance company
domiciled in Texas with executive offices located at 2727 Turtle Creek Boulevard, Dallas, Texas 75219 (“Company”). 
  
 WHEREAS, the Stock Purchase Agreement, dated as of May 9, 2003, by and among Republic Financial Services, Inc. (Texas), Republic Financial Services, Inc. (Nevada),
Winterthur U.S. Holdings, Inc. (only for purposes of Section 13.13 thereof) and RTXA, Inc. and RTXA Sub, Inc. (the “SPA”) provides that the Reinsurer and the Company shall enter into this Agreement. 
  
 DEFINITIONS 
  
 As used herein: 
  
 1. “Affiliated Companies” shall mean Republic-Vanguard Insurance Company, an Arizona
domiciled insurance company, Southern Insurance Company, a Texas domiciled insurance company, Southern Underwriters Insurance Company, an Oklahoma domiciled insurance company, Southern Vanguard Insurance Company, a Texas domiciled insurance company,
Republic Fire and Casualty Insurance Company, an Oklahoma domiciled insurance company, Republic Lloyds, a Texas Lloyds insurer, and Southern County Mutual Insurance Company, a Texas county mutual insurer. 
  
 2. “Covered Business” shall mean all binders,
policies and contracts of insurance or reinsurance of the Company and Affiliated Companies, to the extent that they cover risks located in Texas, written or renewed on or prior to August 29, 2003 (the “Closing Date”). 
  
 3. “Reserves” shall mean the reserves for loss
and loss adjustment expenses (but not unallocated loss adjustment expenses) established by the Company and Affiliated Companies arising from or related to Covered Claims as reflected in the accounting records of the Company and Affiliated Companies
including case reserves for reported but unpaid claims and IBNR claim reserves; provided however, the amount of Reserves as of the Closing Date is specially agreed between the parties to be
$            . 
  
 4. “Net Retained Losses” shall mean the sums paid by the Company with respect to Covered Claims after the Closing Date in settlement of claims and suits and in satisfaction of awards and
judgments, including prejudgment interest when added to a judgment, and all loss adjustment expenses sustained by the Company including, but not limited to, expenses sustained in connection with investigation, adjustment, appraisal, defense and
settlement of all claims and suits, satisfaction of judgments, resistance to or negotiations concerning a loss and all interest on judgments, excluding, however, unallocated loss adjustment expenses, including the Company’s internal office
expense and salaries of its employees; provided, however, that Net Retained Losses shall not include participation in involuntary pools, association or other residual markets mechanisms whether classified as insurance or reinsurance,
including, without limitation, payments to state guaranty or insolvency funds, organizations or associations or similar entities; and, provided, further, however, that Net Retained Losses shall not include judgments in
excess of original policy limits or interest (whether pre-judgment or post-judgment) thereon, ex gratia 

  

 
payments, punitive damages, exemplary damages or any other extra-contractual obligations of any type or nature, or any loss adjustment expenses in connection
with the foregoing (together, “Excess Payments”), except and to the extent that any such Excess Payment arises out of the conduct, act or omission (x) of the Company or the Affiliated Companies prior to the Closing Date or (y) of the
Representative retained by Reinsurer pursuant to Article IX hereof. 
  
 All
salvages, recoveries, payments and reversals or reductions of verdicts or judgments and all costs of obtaining such salvage, recovery, payment or reversal or reduction of a verdict or judgment and including amounts actually recovered under other
insurance or reinsurance applicable to the Covered Claims, shall be added to or deducted from Net Retained Losses when collected or paid. Nothing herein shall be construed to mean losses are not recoverable until the ultimate Net Retained Losses of
the Company have been finally ascertained. 
  
 5.
“Covered Claims” means all claims for actual or alleged injury, damage, expense, cost or loss of any kind (including, but not limited to, bodily injury, mental anguish, personal and advertising injury, property damage,
loss of business income, loss of use, debris removal, diminution in value, economic loss, attorneys’ fees or other defense costs, extra-contractual damages, punitive or exemplary damages, the cost of abating, testing, monitoring, cleaning,
replacing, removing, containing, treating, detoxifying, neutralizing, remediating or disposing) asserted by or against any policyholder under Covered Business initially presented to the Company or Affiliated Companies prior to January 1, 2006, and
which arise out of, consist of, or are caused directly or indirectly by contact with, exposure to, contamination by, or discharge, dispersal, seepage, migration, release, escape, growth, proliferation, spread, presence, existence, or any activity
of, any “mold, fungi or other microbes.” 
  
 6.
“Mold, fungi or other microbes” means any type or form of fungus (including mold, mildew or yeast), bacteria, virus, or microorganism, however caused, and any spores, toxins, mycotoxins, pathogens, allergens, vapors,
gases, odors, byproducts or other substances produced or released by any of the foregoing. 
  
 7. “Net Incurred Losses” means the sum of Net Retained Losses and Reserves as of any calendar quarter end after the Closing Date. 
  
 8. “Representative” shall have the meaning set forth in Article IX. 
  

 2 

 ARTICLE I 
 REINSURANCE AFFORDED 
  
 The Company
shall cede to the Reinsurer, and the Reinsurer shall accept and reimburse the Company, 80% of the first five million dollars of the Company’s Net Retained Losses under the Covered Claims in excess of the Reserves as of the Closing Date and 90%
of the Company’s Net Retained Losses under the Covered Claims in excess of the Reserves as of the Closing Date and five million dollars, according to the terms and conditions hereof. The Reinsurer’s liabilities under this Agreement are not
subject to any dollar limit. 
  
 ARTICLE II 
 LOSS SETTLEMENT 
  
 All loss settlements, adjustments and compromises made by the Company (including those made by the Representative on behalf of the Company pursuant to Article IX hereof)
shall be unconditionally binding upon the Reinsurer in proportion to its participation under this Agreement. 
  
 ARTICLE III 
 TERM 
  
 This Agreement shall be in force immediately following the Closing Date, or if approval is
required by the Department of Insurance of the State of Texas and has not been obtained by the Closing Date, upon such approval, and shall remain in force until all Covered Claims have been finally settled or until this Agreement has been terminated
as hereinafter provided. The Reinsurer agrees that it shall not rely on any fact, matter or circumstance so as to entitle the Reinsurer, and it shall not be entitled to, cancel, avoid or rescind this Agreement for any reason whatsoever. 

 
 ARTICLE IV 
 TERMINATION 
  
 This Agreement shall terminate upon the final settlement of all Covered Claims. Alternatively, this Agreement may be terminated with the mutual written consent of the parties upon such terms as are agreed to by the parties. Upon
termination, the Company shall provide to the Reinsurer a final accounting for Net Incurred Losses through the date of termination. The balance due either party as of the date of termination shall be settled in accordance with Article V hereof with
the exception, as noted in the previous sentence, that Net Incurred Losses as of the alternative termination date shall be used for the final settlement in lieu of Net Retained Losses. 
  
 ARTICLE V 
 SETTLEMENT 
  
 If, and when, the Net Retained Losses exceed
the sum of the Reserves as of the Closing Date, the liability of the Reinsurer shall attach and shall be calculated, determined, reported, and paid as hereinafter provided until all such liability under this Agreement is extinguished. 
  
 A. Within forty-five (45) days after the end of the calendar quarter during
which the Net Retained Losses exceed the sum of the Reserves as of the Closing Date and each calendar quarter thereafter, the Company shall report to the Reinsurer the following information: 
  
 1. Net Retained Losses from the Closing Date through the
calendar quarter end; 
  

 3 

 2. Reserves as of the Closing Date; 
  
 3. Reserves for unsettled Covered Claims as of the calendar
quarter end; 
  
 4. The amount by which item 1
above exceeds item 2 above; 
  
 5. The amount by
which item 4 above exceeds or is exceeded by the item 4 amount from the report for preceding calendar quarter end. 
  
 6. Net Incurred Losses 
  
 B. Within sixty (60) days after the calendar quarter end, the Reinsurer or the Company as may be indicated by the current quarter calculation shall pay
the other the item A.5. amount due pursuant to Article I. 
  
 C.
All amounts shall be due and payable in U.S. currency. 
  
 D.
Within forty-five (45) days after the end of each calendar quarter prior to the attachment of liability of the Reinsurer under this Agreement, the Company shall report to the Reinsurer items A.1., A.2. and A.3. above. 
  
 ARTICLE VI 
 SPECIAL RULES FOR DETERMINING 
 COVERED BUSINESS AND COVERED CLAIMS

  
 Notwithstanding any provision in this Agreement to the contrary, as
between the parties to this Agreement (and irrespective of whether the provisions of this Article VI apply or do not apply to policyholders of the Company or Affiliated Companies) it is agreed that: 
  
 A. In determining whether and to what extent (i) a claim has arisen under a
policy constituting part of the Covered Business and (ii) a claim is a Covered Claim, a claim which arises from a continuous event (for example, a long-standing slow pipe leak) shall be allocated (including as to the measure of damages)
proportionately across all relevant accident years or portions thereof. 
  
 B. Whether or not a Covered Claim has occurred and the measure of damages resulting therefrom will be determined on the basis of the laws of the State of Texas (which shall include statutes, regulations and judicial opinions not subject to
appeal) as of the Closing Date. 
  
 ARTICLE VII 

RESERVE FUNDING 
  
 A. It is the intent of the Company and the Reinsurer that the Company shall be able to obtain statutory financial statement credit (to the extent properly
available under statutory accounting principles) for the reinsurance ceded hereunder. If such credit is otherwise unavailable, the Reinsurer agrees, at Reinsurer’s option, either to obtain unconditional, clean and irrevocable letters of credit
issued by a member of the federal reserve system acceptable to the applicable 

  

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regulatory authority, or by establishing and depositing assets in a trust account in any similarly qualified bank. The letters of credit or trust assets
shall be in such amount and documented in such form and manner as may be required by the applicable regulatory authority so as to allow the Company to take credit in its statutory financial statements filed with the Texas Department of Insurance or
other applicable regulatory authority for the full amount of any funds due from and Reserve liabilities ceded to the Reinsurer hereunder. 
  
 B. Notwithstanding any other provision of this Agreement, the Company, or any successor of the Company by operation of law, including without limitation
any liquidator, rehabilitator, receiver, or conservator of the Company, may draw upon such letters of credit or the assets of such trust account at any time (including, but not limited to, the receipt of notice of non-renewal of such letters of
credit), such withdrawal to be applied without diminution because of the insolvency of the Company or the Reinsurer, only for the following purposes: 
  
 1. to reimburse the Company for the Reinsurer’s share of premiums returned to the owners of policies reinsured under this Agreement
on account of cancellations of such policies; 
  
 2. to reimburse the Company for the Reinsurer’s share of surrenders and benefits or losses paid by the Company pursuant to the provision of the policies reinsured under this Agreement; 
  
 3. in the event of notice of nonrenewal of the letters of
credit or termination of the trust, to fund an account with the Company in an amount at least equal to the deduction, for reinsurance ceded, from the Company’s liabilities for policies ceded under this Agreement, such account to include, but
not be limited to, amounts for policy reserves, claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums reserves; and 
  
 4. to pay any other amount due the Company under this Agreement. 
  
 C. The amount of required funding, if any, shall be calculated as of any
given calendar quarter end by subtracting from Net Incurred Losses the sum of (i) the Reserves as of the Closing Date and (ii) the aggregate payments made by the Reinsurer hereunder prior to the calendar quarter end. 
  
 ARTICLE VIII 
 INSOLVENCY 
  
 A. In the event of the insolvency of the Company, all reinsurance payable under this Agreement shall be payable directly to the Company or its liquidator, receiver, or other statutory successor in accordance with the
policies, contracts, or binders of insurance or reinsurance reinsured hereunder, without diminution because of such insolvency. It is agreed, however, that the liquidator, receiver, or other statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of any claim against the Company arising out of or in connection with the Covered Business within a reasonable time after such claim is filed in the insolvency proceedings, and it is further agreed that during
the pendency of such claim the Reinsurer may investigate the same and interpose, at its own expense, in the proceeding wherein such claim is to be adjudicated, any defense(s) otherwise available to the Company or its liquidator, receiver or other

  

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statutory successor; that the expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the insolvent Company as part of
the expense of liquidation to the extent of a proportionate share of the benefits that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. 
  
 B. The parties further agree and understand that as to all reinsurance made, ceded, renewed or otherwise becoming effective
hereunder, the reinsurance shall be payable by the Reinsurer directly to the Company or to its liquidator, receiver or statutory successor, except where the Reinsurer, as permitted by statute or regulation, has expressly assumed in writing such
policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policy and in substitution for the obligation of the Company to such payee. 
  
 ARTICLE IX 
 ADMINISTRATION 
  
 A. Immediately following
the Closing Date and within forty-five (45) days after the end of each calendar quarter thereafter, the Company will provide the Reinsurer a bordereau of outstanding Covered Claims and outstanding Reserves therefor. Within (30) days after learning
thereof, the Company will advise the Reinsurer in writing of material developments for each Covered Claim for which incurred loss and expense is reasonably likely to exceed $50,000 (a “Claims Notice”). Such Claims Notice shall be in the
form attached hereto as Exhibit X. Failure to provide a Claims Notice in a timely manner shall not be deemed a waiver of the Company’s rights as a reinsured hereunder, except to the extent that such failure causes the Company to suffer
actual prejudice. 
  
 B. Upon receipt of a Claims Notice, the
Reinsurer may at any time notify the Company that the Reinsurer elects to have the Representative (as defined below) participate with the Company in the administration and defense of the claim which is the subject of the Claims Notice (a
“Participating Claim”). Until such time as the Reinsurer notifies the Company of its election to have the Representative participate in the administration and defense of the Participating Claim, the administration and defense of such
Participating Claim described in such Claims Notice will remain fully with the Company. If the Reinsurer delivers such notice, the Company shall cooperate fully at the Company’s expense (which expense will constitute Net Retained Losses under
this Agreement) with the Representative in respect of the Participating Claim. 
  
 C. For purposes of this Agreement, the Representative shall mean General Casualty of Wisconsin or such alternate persons or entities named by the Reinsurer (which may be an affiliate of the Reinsurer) and consented to
by the Company, such consent not to be unreasonably withheld. Properly invoiced fees and expenses of the Representative shall be promptly paid by the Company and will constitute Net Retained Losses under this Agreement. The Representative is
authorized to monitor the Company’s performance of claims administrative services in respect of Participating Claims and is further authorized to (but may decline to) manage and control the disposition of disputes and litigation in respect of
Participating Claims in the name of or on behalf of the Company or Affiliated Companies as appropriate; provided, however, that if litigation has been instituted in respect of a Participating Claim that includes a claim in excess of
policy limits or seeks extra-contractual damages that would not be included in Net Retained Losses (an “Excess Claim”), the Company shall at its expense (which expense will not constitute Net Retained Losses under this 

  

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Agreement) control the defense of such Excess Claim and such Excess Claim may not be settled by the Representative unless the Company has consented to such
settlement, which consent shall not be unreasonably withheld. 
  
 ARTICLE X 
 ARBITRATION 
  

A. In the event of differences arising between the Company and the Reinsurer under this Agreement, such differences shall be submitted to arbitration,
which may be commenced upon written demand by one party upon the other. One arbiter (each arbiter, an “Arbiter”) shall be chosen by the Company, the other by the Reinsurer, and an umpire (the “Umpire”) shall be chosen by the two
Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested accounting officers of property and casualty insurance companies licensed to do business in the United States. In the event that either Party should
fail to choose an Arbiter within 15 days following a written request by the other Party to do so, the requesting Party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree
upon the selection of an Umpire within 15 days following their appointment, the Umpire shall be chosen by the American Arbitration Association. 
  
 B. Each Party shall present its case to the Arbiters within 60 days following the date of appointment of the Umpire, unless the Parties mutually agree to
an extension of time. A final decision shall be rendered within 60 days of the submission of all relevant issues in dispute between the parties. The decision of the Arbiters shall be final and binding on the Parties; but failing to agree, they shall
call in the Umpire and the decision of the majority among the Umpire and the Arbiters shall be final and binding upon the Parties. Judgment upon any such final decision may be entered in any court of competent jurisdiction. 
  
 C. Each Party shall bear the expense of its own Arbiter, and shall jointly
and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one Party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided
between the two Parties. 
  
 D. Any arbitration proceeding shall
take place at a location mutually agreed upon by the Parties, or, if they cannot agree, in Dallas, Texas. Notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the laws of the State of Texas without
giving effect to any choice or conflict of laws provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of laws of any jurisdiction other than the State of Texas. 
  
 ARTICLE XI 
 MODIFICATION 
  
 This Agreement may be modified or altered in any of its terms upon the mutual consent of the parties as expressed in a written addendum to this Agreement signed by each of the parties. No other modification or alteration of the terms and
conditions of this Agreement shall be recognized or enforceable. If required by law, such addendum shall be effective only upon notice to and/or approval by applicable state insurance departments. 
  

 7 

 ARTICLE XII 
 OFFSET 
  
 The Reinsurer and the
Company may offset their respective obligations arising under this Agreement and any other reinsurance agreements between the Reinsurer and the Company. 
  
 ARTICLE XIII 
 ERRORS AND OMISSIONS

  
 Inadvertent delays, errors or omissions made in connection with this
Agreement or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided that such error or omission is rectified as soon as possible after discovery
and does not cause either party actual prejudice. 
  
 ARTICLE
XIV 
 INSPECTION OF RECORDS 
  
 The books and records pertaining to the coverage provided under this Agreement maintained by any party hereto shall at all reasonable times be subject to inspection by an
authorized representative of the other party hereto. This provision shall survive the termination of this Agreement. 
  
 ARTICLE XV 
 GENERAL PROVISIONS 
  
 A. This Agreement is intended as the entire agreement of the parties with
respect to the Covered Claims, and supersedes and subsumes all prior agreements between the parties, whether oral or written, with respect to the matters addressed herein. 
  
 B. The reinsurance provided by Reinsurer under this Agreement is for the sole benefit of the Company and its successors at
law and shall not create any rights on the part of any other party, including without limitation policyholders of and claimants against the Company. 
  
 C. This Agreement may not be assigned by any party without the prior written consent of the other party and, if required by applicable law, upon notice to
and approval by the applicable state insurance departments. 
  
 D.
This Agreement shall inure to the benefit of and be binding upon the parties, their heirs, successors, and assigns. 
  
 E. The titles and captions of the paragraphs and sections of this Agreement are included solely for convenience of reference and are not a part of, nor
shall they be used to construe any term or provision of, this Agreement. 
  
 F. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 
  
 G. If any provision of this Agreement shall prove or be held to be invalid by any court or regulatory agency of competent authority and jurisdiction, such
provision shall be deemed invalid 

  

 8 

 
and shall be severed, such severance not otherwise affecting the remaining provisions of this Agreement. 
  
 H. Subject to the terms and conditions of Article X, the Reinsurer agrees
that, in the event of its failure to perform its obligations under this Agreement or in the event that the Company seeks to enforce any of its rights or remedies hereunder, the Reinsurer (a) shall submit to the jurisdiction of any court of competent
jurisdiction within the United States, (b) shall comply with all requirements necessary to give such court jurisdiction and (c) shall abide by the final decision of such court or of any appellate court in the event of any appeal. The Reinsurer
hereby designates CT Corporation System at its offices in New York, New York as Reinsurer’s true and lawful attorney upon which may be served any lawful process in any action, suit or proceeding instituted on behalf of the Company. 

 
 Executed to take effect immediately following the Closing Date. 
  

													
	 Winterthur Swiss Insurance Company
	 	 Republic Underwriters Insurance Company

					
	By:	 	[SIGNATURE ILLEGIBLE]	 	 	 	By:	 	/s/    BRUCE R.
MILLIGAN        
	 	 	 Name:
	 	 	 	 	 	 	 	 Name:
	 	Bruce R. Milligan
	 	 	 Title:
	 	Managing Director	 	 	 	 	 	 Title:
	 	President
						
	By:	 	/s/    DANIEL
STIEFEL        	 	 	 	 	 	 	 	 
	 	 	 Name:
	 	Daniel Stiefel	 	 	 	 	 	 	 	 
	 	 	 Title:
	 	Vice President	 	 	 	 	 	 	 	 

  

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 EXHIBIT X 

Form of Claims Notice 
  
  ̈
Original      ̈
Supplement                                       
  
  
                                   Claims Notice 
  

															
								
	Insured	 	Name	 	 	 	 	 	Agent	 	Name	 	 	 	#
	 	 	

								
	 	 	Policy No.	 	 	 	 	 	Mortgagees	 	First	 	 	 	 
								
	 	 	Claim No.	 	 	 	 	 	 	 	Second	 	 	 	 
	
	 	

							
	Property Risk
Address/	 	Address	 	 	 	 	 	Occupancy/
Structure	 	 ̈ Owner          ̈ Tenant	 	 
	Auto Garage
Location	 	City, State	 	 	 	 	 	  
 Covered
Driver Name
	 	 	 	 	 	 
	 	  
 Zip
	 	 	 	 	 	 	 	 	 	 	 
	 	  
 Description
	 	 	 	 	 	 	 	 	 	 	 
	
	 	

								
	Coverage	 	Policy Type	 	 	 	 	 	Loss	 	Cause	 	 	 	 
								
	 	 	Period	 	 	 	 	 	 	 	D.O.L.	 	Time	 	 
								
	 	 	Orig Eff Date	 	 	 	 	 	 	 	 	 	 	 	 
								
	 	 	Limits	 	 	 	 	 	 	 	Date Reported	 	CAT #	 	 
								
	 	 	Endorsements	 	 	 	 	 	 	 	 	 	 	 	 
	

							
	Recovery	 	 ̈ Yes          ̈ No	 	 	 	 	 	 	 	 	 	 
								
	 	 	Explain	 	 	 	 	 	 	 	 	 	 	 	 
								
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
								
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	Payment/
Reserve	 	Date	 	Current Reserve	 	        Reserve Change	 	Payment to Date	 	    Total Incurred	 	 
	 	

	
	

	Facts	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	Claimant(s)	 	1	 	 	 	 	 	2	 	 	 	 	 	 
								
	 	 	3	 	 	 	 	 	4	 	 	 	 	 	 
								
	 	 	5	 	 	 	 	 	6	 	 	 	 	 	 
	

							
	 	 	Adjuster	 	Supervisor	 	        Manager	 	Office	 	    DateAMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

 Exhibit 10.11 
  
 EXECUTION COPY 
  

  
 AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT 
  
 among 
  
 REPUBLIC COMPANIES GROUP, INC. 
  
 and 
  
 CERTAIN STOCKHOLDERS OF THE COMPANY DESIGNATED HEREIN 
  
 Dated as of December 9 , 2004 
  

  
 TABLE OF CONTENTS

  

					
	 	  	 	  	Page No.

	 ARTICLE I DEFINITIONS AND GENERAL TERMS
	  	2
	 SECTION 1.1
	  	 Definitions and General Considerations
	  	2
	 SECTION 1.2
	  	 Term of Agreement
	  	7
		
	 ARTICLE II GENERAL TRANSFER RESTRICTIONS
	  	7
	 SECTION 2.1
	  	 Transfer Restrictions
	  	7
	 SECTION 2.2
	  	 Involuntary Transfers
	  	8
	 SECTION 2.3
	  	 Prohibited Transfers
	  	8
		
	 ARTICLE III CORPORATE GOVERNANCE AND VOTING AGREEMENT
	  	8
	 SECTION 3.1
	  	 Corporate Governance
	  	8
	 SECTION 3.2
	  	 Covenant to Vote, etc.
	  	10
	 SECTION 3.3
	  	 No Inconsistent Agreements or Proxies
	  	11
		
	 ARTICLE IV PARTICIPATION RIGHTS AND OBLIGATIONS
	  	11
	 SECTION 4.1
	  	 Right of First Refusal
	  	11
	 SECTION 4.2
	  	 Co-Sale Right
	  	13
	 SECTION 4.3
	  	 Preemptive Rights
	  	14
		
	 ARTICLE V SALE OF THE COMPANY; FORCED SALE RIGHTS
	  	16
	 SECTION 5.1
	  	 Approved Sale by Stockholders
	  	16
	 SECTION 5.2
	  	 Forced Sale Right
	  	16
	 SECTION 5.3
	  	 Participation and Conditions
	  	17
		
	 ARTICLE VI RIGHTS RESPECTING MANAGEMENT STOCKHOLDERS’ EQUITY
	  	18
	 SECTION 6.1
	  	 Call Rights on Common Stock of Management Stockholders
	  	18
	 SECTION 6.2
	  	 Closing
	  	19
		
	 ARTICLE VII FINANCIAL INFORMATION AND NOTICES
	  	20
	 SECTION 7.1
	  	 Financial Statements and Other Reports
	  	20
	 SECTION 7.2
	  	 Notices
	  	21
		
	 ARTICLE VIII AFFIRMATIVE COVENANTS
	  	21
	 SECTION 8.1
	  	 Preservation of Corporate Existence and Related Matters
	  	21
	 SECTION 8.2
	  	 Maintenance of Property
	  	21
	 SECTION 8.3
	  	 Maintenance of Insurance
	  	21
	 SECTION 8.4
	  	 Payment of Taxes and Governmental Charges
	  	22
	 SECTION 8.5
	  	 Accounting Methods; Financial Records
	  	22
	 SECTION 8.6
	  	 Compliance With Laws
	  	22
	 SECTION 8.7
	  	 Visits and Inspections
	  	22
	 SECTION 8.8
	  	 Conduct of Business
	  	22
		
	 ARTICLE IX NEGATIVE COVENANTS
	  	22
	 SECTION 9.1
	  	 Amendment of Organizational Documents
	  	22
	 SECTION 9.2
	  	 Redemptions and Repurchases; Payment of Dividends
	  	22
	 SECTION 9.3
	  	 Mergers and Liquidations
	  	23
	 SECTION 9.4
	  	 Sale of Assets
	  	23
	 SECTION 9.5
	  	 Approval of Annual Budget
	  	23

  

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	 SECTION 9.6
	  	 Investments and Acquisitions
	  	23
	 SECTION 9.7
	  	 Loans and Advances
	  	23
	 SECTION 9.8
	  	 Capital Expenditures
	  	23
	 SECTION 9.9
	  	 Debt
	  	23
	 SECTION 9.10
	  	 Issuance of Equity Securities
	  	23
	 SECTION 9.11
	  	 Agreements and Arrangements with Management
	  	24
	 SECTION 9.12
	  	 Transactions with Affiliates
	  	24
	 SECTION 9.13
	  	 Amendments of Certain Material Documents
	  	24
	 SECTION 9.14
	  	 Settlement of Litigation
	  	24
	 SECTION 9.15
	  	 Initial Public Offering
	  	24
	 SECTION 9.16
	  	 Material Contracts
	  	24
	 SECTION 9.17
	  	 Voluntary Bankruptcy
	  	24
	 SECTION 9.18
	  	 Inconsistent Agreements
	  	24
		
	 ARTICLE X MISCELLANEOUS
	  	25
	 SECTION 10.1
	  	 Legend
	  	25
	 SECTION 10.2
	  	 Specific Performance and Injunctive Relief; Arbitration
	  	25
	 SECTION 10.3
	  	 Headings
	  	26
	 SECTION 10.4
	  	 Entire Agreement
	  	26
	 SECTION 10.5
	  	 Notices
	  	26
	 SECTION 10.6
	  	 Applicable Law
	  	27
	 SECTION 10.7
	  	 Severability
	  	27
	 SECTION 10.8
	  	 Successors and Assigns
	  	27
	 SECTION 10.9
	  	 Defaults
	  	27
	 SECTION 10.10
	  	 Regulatory Requirements
	  	28
	 SECTION 10.11
	  	 State Insurance Approvals
	  	28
	 SECTION 10.12
	  	 Recapitalizations, Exchanges, Etc.
	  	28
	 SECTION 10.13
	  	 Additional Stockholders
	  	28
	 SECTION 10.14
	  	 Amendments; Waivers
	  	28
	 SECTION 10.15
	  	 Aggregation of Ownership
	  	29
	 SECTION 10.16
	  	 Counterparts
	  	29

  
 EXHIBITS

  

					
			
	Exhibit A	  	-	  	 By-laws

	Exhibit B	  	-	  	 Investor Rights Agreement Supplement

  

 ii 

  
 AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT 
  
 THIS AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT (as amended or supplemented, this “Agreement”) is dated as of December 9, 2004, by and among REPUBLIC COMPANIES GROUP, INC. (f/k/a RTXA, INC.), a Delaware corporation (the “Company”), BANC OF AMERICA
CAPITAL INVESTORS SBIC L.P. (f/k/a/ BANCAMERICA CAPITAL INVESTORS SBIC I L.P.), a Delaware limited partnership (“Banc of America”), GREENHILL CAPITAL PARTNERS, L.P., a Delaware limited partnership, (“GCP”), GREENHILL CAPITAL
PARTNERS (CAYMAN), L.P., a Cayman Islands limited partnership, (“GCP Cayman”), GREENHILL CAPITAL PARTNERS (EXECUTIVE), L.P. , a Delaware limited partnership, (“GCP Executive”), GREENHILL CAPITAL, L.P. , a Delaware limited
partnership, (“GC” and together with GCP, GCP Cayman and GCP Executive, the “Greenhill Investors”), BRAZOS EQUITY FUND 2000, L.P., a Texas limited partnership (“Brazos”), NORWEST EQUITY PARTNERS VI, LP, a Minnesota
limited partnership (“NEP VI”), NORWEST EQUITY PARTNERS VII, LP, a Minnesota limited partnership (“NEP VII” and, together with NEP VI, “NEP”), 21ST CENTURY GROUP EQUITY FUND, L.P., a Delaware limited partnership (“21st
Century Equity”), 21ST CENTURY GROUP
COINVESTORS I, L.P., a Texas limited partnership (“21st Century Coinvestors” and, together with
21st Century Equity, “21st Century”), BRUCE W. SCHNITZER, a resident of New York (“Schnitzer”), JOHN S. STRUCK, a resident of Connecticut (“Struck”), PATRICK MCLAUGHLIN, a resident of Pennsylvania
(“McLaughlin”), MARY LOUISE MCLAUGHLIN AS CUSTODIAN FOR CHRISTINE MCLAUGHLIN UNDER THE PENNSYLVANIA UNIFORM TRANSFERS TO MINORS ACT (“Christine”) and MARY LOUISE MCLAUGHLIN AS CUSTODIAN FOR KATHRYN MCLAUGHLIN UNDER THE
PENNSYLVANIA UNIFORM TRANSFERS TO MINORS ACT (“Kathryn” and together with Schnitzer, Struck, McLaughlin and Christine, the “Wand Stockholders”), REPUBLIC CO-INVESTORS, L.P., a Delaware limited partnership, PARKER W. RUSH
(“Rush”), MARTIN CUMMINGS (“Cummings”) and STEPHEN MUDD (“Mudd”). 
  
 STATEMENT OF PURPOSE 
  
 The Company and certain of its stockholders have entered into (a) an Investor Rights Agreement, dated as of May 9, 2003 (the “Original Agreement”), and (b) a First Amendment to Investor Rights Agreement, dated as of August 29,
2003 (the “First Amendment”). The Company and the Stockholders desire to amend and restate the Original Agreement, as amended by the First Amendment and as further amended hereby, for the purpose of agreeing to certain aspects of their
relationship as holders of the capital stock of the Company. 
  

 NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 ARTICLE I 
 DEFINITIONS AND GENERAL TERMS

  
 SECTION 1.1 Definitions and General Considerations.

  
 (a) Definitions. For the purposes of this Agreement, in
addition to any terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth below: 
  
 “Acquisition Documents” means that certain Stock Purchase Agreement, dated as of May 9, 2003, by and among, the Company, RTXA Sub, Inc.,
a Delaware corporation, Republic Financial Services, Inc., a Texas corporation, Republic Financial Services, Inc., a Nevada corporation, and Winterthur U.S. Holdings, Inc. (solely for purposes of Section 13.13 thereof) and each other document and
instrument executed pursuant to such agreement in connection with the acquisition contemplated therein, in each case, as such documents are amended, restated, supplemented or modified from time to time in accordance with their terms. 
  
 “Affiliate” means, with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person; provided, that in no event shall a portfolio company of any Stockholder be deemed to be an Affiliate of such Stockholder
for purposes of Section 2.1. For the purposes of this definition, “control,” when used with respect to any Person, means the ownership, directly or indirectly, of more than ten percent (10%) of the voting securities of such Person or the
power to otherwise direct the management and policies of such Person whether by contract or otherwise. 
  
 “Available Funds” means, with respect to any redemption of Company Securities pursuant to Article VI, the funds of the Company that the
Board determines to be available for such redemption after taking into account the future funding needs of the Company and funds which may be available under any credit facility or other source of financing; provided, that the amount of
Available Funds shall in no event exceed the amount of funds of the Company, if any, available for such redemption under Section 160 of the Delaware General Corporation Law. 
  
 “Board” means the Board of Directors of the Company. 
  
 “Budget” has the meaning assigned thereto in Section 9.5.

  
 “Business Day” means any day other than a
Saturday, Sunday or any other day on which national banking associations in the States of Texas, North Carolina and New York are generally closed for the conduct of commercial banking business. 
  
 “By-laws” means the By-laws of the Company as in effect on
the date hereof, a copy of which is attached hereto as Exhibit A, as amended from time to time. 
  
 “Cause” means, with respect to a Management Stockholder, the definition of “cause” as set forth in any then effective
employment agreement between the Company and such person; provided, that, if “cause” is not defined in such a document or there is not an employment agreement between the Company and such person effective on the date of
determination, then “Cause” shall mean the occurrence of any of the following events: (a) such Person’s failure substantially to perform their duties of employment (other than as a result of total or partial incapacity due to physical
or mental illness) for a period of thirty (30) days following written notice by the Company to such Person of such failure, (b) dishonesty in the performance of their 

  

 2 

 
duties of employment or any material breach of any fiduciary duty to the Company, (iii) any act or acts on their part constituting a felony under the laws of
the United States or any state thereof or (iv) any other act or omission which is materially injurious to the financial condition or business reputation of the Company or any of its Subsidiaries or Affiliates. 
  
 “Certificate of Incorporation” means the Amended and
Restated Certificate of Incorporation of the Company, as amended or restated from time to time. 
  
 “Class A Common Stock” means the Class A Voting Common Stock of the Company, par value $0.01 per share, as described in the Certificate
of Incorporation. 
  
 “Class B Common Stock”
means the Class B Non-voting Common Stock of the Company, par value $0.01 per share, as described in the Certificate of Incorporation. 
  
 “Closing Date” has the meaning assigned thereto in the Securities Purchase Agreement. 
  
 “Common Equivalents” means, without duplication, (a) the
Common Stock, (b) any security or obligation which by its terms is exercisable for or convertible into shares of Common Stock and (c) any option or other subscription or purchase right to acquire, directly or indirectly, Common Stock. 
  
 “Company Securities” means the Preferred Stock and the
Common Equivalents. 
  
 “Common Stock” means the
Class A Common Stock, Class B Common Stock or both, as the context may require. 
  
 “Debt” means, with respect to any Person, (a) all liabilities, obligations and indebtedness for borrowed money, including, but not limited to, obligations evidenced by bonds, debentures, notes or
other similar instruments of any such Person, (b) all obligations to pay any deferred purchase price for property or services of any such Person, (c) all obligations of any such Person as lessee under capital leases, (d) all Debt of any other Person
secured by a lien on any asset of any such Person, (e) all Guaranty Obligations of any such Person and (f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn;
provided, that “Debt” shall not include trade payables of such Person incurred in the ordinary course of business and not more than ninety (90) days past due. 
  
 “Excluded Transfer” means a Transfer by any Stockholder pursuant to Sections 2.1, 2.2, 4.2 (other than as
the Selling Stockholder), 5.1, 5.2 or 6.1 hereof, pursuant to Section B.5 of Article FOURTH of the Certificate of Incorporation or in a redemption effected pursuant to a Wand Consulting Agreement. 
  
 “Fair Market Value” means, with respect to any Company
Securities, an amount determined in good faith by the Board to be the fair market value of those Company Securities, without minority ownership discount or discount for restricted transferability. 
  
 “Fiscal Year” means the annual accounting period of the
Company. 
  

 3 

 “Fully Diluted Shares” means, as of any date of determination and without duplication,
all shares of Common Stock and all shares of such Common Stock issuable upon exercise or conversion of any Common Equivalents, in each case outstanding on such date of determination. 
  
 “GAAP” means, as of any date of determination, United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the
circumstances as of such date of determination. 
  
 “Good
Reason” means, with respect to a Management Stockholder, the definition of “good reason” as set forth in any then effective employment agreement between the Company and such Person; provided, that, if “good
reason” is not defined in such a document or there is not an employment agreement between the Company and such person effective on the date of determination, then “Good Reason” shall mean the occurrence of any of the following events:
(a) a material diminution in such Person’s status, title, position or responsibilities or (b) such Person’s principal place of work being relocated by a distance of 100 miles or more from the location at which they worked immediately prior
the date of this Agreement. 
  
 “Governmental
Authority” means any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. 
  
 “Greenhill Representative” means GCP or any other Greenhill Investor as designated by the holders of a majority of the Common Stock held
by Greenhill Investors in a written notice to the Company. 
  
 “Guaranty Obligation” means, with respect to any Person, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Debt of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or (b) entered into for
the purpose of assuring in any other manner the obligee of such Debt of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term Guaranty Obligation shall not include
endorsements for collection or deposit in the ordinary course of business. 
  
 “Independent Third Party” means any Person who, immediately prior to a Sale of the Company, (a) does not own in excess of 5% of the Fully Diluted Shares, (b) is not an Affiliate of any owner of 5% or
more of the Fully Diluted Shares and (c) is not the spouse or descendant (by birth or adoption) of any owner of 5% or more of the Fully Diluted Shares. 
  
 “Initial Public Offering” means the initial public offering of the Common Stock pursuant to a registration statement declared effective
under the Securities Act, underwritten by an investment banking firm of national reputation. 
  

 4 

 “Investor Stockholders” means the collective reference to Banc of America, the Greenhill
Investors, Brazos, the NEP Investors, 21st Century and the Wand Stockholders and any of their permitted transferees,
and the term “Investor Stockholder” means any such Person. 
  
 “Involuntary Transfer” means any Transfer, proceeding or action (other than pursuant to Sections 2.1, 4.1, 4.2, 5.1, 5.2 or 6.1 hereof, pursuant to Section B.5 of Article FOURTH of the Certificate of Incorporation or
pursuant to a Wand Consulting Agreement) by or in which a Stockholder shall be deprived or divested of any right, title or interest in or to any Company Securities, including any seizure under levy of attachment or execution, any Transfer in
connection with a foreclosure upon a pledge, any Transfer in connection with bankruptcy (whether pursuant to the filing of a voluntary or an involuntary petition under the Federal Bankruptcy Code of 1978, or any modifications or revisions thereto)
or other court proceeding to a debtor-in-possession, trustee in bankruptcy or receiver or other officer or agency, any Transfer to a state or to a public officer or agency pursuant to any statute pertaining to escheat or abandoned property, any
Transfer pursuant to a separation agreement or divorce, equitable or community or marital property distribution, judicial decree or other court order relating to the division or partition of property between spouses or any Transfer, in case of the
death of an individual Stockholder, by will or by the laws of intestate succession, to the executors, administrators, testamentary trustees, legatees or beneficiaries of such Stockholders. 
  
 “Management Stockholders” means the collective reference to
Rush, Cummings, Mudd and any other officers or employees of the Company that acquire Company Securities after the date hereof (whether pursuant to the exercise of options under any Company stock option plan or otherwise) and join this Agreement, and
the term “Management Stockholder” means any such Person. 
  
 “Material Adverse Effect” means, with respect to the Company, a material adverse effect on the properties, business, operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole.

  
 “Permitted Transferee” means, with respect to
any Stockholder who is a natural person, (a) a spouse, (b) any child or the spouse of any child, (c) any grandchild, (d) a parent or (e) any trust created for the benefit of any person specified in clauses (a) through (d) above of such Stockholder.

  
 “Person” means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated association, joint venture, limited liability company or any other entity of whatever nature. 
  
 “Preferred Stock” means the Series A Preferred Stock of the Company, par value $0.01 per share, as
described in the Certificate of Incorporation. 
  
 “Proportionate Share” means, as to any Stockholder and as of any date of determination, the percentage determined by dividing the number of Fully Diluted Shares then owned by such Stockholder by the total number of Fully
Diluted Shares then owned by all Stockholders eligible to participate in the purchase option for which a determination is being made. 
  

 5 

 “Required Preferred Stockholders” means the holders of at least a majority of the
outstanding shares of Preferred Stock. 
  
 “Required
Stockholders” means (a) the Required Preferred Stockholders and (b) the holders of at least a majority of the outstanding shares of Common Stock. 
  
 “Requirement of Law” means, with respect to any Person, the certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation, statute, ordinance, qualification, license or franchise or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is subject or pertaining to any of the transactions contemplated or referred to herein. 
  
 “Restricted Common Stock” means the shares of Common Stock owned by each Management Stockholder party
hereto and which is subject to a restricted stock award agreement between the Company and each such Management Stockholder, respectively.  
  
 “Sale of the Company” means a sale of the Company pursuant to which any Independent Third Party or affiliated group of Independent Third
Parties proposes to acquire, in one or more related transactions, (a) at least 80% of the Common Stock of the Company (whether by merger, consolidation, share exchange or other Transfer of the Company’s capital stock) or (b) all or
substantially all of the Company’s assets. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Securities Purchase Agreement” means that certain Securities Purchase Agreement dated as of May 9, 2003, among the Corporation and certain investors in the Corporation, as amended, restated,
supplemented or modified from time to time in accordance with its terms. 
  
 “Stockholders” means, without duplication, the collective reference to the Investor Stockholders, the Management Stockholders, if any, and any other Persons who become party to this Agreement pursuant
to Section 10.13 or otherwise and any transferees bound by the terms and conditions of this Agreement in accordance with the terms hereof, and the term “Stockholder” means any such Person. 
  
 “Subsidiary” means, with respect to any Person, any entity
of which more than fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect the board of directors or other managers of such entity is at the time, directly or indirectly, owned by or
the management is otherwise controlled by such Person. Unless otherwise qualified, references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the Company. 
  
 “Transfer” means sell, assign, convey, donate, transfer or
otherwise dispose of, or contract to do any of the foregoing. 
  

 6 

 “Wand Consulting Agreements” means, without duplication, the collective reference to
those certain Consulting Agreements between the Company and Bruce W. Schnitzer, John S. Struck, and Patrick McLaughlin, each dated as of May 9, 2003, and the term “Wand Consulting Agreement” means any such agreement. 
  
 “Wand Stockholders” has the meaning assigned thereto in the
introductory paragraph to this Agreement. 
  
 (b) General
Considerations. Any reference to any Section or Schedule herein, unless expressly stated otherwise, will refer to such Section of this Agreement or Schedule to this Agreement, as applicable. The use of pronouns herein shall refer to the
masculine, feminine and/or neuter, and to the singular and/or plural, as the context requires. 
  
 SECTION 1.2 Term of Agreement. The term of this Agreement shall commence on the date hereof and shall terminate on the earlier of: (a) the closing of an Initial Public Offering with net proceeds to the Company
of at least $25,000,000 and (b) a Sale of the Company. 
  
 ARTICLE
II 
 GENERAL TRANSFER RESTRICTIONS 
  
 SECTION 2.1 Transfer Restrictions. No Stockholder shall Transfer any Company Securities held by such Stockholder except that, commencing on the day
after the Closing Date: 
  
 (a) any Investor Stockholder shall be
entitled at any time to Transfer all or any portion of its Company Securities to any Affiliate of such Person, to any fund which such Investor Stockholder manages or to any Person acquiring such Investor Stockholder’s investment portfolio;

  
 (b) any Stockholder who is a natural person (an
“Individual Transferor”) may Transfer all or any portion of his Company Securities to any Permitted Transferee, and any Permitted Transferee of all or any part of such Individual Transferor’s Company Securities may thereafter Transfer
all or any portion of such Company Securities to any other Permitted Transferee of such Individual Transferor if, and only if, in each case (i) such Individual Transferor retains exclusive control of, and continues to exercise, all voting and
consent rights with respect to any such Company Securities Transferred to a Permitted Transferee pursuant to a proxy in form reasonably satisfactory to the Board, or as trustee of any trust to which such Company Securities are Transferred, (ii) any
trust to which such Company Securities are transferred does not require or permit distribution of such Company Securities during the term of this Agreement and (iii) the Permitted Transferee agrees in writing to be bound by the provisions of this
Agreement; and 
  
 (c) each Stockholder shall be permitted or
required, as applicable, to transfer his or its Company Securities as permitted or required, as applicable, pursuant to Sections 4.1, 4.2, 5.1, 5.2 

  

 7 

 
and 6.1 hereof, pursuant to Section B.5 of Article FOURTH of the Certificate of Incorporation and pursuant to a Wand Consulting Agreement; 
  
 provided, that in the case of Transfers permitted pursuant to Section 2.1(a) or (b)
above, the transferring Stockholder shall (i) provide prior written notice to the Company of such proposed Transfer (ii) if requested by the Board, an opinion of counsel, in form and substance reasonably satisfactory to the Board, that such Transfer
will not require registration of any such Company Securities under the Securities Act and (iii) cooperate with the Company (and the Company shall cooperate with such Stockholder) to make any Form A filings and other insurance regulatory filings as
may be required in connection with such Transfer. 
  
 SECTION 2.2
Involuntary Transfers. Upon any Involuntary Transfer of any Company Securities owned by any Stockholder, such Stockholder (or such Stockholder’s personal representative, if applicable) shall promptly, but in any event within thirty (30)
days after such Involuntary Transfer, give written notice to the Company, with a copy to the Person to whom the Transfer was made (the “Involuntary Transferee”), stating that the Involuntary Transfer occurred, the reason therefor, the date
of the Involuntary Transfer, the name and address of the Involuntary Transferee and the type and amount of Company Securities acquired by such Person. Upon receipt of such written notice by the Company, the Company shall give prompt written notice
of such Involuntary Transfer to the other Stockholders and (a) the Company shall have the first option and (b) the Investor Stockholders (other than any Investor Stockholder having made such Involuntary Transfer), on a pro rata basis (based on their
respective Proportionate Shares), shall have the second option, to purchase all, but not less than all, of the Company Securities subject to the Involuntary Transfer for the periods and on the terms described in Section 4.1(c), (d), (e) and (f), as
if the receipt by the Company of the notice of Involuntary Transfer had been the receipt by the Company of the Transfer Notice thereunder; provided, that the purchase price of any such Company Securities shall be the Fair Market Value of such
Company Securities. 
  
 SECTION 2.3 Prohibited Transfers.
If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void and the Company shall refuse to record such purported Transfer and shall not recognize any purported transferee as a
stockholder for any purpose. 
  
 ARTICLE III 
 CORPORATE GOVERNANCE AND VOTING AGREEMENT 
  
 SECTION 3.1 Corporate Governance. 
  
 (a) Board Representation. Each Stockholder shall vote all of his or its voting Company Securities and shall take all other necessary or desirable
actions within his or its control (whether in his or its capacity as a Stockholder, director, member of a Board committee, officer of the Company or otherwise, and including attendance at meetings in person or by proxy for purposes of obtaining a
quorum and execution of written consents or resolutions in lieu of meetings), and the Company shall take all necessary or desirable actions within its control (including calling special Board and Stockholder meetings) so that: 
  
 (i) the authorized number of directors of the Board shall be
established at nine (9); 
  

 8 

 (ii) the following individuals shall be elected to the Board: 
  
 (A) two individuals designated by Banc of America (the
“Banc of America Directors”), who shall initially be Robert H. Sheridan III and Robert L. Edwards; 
  
 (B) two individuals designated by the Greenhill Representative (the “Greenhill Directors”), who shall initially be Scott L. Bok
and Timothy M. Dwyer; 
  
 (C) one individual
designated by the Greenhill Representative and approved by Banc of America, who shall initially be David Elliott; 
  
 (D) one individual designated by Brazos (the “Brazos Director”), who shall initially be Patrick K. McGee; 
  
 (E) one individual designated by the holders of a majority
of the Preferred Stock held by the Investor Stockholders (excluding the Wand Stockholders), who shall initially be John Ware (“Ware”); provided, that so long as 21st Century owns at least 6,500 shares (as adjusted for any splits, stock dividends or combinations thereof) of Preferred Stock, Ware shall not be removed from
the Board without the prior written approval of 21st Century; provided, further, that for purposes of
this clause (E) the ownership of Preferred Stock shall be determined as if the transactions to occur on the Closing Date had occurred on May 9, 2003; 
  
 (F) one individual designated by the Wand Stockholders, who shall initially be Bruce Schnitzer; and 
  
 (G) one individual designated by the other members of the
Board, which person must be a member of management of the Company (the “Management Director”), who shall initially be Parker W. Rush; and 
  
 (iii) Bruce Schnitzer shall serve as the initial Chairman of the Board until a successor is duly selected by the Board; 
  
 (iv) any question brought before any meeting of the Board at
which a quorum exists under the By-laws shall be decided by a majority of the total number of votes cast at such meeting; provided, that until the day after the Closing Date, such majority vote must include the affirmative vote of at least
one Banc of America Director and at least one Greenhill Director; and 
  

 9 

 (v) neither the Certificate of Incorporation nor the By-laws of the Company shall be
amended in any manner that conflicts with any provisions of this Agreement. 
  
 (b) Any director designated pursuant to this Section 3.1 shall only be removed from the Board (and from all committees of the Board) at the written request of the Person or Persons having the right to designate such
director pursuant to this Section 3.1. 
  
 (c) Filling
Vacancies. 
  
 (i) At any time a vacancy is
created on the Board by the death, removal or resignation of any director, the applicable Person or Persons entitled to nominate the former director or directors as provided in Section 3.1(a)(ii) shall nominate a director to fill such vacancy. If,
within ten (10) Business Days, no individual shall have been nominated to fill such vacancy, such vacancy may be filled with a nominee designated by the vote of a majority of the remaining directors. If any Person who shall have failed to nominate a
director to fill such vacancy in accordance with Section 3.1(a)(ii) shall continue to be entitled to nominate one or more directors in accordance with Section 3.1(a)(ii), such Person may at any time direct the Stockholders to remove the director
nominated in accordance with the preceding sentence and to elect such Person’s nominee to the Board. 
  
 (ii) If any Person referred to in Section 3.1(a)(ii) is no longer entitled to nominate directors pursuant to Section 3.1(a)(ii), each
director nominated by such Person shall immediately resign or, if he fails to do so, shall be removed by a vote of the Stockholders and each resulting vacancy shall be filled with a nominee designated by the vote of a majority of the remaining
directors; provided, that in the event that no Person is entitled to nominate directors pursuant to Section 3.1(a)(ii), directors shall be nominated and elected in accordance with the By-laws and applicable law without regard to this Article
III. 
  
 (d) Board Meetings. The Board shall meet not less
than quarterly. At least 48 hours notice shall be given to each member of the Board prior to any meeting of the Board unless such notice shall have been waived in accordance with applicable corporate law. Each director nominated and elected pursuant
to the provisions of this Section 3.1 shall be entitled to reimbursement by the Company of all reasonable out-of-pocket expenses incurred in connection with attendance of meetings of the Board. 
  
 (e) D&O Insurance. The Company shall at all times maintain
directors’ and officers’ liability insurance in form and substance satisfactory to the Board. 
  
 (f) Committees. If at any time the Company establishes a compensation committee or an audit committee in accordance with the By-laws, one Banc of
America Director, one Greenhill Director and the Brazos Director shall be included on each such committee. Further, the Brazos Director shall be included on any other committee that includes both a Banc of America Director and a Greenhill Director.

  
 SECTION 3.2 Covenant to Vote, etc. At any time any
nominee is to be elected a director or any director is to be removed pursuant to Section 3.1 hereof or any vote on a matter 

  

 10 

 
described in Section 5.1 or 5.2 is to be taken, the Company shall, and the Stockholders shall cause the Company to, promptly call a meeting of stockholders
or obtain their written consents as necessary to effect such a vote. Without limiting the provisions of Section 3.1(a), each of the Stockholders shall appear in person or by proxy at each annual or special meeting of stockholders for the purpose of
obtaining a quorum and shall vote the Company Securities owned by such Stockholder, either in person or by proxy, at such annual or special meeting of stockholders of the Company or execute written consents as necessary: (a) in favor of establishing
the number of directors in accordance with Section 3.1(a), (b) in favor of the election, removal and replacement of directors in accordance with Section 3.1 and (c) in favor of any action described in Section 5.1 or 5.2. 
  
 SECTION 3.3 No Inconsistent Agreements or Proxies. Other than as
required hereunder, no Stockholder shall (a) grant any proxy or enter into any stockholder agreements or arrangements of any kind the terms of which are inconsistent with the provisions of this Agreement or (b) enter into or agree to be bound by any
voting trust with respect to his or its Company Securities. 
  
 ARTICLE IV 
 PARTICIPATION RIGHTS AND OBLIGATIONS 
  
 SECTION 4.1 Right of First Refusal. 
  
 (a) Transfer Notice. If any Stockholder (a “Transferor Stockholder”) desires to Transfer all or any portion
of his or its Company Securities pursuant to a bona fide offer from any Person other than in an Excluded Transfer, such Transferor Stockholder shall, prior to effecting or making such Transfer, give written notice thereof (the “Transfer
Notice”) to the Company and each of the Investor Stockholders. The Transfer Notice shall state (i) the type and amount of Company Securities to be Transferred (the “Transferred Company Securities”), (ii) the name of the Person to whom
the Transferor Stockholder desires to Transfer such Transferred Company Securities (the “Prospective Stockholder”), (iii) the price of the Transferred Company Securities to be paid by the Prospective Stockholder, which price must be
payable in cash, (iv) that the proposed purchase of the Transferred Company Securities shall be consummated no later than thirty (30) days after the expiration of the options referred to in Sections 4.1(c) and (d) and (v) that the offer of the
Prospective Stockholder has been accepted by the Transferor Stockholder subject to the rights of the Company and the Investor Stockholders contained in this Section 4.1 and Section 4.2. 
  
 (b) Certificate of Prospective Stockholder. The Transfer Notice shall be accompanied by a certificate executed by the
Prospective Stockholder stating that (i) its offer to purchase the Transferred Company Securities has been approved by its board of directors (or the equivalent body), if necessary, (ii) the description of its offer contained in the Transfer Notice
is complete and accurate, (iii) it is aware of the rights of the Company and the Investor Stockholders contained in this Section 4.1 and Section 4.2 and (iv) concurrently with its purchase of any Transferred Company Securities, it will become a
party to this Agreement and agree to be bound by the terms and conditions hereof to the same extent and in the same manner as the Transferor Stockholder as set forth in Section 10.13. In addition, the certificate of the 

  

 11 

 
Prospective Stockholder shall be accompanied by evidence reasonably satisfactory to the Company of the Prospective Stockholder’s financial ability to
consummate the proposed purchase. 
  
 (c) Company Option to
Purchase. For a period of ten (10) Business Days after receipt of the Transfer Notice and the certificate referred to in Section 4.1(b), the Company shall have the option to purchase all or any portion of the Transferred Company Securities on
the terms contained in the Transfer Notice; provided, that the Company shall not have the right to purchase less than all of the Transferred Company Securities unless (i) the Investor Stockholders elect to purchase all of the remaining
Transferred Company Securities pursuant to Section 4.1(d) or (ii) the Transferor Stockholder consents to the purchase of less than all of the Transferred Company Securities. The Company’s option to purchase the Transferred Company Securities
hereunder shall be exercisable by delivering written notice to such effect, prior to the expiration of such ten (10) Business Day option period, to the Transferor Stockholder and each of the Investor Stockholders. The failure of the Company to
exercise its option under this Section 4.1(c) within such ten (10) Business Day option period shall be deemed to be an election by the Company not to purchase the Transferred Company Securities. 
  
 (d) Stockholders Option to Purchase. If the Company does not elect to
purchase all of the Transferred Company Securities pursuant to Section 4.1(c), then each Investor Stockholder (other than the Transferor Stockholder) (each, an “Offeree Stockholder”) shall have the option, for a period of ten (10) Business
Days after the earlier of receipt by the Transferor Stockholder and the Offeree Stockholders of notice by the Company that the Company has so elected or the expiration of the ten (10) Business Day option period set forth in Section 4.1(c), to
purchase, on the terms contained in the Transfer Notice, up to its Proportionate Share of the remaining Transferred Company Securities plus any Excess Transferred Company Securities described below; provided, that the Offeree Stockholders
shall not have the right to purchase less than all of the Transferred Company Securities unless (i) the Company and the Offeree Stockholders collectively elect to purchase all of the Transferred Company Securities or (ii) the Transferor Stockholder
consents to the purchase of less than all of the Transferred Company Securities. 
  
 Each Offeree Stockholder’s option to purchase the Transferred Company Securities hereunder shall be exercisable by delivering written notice to such effect, prior to the expiration of such ten (10) Business Day
option period, to the Transferor Stockholder, the Company and each of the other Offeree Stockholders (each, a “Purchaser’s Notice”). Each Offeree Stockholder shall have the right and may indicate in its Purchaser’s Notice its
desire to participate in the purchase of Transferred Company Securities in excess of its Proportionate Share. The failure of an Offeree Stockholder to exercise its option under this Section 4.1(d) within such ten (10) Business Day period shall be
deemed to be an election by such Offeree Stockholder not to purchase the Transferred Company Securities. 
  
 If any Offeree Stockholder elects not to purchase all of its Proportionate Share of the Transferred Company Securities, then the Transferred Company
Securities which were available for purchase by all such declining Offeree Stockholders (the “Excess Transferred Company Securities”) shall automatically be deemed to be accepted for purchase by the Offeree 

  

 12 

 
Stockholders who indicated in their respective Purchaser’s Notices a desire to participate in the purchase of Transferred Company Securities in excess
of their respective Proportionate Shares. Unless otherwise agreed by all of the Offeree Stockholders participating in the purchase, each such Offeree Stockholder shall purchase its Proportionate Share of the Excess Transferred Company Securities
(computed on the basis of the Offeree Stockholders who participate in the purchase of Excess Transferred Company Securities). 
  
 (e) Sale by Offering Stockholder. Unless the Company and the Offeree Stockholders collectively elect to purchase all of the Transferred Company
Securities or the Transferor Stockholder consents to the purchase of less than all of the Transferred Company Securities, neither the Company nor any Offeree Stockholder may purchase any of the Transferred Company Securities, and the Transferor
Stockholder shall be free to Transfer all, but not less than all, of the Transferred Company Securities to the Prospective Stockholder in accordance with the terms set forth in the Transfer Notice, but subject to the co-sale provisions of Section
4.2; provided, that, if such sale is not consummated within thirty (30) days after the later of the expiration of the options referred to in Sections 4.1(c) and (d) and the agreement as to partial exercise of such options, the restrictions
provided for in this Section 4.1 shall again become effective, and no Transfer of the Transferred Company Securities may be made thereafter (other than in an Excluded Transfer) by the Transferor Stockholder without again offering such Transferred
Company Securities to the Company and the Offeree Stockholders in accordance with this Section 4.1. 
  
 (f) Closing. The closing of any purchase of the Transferred Company Securities by the Company or the Offeree Stockholders pursuant to this Section
4.1 shall be held at the principal office of the Company at 10:00 a.m. local time no later than forty-five (45) days after the date that the options referred to in Section 4.1(c) and (d) have either been exercised or expired (or if such day is not a
Business Day, then on the next succeeding Business Day) or at such other time, date and place as the parties to the transaction may agree. At such closing, the Transferor Stockholder shall deliver the Transferred Company Securities, duly endorsed
for Transfer and accompanied by all requisite stock transfer taxes, if any, and the Transferred Company Securities to be Transferred shall be free and clear of any liens, claims, pledges or encumbrances (other than restrictions imposed by this
Agreement and pursuant to applicable federal and state securities laws) and the Transferor Stockholder shall so represent and warrant, and further represent and warrant that he or it is the record and beneficial owner of the Transferred Company
Securities. The Company and each Offeree Stockholder participating in the purchase shall deliver payment in full for the Transferred Company Securities at such closing, by certified or official bank check or by wire transfer of immediately available
funds. 
  
 SECTION 4.2 Co-Sale Right. 
  
 (a) Co-Sale Right. In the event that any Stockholder (the
“Selling Stockholder”) proposes to sell all or any portion of its Company Securities (other than in an Excluded Transfer), the Selling Stockholder shall, after complying with the applicable provisions of Section 4.1 and no later than ten
(10) Business Days after the expiration of the options referred to in Sections 4.1(c) and (d), deliver to each Investor Stockholder written notice (the “Selling Stockholder Notice”) thereof describing such Company Securities (including the
class or classes thereof) subject to sale 

  

 13 

 
and the terms and conditions of such sale. Upon receipt of a Selling Stockholder Notice, each such Investor Stockholder (other than the Selling Stockholder,
if applicable), by giving written notice to the Selling Stockholder of its election to participate not later than ten (10) Business Days following receipt of the Selling Stockholder Notice, may participate in such sale by including therein a portion
of such Stockholder’s Company Securities comprised of a number of Company Securities of the same class equal to the product of (i) the number of Company Securities of such class to be sold by the Selling Stockholder in connection with such sale
and (ii) a fraction, the numerator of which is the number of Company Securities of such class then owned by such Investor Stockholder immediately prior to giving effect to such sale and the denominator of which is the aggregate number of Company
Securities of such class then owned by all Investor Stockholders and the Selling Stockholder (without duplication), immediately prior to giving effect to such sale. Such sale shall be made on the same terms and conditions of the sale described in
the Selling Stockholder Notice. The number of Company Securities to be sold by Selling Stockholder in connection with such sale shall be reduced by the number of Company Securities sold by the Investor Stockholders (excluding, if applicable, the
Selling Stockholder) pursuant to this Section 4.2(a). For purposes of this Section 4.2, the Class A Common Stock and Class B Common Stock shall be deemed to be of the same class. 
  
 (b) Closing. The closing of any transaction pursuant to this Section 4.2 shall be held at such time and place as the
Selling Stockholder shall reasonably specify. At such closing, the Stockholders participating in such sale shall take such action and deliver such documents and instruments as shall be necessary to transfer the Company Securities in such
transaction, and the Company Securities to be transferred shall be free and clear of any liens, claims, pledges or encumbrances (other than restrictions imposed pursuant to applicable federal and state securities laws and this Agreement that do not
relate to any breach or default by the seller of such Company Securities hereunder) and each Stockholder participating in such sale shall so represent and warrant. Each Stockholder participating in such sale shall further represent and warrant that
such Stockholder is the record and beneficial owner of such Company Securities and make such additional representations and warranties as shall be customary in transactions of a similar nature. The selling price of any Company Securities to be sold
by each Stockholder participating in a sale pursuant to this Section 4.2 shall be the same price per share as received by the Selling Stockholder. 
  
 SECTION 4.3 Preemptive Rights. 
  
 (a) Eligible Offering. Except as otherwise provided in Section 4.3(e), the Company hereby grants to each Investor Stockholder the right to purchase
(i) its Proportionate Share of any future offering of equity securities of the Company or of any security or other obligation convertible into or exchangeable for or carrying rights or options to purchase equity securities of the Company (an
“Eligible Offering”), plus (ii) any Excess New Securities as defined in Section 4.3(c). 
  
 (b) Notice of an Eligible Offering and Exercise of Rights of First Offer. Before issuing any securities pursuant to an Eligible Offering, the
Company shall give written notice thereof to each Investor Stockholder specifying the securities the Company proposes to issue (the “New Securities”) and the consideration that the Company intends to receive for the New Securities. For a
period of ten (10) Business Days (the “Election Period”) following the delivery 

  

 14 

 
of such notice, each Investor Stockholder shall be entitled to elect to purchase up to its Proportionate Share of the New Securities. Each Investor
Stockholder desiring to exercise its rights under this Section 4.3 shall do so by delivering written notice (an “Exercise Notice”) to such effect, prior to the expiration of the Election Period, to the Company, stating (i) the portion of
its Proportionate Share that it desires to purchase and (ii) if it has elected to purchase its full Proportionate Share, whether it desires to participate in the purchase of New Securities in such Eligible Offering in excess of its Proportionate
Share. The failure of any Investor Stockholder to deliver an Exercise Notice within the Election Period shall be deemed to be a waiver of its right to participate in the purchase of such New Securities in such Eligible Offering. 
  
 (c) Investor Stockholders’ Purchase of New Securities. The
Company shall sell to each Investor Stockholder delivering an Exercise Notice, and each such Investor Stockholder shall purchase from the Company, for that consideration and on the terms set forth in the Company’s notice of such Eligible
Offering, the number of New Securities that such Investor Stockholder has elected to purchase. If any Investor Stockholder does not elect to purchase all of its respective Proportionate Share of the Eligible Offering, then the New Securities which
were available for purchase by such declining Investor Stockholders (the “Excess New Securities”) shall automatically be deemed to be accepted for purchase by the Investor Stockholders who indicated in their Exercise Notices a desire to
participate in the purchase of New Securities in excess of their Proportionate Share. Unless otherwise agreed by all of the Investor Stockholders participating in the purchase, each Investor Stockholder so electing to purchase more than its
Proportionate Share shall purchase its Proportionate Share of the Excess New Securities (computed on the basis of the Investor Stockholders who participate in the purchase of Excess New Securities). The Company may sell the remainder of the New
Securities to be sold in the Eligible Offering, if any, pursuant to the provisions of Section 4.3(d). 
  
 (d) Sale to Third Parties. If there remain New Securities to be sold after the exercise of the options of the Investor Stockholders referred to in
this Section 4.3, then the Company may issue such New Securities to third Persons, but only (i) for a consideration not less than that set forth in the Company’s notice and (ii) within the period of ninety (90) days after the date of such
notice. 
  
 (e) Exceptions to Eligible Offering. No
Investor Stockholder shall have any right pursuant to this Section 4.3 to purchase any of the following securities issued by the Company: 
  
 (i) securities issued pursuant to any employee equity incentive plan of the Company approved by the Board; 
  
 (ii) securities issued to the acquiree or to its
shareholders in connection with any merger, consolidation or acquisition to which the Company is a party, if approved by the Board; 
  
 (iii) securities issued upon exercise or conversion of any Common Equivalent, or pursuant to the anti-dilution provisions thereof, if such
Common Equivalent was originally issued on or prior to May 9, 2003 or thereafter in compliance with this Section 4.3; 
  

 15 

 (iv) securities issued in connection with any stock dividend or subdivision of Company
Securities; 
  
 (v) securities issued pursuant to
the Securities Purchase Agreement; and 
  
 (vi)
securities issued in an Initial Public Offering. 
  
 ARTICLE V

 SALE OF THE COMPANY; FORCED SALE RIGHTS 
  
 SECTION 5.1 Approved Sale by Stockholders. Notwithstanding the provisions of Sections 9.3 and 9.4, in the event that any two of Banc of America,
the Greenhill Representative and Brazos approve a Sale of the Company (an “Approved Sale”) and the proposed terms and conditions thereof (the “Proposed Terms”), the Company and the Stockholders shall be required to consummate
such Approved Sale subject to the terms and conditions of this Article V. Within five (5) Business Days after the date of determination of the Proposed Terms, the Company shall deliver a written notice containing such Proposed Terms to each
Stockholder. 
  
 SECTION 5.2 Forced Sale Right. 

 
 (a) Stockholder Right to Force a Sale. So long as any Preferred
Stock remains outstanding, upon the written election of any holder of more than twenty five percent (25%) of the outstanding shares of Preferred Stock delivered at any time after the second anniversary of the Closing Date or (b) any holder of more
than ten percent (10%) of the outstanding shares of Preferred Stock delivered at any time after the fifth anniversary of the Closing Date, such requesting Stockholder (the “Initiating Holder”) shall have the sole right commencing upon
expiration of the Call Option Period (as defined below) to negotiate and determine the Proposed Terms of a Sale of the Company (including engaging investment bankers and other advisors by the Company at the direction of such Initiating Holder) by
delivering written notice (a “Sale Notice”) thereof to the Company and the other Stockholders; provided, that if the Company has entered into a definitive purchase agreement to consummate a Sale of the Company on or prior to the
expiration of the Call Option Period, the Initiating Holder shall not have such negotiation and determination rights unless and until such Sale of the Company does not close within ninety (90) days following the execution of such definitive
agreement. Any Sale of the Company approved by an Initiating Holder pursuant to this Section 5.2 shall be deemed to be an Approved Sale for purposes of this Article V. 
  
 (b) Company Call Right. For a period of one hundred eighty (180) Business Days after receipt by the Company of the
Sale Notice (the “Call Option Period”), the Company shall have the right to purchase all of the Company Securities of the Initiating Holder at a price equal to (i) with respect to the Preferred Stock, the Series A Redemption Price (as
defined in the Certificate of Incorporation) and (ii) with respect to the Common Stock, the Fair Market Value of such Company Securities determined as of the date of the Sale Notice. The Company’s option to purchase the Initiating Holder’s
Company Securities hereunder shall be exercisable by 

  

 16 

 
delivering written notice (the “Redemption Notice”) to such effect, prior to the expiration of the Call Option Period, to the Initiating Holder.
The failure of the Company to exercise its option to purchase the Initiating Holder’s Company Securities prior to the expiration of the Call Option Period shall be deemed to be a waiver of its right to purchase the Initiating Holder’s
Company Securities pursuant to this Section 5.2(b). 
  
 (c)
Closing. The closing of any purchase of the Initiating Holder’s Company Securities by the Company pursuant to this Section 5.2 shall be held at the principal office of the Company at 10:00 a.m. local time no later than the earlier of (i)
thirty (30) days after delivery of the Redemption Notice or (ii) the last day of the Call Option Period (or if such day is not a Business Day, then on the next succeeding Business Day) or at such other time, date and place as the parties to the
transaction may agree. At such closing, the Initiating Holder shall deliver the Transferred Company Securities, duly endorsed for Transfer and the Company Securities to be purchased shall be free and clear of any liens, claims, pledges or
encumbrances (other than restrictions imposed by this Agreement and pursuant to applicable federal and state securities laws) and the Initiating Holder shall so represent and warrant, and further represent and warrant that he or it is the record and
beneficial owner of the Company Securities. The Company shall deliver payment in full for the Company Securities at such closing, by certified or official bank check or by wire transfer of immediately available funds. Upon such closing, the
Initiating Holder shall have no further rights under this Section 5.2. 
  
 SECTION 5.3 Participation and Conditions. 
  
 (a)
Obligation to Participate. Upon the exercise of the Approved Sale rights pursuant to Section 5.1 or 5.2, each Stockholder shall (i) consent to, vote for and raise no objections against the Approved Sale or the process pursuant to which the
Approved Sale is arranged, (ii) waive any dissenters’ or appraisal rights and all other rights with respect to the Approved Sale under the Delaware General Corporation Law and (iii) if the Approved Sale is a sale of the Company Securities,
agree to sell all of such Stockholder’s Company Securities on the Proposed Terms. Each Stockholder shall take all reasonably necessary and desirable actions in connection with the consummation of any Approved Sale, including the execution of
such agreements and instruments and other actions reasonably necessary to (A) provide such representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale as are
customary in transactions of a similar nature and (B) effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale as set forth below. 
  
 (b) Satisfaction of Conditions. The obligations of each Stockholder pursuant to this Article V are subject to the
satisfaction of the following conditions: 
  
 (i)
upon the consummation of the Approved Sale, such Stockholder shall receive at least the same proportion of the aggregate consideration from such Approved Sale that such Stockholder would have received if such aggregate consideration had been
distributed by the Company in the manner provided in the Certificate of Incorporation; 
  

 17 

 (ii) all holders of any class or series of Company Securities shall receive the same form
of consideration per share, or if any holders of any class or series are given an option as to the form of consideration, all holders of such class or series shall be given the same option, unless each affected holder otherwise agrees;
provided, that the Class A Common Stock and Class B Common Stock shall be deemed to be of the same class and series for purposes of this Section 5.3; 
  
 (iii) all noncompetition and any other transaction-related fees paid to any Stockholder initiating the Approved Sale process pursuant to
this Article V (or any Affiliate thereof) shall be deemed to be consideration from the Approved Sale and distributed as set forth in this Section 5.3(b); provided, that the foregoing shall not apply to customary investment banking fees
approved by a majority of the members of the Board who are not affiliated with any such Stockholder; 
  
 (iv) such Stockholder shall neither be obligated to make any out-of-pocket expenditure prior to the consummation of the Approved Sale
(excluding modest expenditures for postage, copies, etc.) nor to pay more than such Stockholder’s Proportionate Share of reasonable expenses incurred in connection with a consummated Approved Sale to the extent such expenses are incurred for
the benefit of all Stockholders and are not otherwise paid by the Company or the acquiring party (costs incurred by or on behalf of a Stockholder for its sole benefit will not be considered costs of the transaction hereunder); and 
  
 (v) in the event that the Stockholders are required to make
any representations or indemnities in connection with the Approved Sale (other than representations and indemnities concerning each Stockholder’s valid ownership of such Stockholder’s Company Securities, free of all liens and encumbrances
(other than those arising under applicable securities laws and this Agreement that do not relate to any breach or default by the seller of such Company Securities hereunder), and each Stockholder’s authority, power and right to enter into and
consummate such Approved Sale without violating any other agreement), then each such Stockholder shall make substantially the same representations and no such Stockholder shall be liable for more than its pro rata share of any liability for
misrepresentation or indemnity and such liability shall not exceed the total proceeds received by such Stockholder for his Company Securities. 
  
 ARTICLE VI 
 RIGHTS RESPECTING MANAGEMENT
STOCKHOLDERS’ EQUITY 
  
 SECTION 6.1 Call Rights on Common
Stock of Management Stockholders. 
  
 (a) Call Rights and
Purchase Price. For a period of one hundred eighty (180) days immediately following the date on which a Management Stockholder’s employment with the Company or any of its Subsidiaries is terminated, the Company shall have the right, but not
the obligation, to purchase from such Management Stockholder, and upon the exercise of such right by the Company, such Management Stockholder shall be obligated to sell to the Company: 
  
 (i) if Cause existed for such Management Stockholder’s termination or such Management Stockholder
resigned without Good Reason, all of the vested Company Securities held by such Management Stockholder at an aggregate purchase price equal to the lesser of (A) the Fair Market Value of such Company Securities or (B) the original cost paid for such
Company Securities; or 
  

 18 

 (ii) in the event of any termination for any reason other than as set forth in clause (i)
above (including death or disability), all of the Restricted Common Stock held by such Management Stockholder at the Fair Market Value of such Restricted Common Stock. 
  
 (b) Method of Exercise. The Company may exercise such right by delivering a written notice to such effect (the
“Call Notice”) to such Management Stockholder or, if applicable, to such Management Stockholder’s personal or succession representative, as the case may be. The purchase price for the Company Securities purchased pursuant to this
Section 6.1 shall be paid at the closing as described in Section 6.2. 
  
 SECTION 6.2 Closing. The closing for the redemption of any Company Securities of a Management Stockholder under this Article VI shall take place on such date as determined by the Board, but no later than sixty (60) Business Days
after the delivery of the Call Notice. The closing of such redemption shall take place at the principal place of business of the Company at 10:00 a.m., local time, or at such other place and time as the parties to such redemption may mutually agree
in writing. At the closing: 
  
 (a) the party
selling its Company Securities shall execute and deliver to the Company such documents, certificates and other papers as the Company may reasonably require to effect the transfer and conveyance by assignment of absolute title to the Company of that
portion of such party’s Company Securities free and clear of all liens (other than restrictions imposed pursuant to applicable federal and state securities laws and this Agreement that do not relate to any breach or default by the seller of
such Company Securities hereunder) of all Persons whomsoever and such party shall so represent and warrant; 
  
 (b) the Company shall purchase such party’s Company Securities and pay the applicable purchase price by delivery of (A) in the case
of shares of Preferred Stock, cash (to the extent of Available Funds) and (B) in case of any other Company Securities, at the option of the Company, either (1) cash (to the extent of Available Funds), (2) an unsecured promissory note of the Company
which pays annual interest on the outstanding balance thereof at the then current prime rate of interest of Bank of America, N.A. (or its successor), is payable in three equal annual installments of principal and interest starting on the first
anniversary of the date of such closing and is subordinated in right of payment to all other Debt of the Company other than unsecured trade payables, (3) subject to Article IX, shares of new class of preferred stock of the Company junior to the
Preferred Stock that accrues non-cash dividends at a rate of 7% per annum and is payable solely upon redemption of the existing Preferred Stock, or (4) any combination of the foregoing clauses (1), (2) and (3) and the Company shall execute and
deliver to such party such 

  

 19 

 
documents, certificates and other papers to effect such transactions as such party may reasonably require; provided, that, if the Company cannot make
any payment for a cash repurchase pursuant to this Article VI due to a lack of Available Funds, partial repurchases may be made by the Company at any time when Available Funds in excess of $10,000 exist and are permitted to be used for such purpose;
and 
  
 (c) both the Company and such party shall
covenant to execute all such documents and take all such further action as may be necessary to effect the provisions of, and transactions described in and contemplated by, the applicable provisions of this Article VI. 
  
 ARTICLE VII 
 FINANCIAL INFORMATION AND NOTICES 
  
 SECTION 7.1 Financial Statements and Other Reports. Commencing on the Closing Date, the Company shall cause to be prepared and each Investor Stockholder to be furnished with: 
  
 (a) Monthly Financial Statements. As soon as practicable and in any
event within thirty (30) days after the end of each fiscal month, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the close of such fiscal month and unaudited consolidated statements of income, cash flows and
stockholders’ equity for the fiscal month then ended and that portion of the Fiscal Year then ended, including the notes thereto (if any), all in reasonable detail prepared by the Company in accordance with GAAP and (i) if applicable,
containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period and (ii) setting forth in comparative form the corresponding figures for
the same portion of the preceding Fiscal Year and the Budget for the current Fiscal Year. 
  
 (b) Annual Financial Statements. As soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year, an audited consolidated balance sheet of the Company and its Subsidiaries as
of the close of such Fiscal Year and audited consolidated statements of income, cash flows and stockholders’ equity for the Fiscal Year then ended, including the notes thereto, all in reasonable detail and in comparative form the corresponding
figures for the preceding Fiscal Year, prepared by a nationally recognized “Big Four” independent certified public accounting firm selected by the Board, in accordance with GAAP and, if applicable, containing disclosure of the effect on
the financial position or results of operation of any change in the application of accounting principles and practices during the year. 
  
 (c) Company Budget. Subject to Section 9.5, as soon as practicable and in any event on or before January 1 of each Fiscal Year, the Board shall
cause the Company’s operating budget for the next Fiscal Year to be prepared, setting forth in reasonable detail in comparative form the corresponding figures for the preceding fiscal year on a monthly basis for the subject Fiscal Year
projected operating expenses, capital expenditures, other costs and expenses, revenues from operations and any other source, cash flow from operations, amounts of capital and services the Company and its Subsidiaries will require and material terms
of any financing 

  

 20 

 
the Company or any of its Subsidiaries will require and any other relevant financial information in respect of the Company and its Subsidiaries for the
subject Fiscal Year. 
  
 (d) Regulatory and Rating Filings.
The Company shall delivery to each Investor Stockholder, promptly, and in any event within ten (10) Business Days after filing or delivery thereof, copies of all (i) statutory accounting and other financial reports filed with any state insurance
regulatory Governmental Authorities and (ii) all financial information submitted to A.M. Best (or any successor thereto). 
  
 SECTION 7.2 Notices. The Company shall deliver to each Investor Stockholder prompt (but in no event later than ten (10) Business Days after an
officer of the Company obtains knowledge thereof) written notice of: (a) the commencement of any proceedings or investigations by or before any Governmental Authority and any actions or proceedings in any court or before any arbitrator against or
involving the Company or any of its Subsidiaries or any of their respective properties, assets or businesses, in each case involving a claim or liability which could reasonably be expected to have a Material Adverse Effect, (b) any attachment,
judgment, levy or order assessed against the Company that could reasonably be expected to have a Material Adverse Effect, (c) any default or event of default under any material Debt of the Company, (d) copies of all notices received under the
Acquisition Documents and (e) the occurrence of any other event reasonably likely to have a Material Adverse Effect. 
  
 ARTICLE VIII 
 AFFIRMATIVE COVENANTS 
  
 Unless otherwise consented to in writing by the Required Preferred
Stockholders, the Company hereby covenants and agrees that, it will, and will cause each of its Subsidiaries to: 
  
 SECTION 8.1 Preservation of Corporate Existence and Related Matters. Preserve and maintain its separate corporate existence and all rights,
franchises, licenses, permits and privileges necessary to the conduct of its business; and qualify and remain qualified as a foreign corporation authorized to do business in each jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except in each case to the extent that the failure to be or remain so qualified would not have a Material Adverse Effect. 
  
 SECTION 8.2 Maintenance of Property. Protect and preserve all properties necessary and material to its business,
including all tangible and intangible assets; maintain in good working order and condition (ordinary wear and tear excepted) all buildings, equipment and other tangible real and personal property necessary and material to its business; and from time
to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business so that the business carried on in connection therewith may be properly conducted at all times. 
  
 SECTION 8.3 Maintenance of Insurance. Maintain insurance, including
directors’ and officers’ liability insurance, with responsible insurance companies against such risks and in such amounts as are customarily maintained by similar businesses in similar industries. 
  

 21 

 SECTION 8.4 Payment of Taxes and Governmental Charges. Pay all material taxes, assessments and
other governmental charges that may be levied or assessed upon it or any of its property (including, without limitation, withholding, social security, payroll and similar employment related taxes on the dates such taxes are due); provided,
that the Company may contest such taxes, assessments and other governmental charges in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP. 
  
 SECTION 8.5 Accounting Methods; Financial Records. Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP consistently applied and in compliance with the regulations of
any Governmental Authority having jurisdiction over it or any of its properties. 
  
 SECTION 8.6 Compliance With Laws. Observe and remain in compliance with all Requirements of Law and maintain in full force and effect all approvals of Governmental Authorities (including state insurance
regulatory bodies), in each case applicable or necessary to the conduct of its business except where the failure to do so would not result in a Material Adverse Effect and except that the Company or such Subsidiary may contest the applicability of
any Requirement of Law in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP. 
  
 SECTION 8.7 Visits and Inspections. Permit representatives of each Investor Stockholder, from time to time, as often as may be reasonably
requested, but only during normal business hours and upon reasonable prior notice, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by
independent accountants; and discuss with its principal officers and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. 
  
 SECTION 8.8 Conduct of Business. From and after the Closing Date,
engage only in the business conducted by the Subject Companies (as defined in the Securities Purchase Agreement) and any other activities reasonably related or incidental thereto. 
  
 ARTICLE IX 
 NEGATIVE COVENANTS 
  
 Unless otherwise consented to in
writing by the Required Preferred Stockholders, the Company hereby covenants and agrees that it will not, and will not permit any of its Subsidiaries to at any time after the date hereof: 
  
 SECTION 9.1 Amendment of Organizational Documents. Amend, modify or restate its Certificate of Incorporation, By-laws
or other similar organizational documents. 
  
 SECTION 9.2
Redemptions and Repurchases; Payment of Dividends. Purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its capital stock or other 

  

 22 

 
ownership interests or make or pay any dividend or distribution of cash, property or assets among the holders of its capital stock or other ownership
interests, other than with respect to the transactions required or permitted, as applicable, pursuant to Articles II, IV, V and VI hereof, Section B.5 of Article FOURTH of the Certificate of Incorporation and the Wand Consulting Agreements.

  
 SECTION 9.3 Mergers and Liquidations. Merge,
consolidate or enter into any similar combination with any other Person other than in a Sale of the Company arising pursuant to Section 5.1 or 5.2; voluntarily liquidate, wind-up or dissolve itself; or cause the conversion or reorganization of such
Person into another entity form. 
  
 SECTION 9.4 Sale of
Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any material portion of its property, business or assets, in any transaction or series of related transactions, other than (a) a Sale of the Company arising pursuant to
Section 5.1 or 5.2 or (b) sales of investment assets in the ordinary course of business. 
  
 SECTION 9.5 Approval of Annual Budget. Approve and adopt an operating budget for the Company for any Fiscal Year. 
  
 SECTION 9.6 Investments and Acquisitions. Purchase, own, invest in or otherwise acquire, directly or indirectly, any capital stock, interests in
any partnership or joint venture (other than the acquisition contemplated in the Acquisition Documents), evidence of Debt or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other
investment or interest whatsoever in any other Person other than investments in the ordinary course of business. 
  
 SECTION 9.7 Loans and Advances. Make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment
in cash or by delivery of property in, any Person; or enter into, directly or indirectly, any commitment or option in respect of the foregoing other than (a) advances for travel and other business-related expenses in the ordinary course of business
and (b) other loans, advances and extensions of credit made in accordance with the terms of the Budget then in effect. 
  
 SECTION 9.8 Capital Expenditures. Make or commit to make any capital expenditure in excess of the total amount allocated for capital expenditures
in the Budget then in effect. 
  
 SECTION 9.9 Debt. Create,
incur, assume or suffer to exist any Debt in excess of $100,000 or prepay, refinance, renew, modify or extend the terms of any Debt. 
  
 SECTION 9.10 Issuance of Equity Securities. Issue any capital stock or other ownership interests other than Common Equivalents issued pursuant to
the terms of a Company equity incentive plan that is approved by the Board and the Required Preferred Stockholders and shares of capital stock issued upon exercise or conversion of the foregoing. 
  

 23 

 SECTION 9.11 Agreements and Arrangements with Management. Enter into any employment agreement or
agreement providing for severance payments to any employee or amend, restate or supplement in any manner or grant any waiver of a material right under (a) any employment agreement between any member of management of the Company and the Company that
exists on the date hereof or (b) any Company equity incentive plan. 
  
 SECTION 9.12 Transactions with Affiliates. Conduct any business or enter into any transaction with any Affiliate of the Company other than as contemplated by this Agreement. 
  
 SECTION 9.13 Amendments of Certain Material Documents. Amend, restate
or supplement in any manner or grant any waiver of a material right under (a) the Acquisition Documents and (b) the Wand Consulting Agreements. 
  
 SECTION 9.14 Settlement of Litigation. Settle any litigation or other proceeding which is other than in the ordinary course of business and which
involves any material restriction on the conduct of business by the Company or any of its Subsidiaries or the continued ownership of any of its material assets (other than cash). 
  
 SECTION 9.15 Initial Public Offering. Commence any Initial Public Offering. 
  
 SECTION 9.16 Material Contracts. Without limiting any other covenant
herein, bind or obligate the Company or any Subsidiary with respect to any agreement that has, or the subject property or services has, a value or potential cost to such Person in excess of $1,000,000 in any transaction or series of related
transactions (a “Material Contract”), including any material amendment, substitution, modification, restatement, alteration or adjustment in any such Material Contract. 
  
 SECTION 9.17 Voluntary Bankruptcy. Commence any case, proceeding or other action under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, composition, extension or other such relief with respect to it or its debts, or seeking appointment of a receiver, trustee, custodian or other similar official for all or substantially all of its assets. 
  
 SECTION 9.18 Inconsistent Agreements. Enter into any contractual
obligation, which by its terms restricts, impairs or prohibits the ability of such Person to perform its obligations hereunder and under the Certificate of Incorporation. 
  

 24 

 ARTICLE X 
 MISCELLANEOUS 
  
 SECTION 10.1
Legend. Each Stockholder agrees that a legend in substantially the following form shall be placed on the certificates issued on or after the date hereof representing any shares owned by it: 
  
 THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE TERMS OF AN AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DATED AS OF DECEMBER 9, 2004, A COPY OF WHICH IS ON FILE IN THE COMPANY’S OFFICES. THE INVESTOR RIGHTS AGREEMENT, AMONG OTHER THINGS, CONTAINS RESTRICTIONS ON THE TRANSFERABILITY OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE INVESTOR RIGHTS AGREEMENT.

  
 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 
  
 THIS CERTIFICATE REPRESENTS SHARES OF ONE OF A NUMBER OF SERIES AND CLASSES OF CAPITAL STOCK WHICH THE COMPANY IS AUTHORIZED TO ISSUE. THE COMPANY WILL
FURNISH WITHOUT CHARGE TO A REQUESTING STOCKHOLDER A COPY OF THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS THEN IN EFFECT, THAT SETS FORTH THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH SUCH SERIES AND CLASS AND THE QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS APPLICABLE THERETO. 
  
 SECTION 10.2 Specific Performance and Injunctive Relief; Arbitration. 
  
 (a) Each Stockholder and the Company acknowledge and agree that in the event of any breach of this Agreement, the
non-breaching party or parties would be irreparably harmed and could not be made whole by monetary damages, and therefore each Stockholder and the Company hereby waive the defense in any action for specific performance or injunctive relief that a
remedy at law would be adequate. Each Stockholder and the Company further agree that each Stockholder, in addition to any other remedy to which such Stockholder may be entitled at 

  

 25 

 
law or in equity, shall be entitled to compel specific performance of this Agreement and to obtain injunctive relief in any action instituted in a court of
proper jurisdiction. Without limitation of the foregoing, any removal or election of directors on or prior to the Closing Date in violation of Section 3.1 shall be null and void ab initio and the Company shall not recognize or give effect
thereto. 
  
 (b) Except as provided in Section 10.2(a), any
dispute among the parties hereto shall, on demand of any party to such dispute, be submitted to binding arbitration in New York, New York, conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association by a
panel of three impartial arbitrators selected in accordance with such Rules, and judgement upon the award of the arbitrators may be entered in any court of competent jurisdiction. In rendering their award, the arbitrators shall enforce this
Agreement in accordance with its terms and in accordance with applicable law, and shall assess the costs of such arbitration as they deem just and equitable in light of their determination of the issues being arbitrated. 
  
 SECTION 10.3 Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof. 
  
 SECTION 10.4 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the parties hereto with respect to the subject matter hereof including the Original Agreement which is hereby amended and restated. In the event of any inconsistency or conflict between the provisions
hereof and the provisions of the Certificate of Incorporation or By-laws of the Company, the provisions hereof shall control and the parties hereto shall use their best efforts to cause the Company to correct such inconsistency or conflict.

  
 SECTION 10.5 Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopy, recognized overnight courier service or personal delivery: 
  

	 	(a)	if to the Company: 

  
 Republic Companies Insurance Group, Inc. 
 2727 Turtle Creek Blvd. 
 Dallas, Texas 75219 

			
	 Attn:
	  	Parker W. Rush
	 Telephone No.:
	  	(214) 559-1836
	 Fax No.:
	  	(214) 559-5868

  

 26 

 With copies to: 
  

Skadden, Arps, Slate, Meagher & Flom LLP 
 1440 New York Avenue, NW 
 Washington, DC 20005 

			
	 Attn:
	  	Michael P. Rogan, Esq.
	 Telephone No.:
	  	202-371-7000
	 Fax No.:
	  	202-393-5760

  
 And: 
  
 Kennedy Covington Lobdell & Hickman, L.L.P. 
  
 47th Floor, Hearst Tower 
 214 N. Tryon Street

 Charlotte, NC 28202 

			
	 Attn:
	  	T. Richard Giovannelli, Esq.
	 Telephone No.:
	  	704-331-7484
	 Fax No.:
	  	704-353-3184

  

	 	(b)	If to any Stockholder, to the respective address shown in the records of the Company. 

  
 All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally
delivered; when delivered by courier, if delivered by commercial overnight courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied. 
  
 SECTION 10.6 Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York except as to matters of corporate law which shall be governed by, construed and enforced in accordance with the laws of Delaware, in each case, without regard to the
principles of conflicts of law of any jurisdiction. 
  
 SECTION
10.7 Severability. The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest
extent permitted by law. 
  
 SECTION 10.8 Successors and
Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. 
  
 SECTION 10.9 Defaults. A default by any party to this Agreement in such party’s compliance with any of the terms
or conditions hereof or performance of any of the obligations of such party hereunder shall not constitute or excuse a default by any other party. 
  

 27 

 SECTION 10.10 Regulatory Requirements. Notwithstanding anything to the contrary herein, in the
event of any reasonable determination by Banc of America, after consultation with legal counsel, that, by reason of any existing or future federal or state law, rule, regulation, guideline, order, request or directive (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful) (collectively, a “Regulatory Requirement”), Banc of America is effectively restricted or prohibited from holding any of the shares of capital stock of the
Company (including any shares of capital stock or other securities distributable to Banc of America in any merger, reorganization, readjustment or other reclassification of such shares), the Company and the other Stockholders shall take such action,
at Banc of America’s expense, as may be deemed reasonably necessary by Banc of America, after consultation with legal counsel, to permit Banc of America to comply with such Regulatory Requirement. Such action to be taken may include, without
limitation, the Company’s authorization of one or more new classes of capital stock and the modification or amendment of the Certificate of Incorporation or any other documents or instruments executed in connection with the shares held by Banc
of America. Banc of America shall give written notice to the Company and the other Stockholders of any such determination and the action or actions necessary to comply with such Regulatory Requirement, and the Company and such other Stockholders
shall take all steps reasonably necessary to comply with such determination as expeditiously as possible. 
  
 SECTION 10.11 State Insurance Approvals. Notwithstanding any provision to the contrary contained herein, if any actions to be taken hereunder or
transactions to be consummated pursuant hereto require the prior approval of any state insurance regulatory authority, no such action shall be taken or transaction consummated without such prior approval and the Company and each Stockholder shall
use their reasonable best efforts promptly to obtain such approval including, without limitation, the timely filing of all such applications and the taking of all such other actions as may be necessary to obtain such approval. 
  
 SECTION 10.12 Recapitalizations, Exchanges, Etc. The provisions of
this Agreement shall apply, to the full extent set forth herein, to any and all shares of capital stock of the Company or any successor or assign thereof (whether by merger, consolidation, sale of assets or otherwise and including securities issued
in exchange for the shares of the Company in connection with the merger) which may be issued in respect of, in exchange for, or in substitution of the shares, by reason of a stock dividend, recapitalization, reclassification, merger, consolidation
or otherwise. 
  
 SECTION 10.13 Additional Stockholders.
The Company shall cause each Person hereafter becoming a holder of capital stock of the Company (whether pursuant to the exercise of stock options or otherwise) to execute a supplement to this Agreement in the form attached hereto as Exhibit
B for purposes of making such Person a party hereto and subject to all of the terms and conditions hereof. 
  
 SECTION 10.14 Amendments; Waivers. This Agreement may not be amended, modified or supplemented and no waivers of or consents to departures from the
provisions hereof 

  

 28 

 
may be given unless consented to in writing by the Company and the Required Stockholders; provided, that: 
  
 (a) any amendment, waiver or consent to a departure of Section 3.1 which
would amend or terminate (i) the right of any Stockholder or group of Stockholders to designate, approve or consent to the removal of a member or members of the Board shall not be effective without the written consent of (A) such Stockholder or (B)
in the case of a group of Stockholders, Stockholders holding a majority of the shares of Preferred Stock held by all Stockholders in such affected group or (ii) the rights of 21st Century set forth in Section 3.1(a)(ii)(E); 
  
 (b) any amendment, waiver or consent to a departure of Section 3.1(a) which would amend or terminate the right of any director designated by a Stockholder
or group of Stockholders to serve on any committee of the Board shall not be effective without the written consent of such Stockholder or group of Stockholders, as the case may be, entitled to designate such director; 
  
 (c) waivers of or consents to departures from the covenants in Articles VIII
and IX may only be given by the Required Preferred Stockholders; 
  
 (d) amendments to Sections 5.1 or 5.2 may only be made pursuant to a writing signed by Banc of America, the Greenhill Representative and Brazos and any waiver or consent to departure from the provisions of such Sections 5.1 and 5.2 once an
Approved Sale process has been initiated may be given only by the Stockholders having approved such Approved Sale and or having delivered the Forced Sale Notice; provided, further, that any amendment to Section 5.2 may only be made
with the approval of each holder of at least ten percent (10%) of the outstanding shares of Preferred Stock; and 
  
 (e) no amendment, modification or waiver of any provision of this Agreement that adversely affects the rights of one Stockholder in a manner materially
different from any other Stockholder shall be effective against such adversely affected Stockholder unless approved in writing by that Stockholder; 
  
 provided, further, that any amendment or waiver effected in accordance with this Section 10.14 shall be binding upon each then-current and future
Stockholder party hereto and the Company. 
  
 SECTION 10.15
Aggregation of Ownership. All Company Securities held by affiliated investment funds shall be aggregated for purposes of determining ownership thresholds under this Agreement. 
  
 SECTION 10.16 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same Agreement. Signatures may be exchanged by telecopy, with original signatures to follow. Each party to this Agreement agrees that it will be bound by its own telecopied signature and
that it accepts the telecopied signatures of the other parties to this Agreement. 
  

 29 

  
 [SIGNATURE PAGE FOLLOWS]

  

 30 

  
 IN WITNESS WHEREOF, each
party hereto has caused this Agreement to be duly executed as of the date first above written. 
  

					
	REPUBLIC COMPANIES GROUP, INC.
		
	By:	 	/s/    PARKER W.
RUSH        
	 Name:
	 	Parker W. Rush
	 Title:
	 	President

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	BANC OF AMERICA CAPITAL INVESTORS SBIC, L.P.
		
	 By:
	 	BANC OF AMERICA CAPITAL MANAGEMENT SBIC, LLC, General Partner
		
	 By:
	 	BANC OF AMERICA CAPITAL MANAGEMENT, L.P., its sole member
		
	 By:
	 	BACM I, GP, LLC, its General Partner
		
	 By:
	 	/s/    ROBERT H. SHERIDAN,
III        
	 Name:
	 	Robert H. Sheridan, III
	 Title:
	 	Member

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	GREENHILL CAPITAL PARTNERS, L.P.
		
	By:	 	GCP, LLC, its General Partner
		
	By:	 	/s/    SCOTT L. BOK        
	 Name:
	 	Scott L. Bok
	 Title:
	 	Managing Member
	
	GREENHILL CAPITAL PARTNERS (CAYMAN), L.P.
		
	By:	 	GCP, LLC, its General Partner
		
	By:	 	/s/    SCOTT L. BOK        
	 Name:
	 	Scott L. Bok
	 Title:
	 	Managing Member
	
	GREENHILL CAPITAL PARTNERS (EXECUTIVE), L.P.
		
	By:	 	GCP, LLC, its General Partner
		
	By:	 	/s/    SCOTT L. BOK        
	 Name:
	 	Scott L. Bok
	 Title:
	 	Managing Member
	
	GREENHILL CAPITAL, L.P.
		
	By:	 	GCP, LLC, its General Partner
		
	By:	 	/s/    SCOTT L. BOK        
	 Name:
	 	Scott L. Bok
	 Title:
	 	Managing Member

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	BRAZOS EQUITY FUND 2000, L.P.
		
	By:	 	Brazos Investment Partners, LLC, Its general partner
		
	By:	 	/s/    PATRICK K.
MCGEE        
	 Name:
	 	Patrick K. McGee
	 Title:
	 	Authorized Representative

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	NORWEST EQUITY PARTNERS VI, LP
		
	By:	 	ITASCA LBO Partners VI, LLP, Its general partner
		
	By:	 	/s/    TIM
DEVRIES        
	 Name:
	 	Tim DeVries
	 Title:
	 	M.G.P.
	
	NORWEST EQUITY PARTNERS VII, LP
		
	By:	 	ITASCA LBO Partners VII, LLP, Its general partner
		
	By:	 	/s/    TIM
DEVRIES        
	 Name:
	 	Tim DeVries
	 Title:
	 	M.G.P.

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	 21ST CENTURY GROUP EQUITY FUND, L.P.

		
	 By:   
	 	 21st
Century GP, L.L.C., Its general partner

		
	 By:
	 	/s/    JOHN WARE        
	 Name:
	 	John Ware
	 Title:
	 	President
	
	21ST CENTURY GROUP COINVESTORS I,
L.P.
		
	 By:   
	 	21st Century GP, L.L.C., Its general partner
		
	 By:
	 	/s/    JOHN WARE        
	 Name:
	 	John Ware
	 Title:
	 	President

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

	
	
	/s/    BRUCE W.
SCHNITZER        
	Bruce W. Schnitzer

  

	
	
	/s/    JOHN S. STRUCK        
	John S. Struck

  

	
	
	/s/    PATRICK
MCLAUGHLIN        
	Patrick McLaughlin

  

	
	
	/s/    MARY LOUISE
MCLAUGHLIN        
	Mary Louise McLaughlin as Custodian for Christine McLaughlin under the Pennsylvania Uniform Transfers to Minors Act

  

	
	
	/s/    MARY LOUISE
MCLAUGHLIN        
	Mary Louise McLaughlin as Custodian for Kathryn McLaughlin under the Pennsylvania Uniform Transfers to Minors Act

  
 [Signature Pages
Continue] 
  

 [Amended and Restated Investor Rights Agreement] 

			
	REPUBLIC CO-INVESTORS, L.P.
		
	By:	 	Republic Companies Group, Inc., Its general partner
		
	By:	 	/s/    PARKER W. RUSH        
	 Name:
	 	Parker W. Rush
	 Title:
	 	President

  

	
	
	/s/    PARKER W. RUSH        
	Parker W. Rush

  

	
	
	/s/    MARTIN B.
CUMMINGS        
	Martin B. Cummings

  

	
	
	/s/    STEPHEN W. MUDD        
	Stephen W. Mudd

  

 [Amended and Restated Investor Rights Agreement] 

  
 Exhibit A 

 
 BY-LAWS 
  

  
 Exhibit B 

 
 INVESTOR RIGHTS AGREEMENT SUPPLEMENT 
  
 THIS INVESTOR RIGHTS AGREEMENT SUPPLEMENT (this
“Supplement”) is dated as of                      ,
             between REPUBLIC COMPANIES GROUP, INC., a Delaware corporation (the “Company”), and
                                     (“New
Stockholder”). 
  
 STATEMENT OF PURPOSE 

 
 The Company has entered into an Amended and Restated Investor Rights
Agreement, dated as of December 9, 2004, among the Company, and certain stockholders of the company set forth therein, a copy of which is attached hereto as Annex I (as amended or supplemented, the “Investor Rights
Agreement”). Pursuant to the terms of the Investor Rights Agreement, the New Stockholder is required to execute this Supplement for the purposes of making such Person a party to the Investor Rights Agreement. The New Stockholder has agreed
to execute this Supplement in consideration of the receipt of his, her or its shares of capital stock of the Company. 
  
 NOW, THEREFORE, the Company and the New Stockholder agree as follows: 
  
 1. Defined Terms. All capitalized terms used but not defined in this Supplement have the meanings assigned thereto in
the Investor Rights Agreement. 
  
 2. Joinder of New
Stockholder. The New Stockholder hereby joins in and agrees to become a party to the Investor Rights Agreement with all right, title and interest as a Stockholder thereunder and subject to all of the terms and conditions thereof as if the New
Stockholder were an original party and signatory thereto. The New Stockholder’s notice address for the company’s records is: 
  

			
	 	 	 
	 	 	 

  
 IN WITNESS WHEREOF,
the Company and the New Stockholder have executed this Supplement, this      day of                     ,
            . 
  

			
	REPUBLIC COMPANIES GROUP, INC.
		
	By:	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	 [INSERT SIGNATURE BLOCK FOR NEW STOCKHOLDER]

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