Document:

Exhibit 4.1

 

[GRAPHIC]

© SECURITY-COLUMBIAN UNITED
STATES BANKNOTE COMPANY

 

	
   

  	
  COMMON SHARES

  	
  

  	
  COMMON SHARES

  	
   

  
	
   

  	
  

  	
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   CUSIP

  	
   

  
	
   

  
	
  CASTLEPOINT HOLDINGS, LTD.

  
	
  INCORPORATED IN BERMUDA UNDER THE COMPANIES
  ACT, 1981

  
	
   

  
	
  THIS IS TO CERTIFY THAT

  	
   

  
	
   

  	
   

  
	
   

  
	
  is the registered holder of

  	
   

  
	
   

  	
   

  
	
  FULLY PAID COMMON SHARES OF PAR VALUE
  US$0.01 EACH OF

  
	
   

  
	
  CASTLEPOINT HOLDINGS, LTD.

  
	
   

  
	
  transferable on the books of the Company by the holder hereof in
  person or by duly authorized attorney upon surrender of this certificate properly
  endorsed. This certificate and the shares represented hereby are issued and
  shall be held subject to all of the provisions of the Memorandum of
  Association and Bye-Laws of the Company and all amendments thereto and shall
  be transferable in accordance therewith. This certificate is not valid unless
  countersigned and registered by the Transfer Agent and Registrar.

  
	
   

  
	
  WITNESS the facsimile seal of the Company and the facsimile
  signatures of its duly authorized officers.

  
	
   

  
	
  CERTIFICATE OF STOCK

  
	
   

  
	
  Dated

  
	
   

  
	
  COUNTERSIGNED AND REGISTERED:

  	
   

  	
  

  	
  

  
	
   

  	
  /s/ John Sivertsen

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  	
   

  	
  DIRECTOR

  
	
   

  	
  (NEW YORK, NY)

  	
   

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
  TRANSFER AGENT

  	
   

  
	
   

  	
  AND REGISTRAR

  	
   

  
	
  BY

  	
   

  	
   

  	
   

  
	
  AUTHORIZED SIGNATORY

  	
   

  	
   

  	
  DIRECTOR

  
											

 

 

 

EACH COMMON SHARE HAS ONE
VOTE, EXCEPT THAT THE VOTING RIGHTS EXERCISABLE BY COMMON SHAREHOLDERS,
DIRECTLY OR INDIRECTLY OR THROUGH ATTRIBUTION, MAY BE LIMITED TO NOT MORE THAN
9.5% OF THE VOTING POWER CONFERRED BY OUR COMMON SHARES, PURSUANT TO A FORMULA
CONTAINED IN THE COMPANY’S BYE-LAWS. THE BOARD OF DIRECTORS OF THE COMPANY, BY
VIRTUE OF POWERS CONFERRED BY THE BYE-LAWS, ALSO HAS THE DISCRETION TO MAKE
SUCH ADJUSTMENTS TO THE AGGREGATE NUMBER OF VOTES ATTACHING TO THE COMMON
SHARES OF ANY SHAREHOLDER THAT IT CONSIDERS FAIR AND REASONABLE IN ALL CIRCUMSTANCES
TO ENSURE THAT NO PERSON WILL HOLD MORE THAN 9.5% OF THE COMPANY’S VOTING
RIGHTS AT ANY TIME.

 

The following abbreviations,
when used in the inscription on the face of this certificate, shall be
construed as though they were written out in full according to applicable laws
or regulations:

 

	
  TEN COM 

  	
  —

  	
  as tenants in common

  	
  UNIF GIFT MIN ACT — 

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
  TEN ENT 

  	
  —

  	
  as tenants by the
  entireties

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  under Uniform Gifts to
  Minors

  
	
  JT TEN 

  	
  —

  	
  as joint tenants with right
  of

  	
   

  	
  Act

  	
   

  	
   

  
	
   

  	
   

  	
  survivorship and not as
  tenants

  	
   

  	
   

  	
  (State)

  	
   

  
	
   

  	
   

  	
  in common

  	
   

  	
   

  	
   

  
										

 

Additional
abbreviations may also be used though not in the above list.

 

	
  For Value Received,

  	
   

  	
   

  	
  hereby sell, assign and
  transfer unto

  

 

	
  PLEASE
  INSERT SOCIAL SECURITY OR OTHER

  	
   

  
	
  IDENTIFYING
  NUMBER OF ASSIGNEE

  	
   

  

 

 

	
   

  
	
  (PLEASE
  PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

  
	
   

  
	
   

  
	
   

  	
   

  	
  Shares 

  
	
  represented by the within
  Certificate, and do hereby irrevocably constitute and appoint

  
	
   

  
	
   

  	
   

  	
  Attorney

  
	
  to transfer the said
  shares on the books of the within named Company with full power of
  substitution in the premises.

  
	
   

  
	
  Dated

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  NOTICE: 

  	
  THE SIGNATURE TO THIS
  ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE
  CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
  WHATEVER.

  
	
   

  	
   

  
	
  Signature(s) Guaranteed:

  	
   

  
									

 

	
   

  	
   

  
	
  THE SIGNATURE(S) MUST BE
  GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
  AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
  GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.EXHIBIT 10.47

 

PROGRAM MANAGEMENT AGREEMENT

 

between

 

Tower Insurance Company of New York

 

and

 

CastlePoint Management Corp.

 

Amended and Restated

 

This Agreement, entered into as of January 1,
2007 (the “Agreement”) by and between TOWER INSURANCE COMPANY OF NEW YORK, a
property and casualty insurance company domiciled in New York (the “Company”), and
CASTLEPOINT MANAGEMENT CORP., a Delaware corporation (“Manager”), each having
offices located at 120 Broadway, New York, N.Y. 10271.

 

PREAMBLE

 

WHEREAS, Company
and Manager entered into a Program Management Agreement dated April 4, 2006,
but now find it advisable to amend and restate such agreement; and

 

WHEREAS, Company desires to appoint Manager
as its manager for performing underwriting and claims services with respect to
the Traditional Program Business and Specialty Program Business and Insurance
Risk Sharing Business as set forth in this Agreement; and

 

WHEREAS, Manager
desires to perform such responsibilities;

 

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

 

1.             Appointment.

 

                Company
does hereby nominate, constitute, and appoint Manager as its manager for: (i)
the soliciting, underwriting, quoting, binding, issuing, and servicing of
Company’s insurance policies classified as Traditional Program Business and Specialty
Program Business and Insurance Risk Sharing Business as set forth in the
schedule attached hereto as Exhibit A, as may be amended from time to time
(such insurance and any policies, contracts, binders, endorsements,
certificates, agreements, or evidence of insurance, individually and
collectively, will be referred to as “Policy” or “Policies” hereunder).

 

2.             Authority. Manager is authorized to:

 

1

 

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

 

2.2           Collect, account, receipt for, and remit
premiums on Policies that Manager writes on behalf of Company in accordance
with Section 2.1 and, as full compensation, to retain commissions out of
premiums so collected in amounts as specified in Exhibit A attached hereto. Manager
agrees to pay all costs and expenses of collection from insureds where premiums
to be received by Manager pursuant to this Agreement are not paid in full by
the insured. Manager agrees that all premiums, including return premiums
received by Manager, are Company’s property and will be paid over to the
Company immediately following collection.

 

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

 

2.4           Terminate agents and producers.

 

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

 

2.6           Appoint properly licensed small third party
insurers or their affiliates as Program Underwriting Agents using Company
policies on the condition that such small insurers participate as a reinsurer
on the Specialty Program Business and Insurance Risk Sharing Business they
underwrite. “Program Underwriting Agent” means an insurance intermediary that
aggregates business from retail and general agents and manages business on
behalf of insurance companies, including functions such as risk selection and
underwriting, premium collection, policy form design and client service.

 

3.             Performance.

 

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

 

3.2           If Manager commits a material breach of
this Agreement, Company may, as one remedy but not as an exclusive remedy,
require its own employees or designated representatives to carry out Manager’s
duties hereunder. Manager shall reimburse Company for Company’s 

 

2

 

reasonable expenses, including
salaries, incurred for having Company’s employees or representatives perform
such duties or, at Company’s option, Manager shall pay such employees or
representatives directly. Such reimbursement or direct payments shall be made
by Manager within five (5) days after Manager’s receipt of invoices of such
expenses.

 

4.             Expenses.

 

No expenses or fees shall be paid pursuant to
this Agreement. All expenses incurred by either party shall be apportioned,
allocated or paid at actual cost in accordance with the Traditional Program
Business Quota Share Reinsurance Agreement and the Specialty Program Business
and Insurance Risk Sharing Business Quota Share Reinsurance Agreement between
the Company and CastlePoint Reinsurance Company (CPRe) or the Traditional
Program Business Pool Management Agreement and the Specialty Program Business
Pool Management Agreement  between the
Company and CastlePoint Insurance Company (CPIC), as that term is defined in
those agreements, as the case may be. Manager may, however, seek reimbursement
for any expenses it incurs in performing its functions hereunder from either
CPRe or CPIC as the case may be, the allocation of which shall comply with
Regulation 30 of the New York Insurance Laws 
(11 NYCRR 105-109).

 

5.             Territory.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

8.11         Collect, account, receipt for and promptly remit
premiums on Policies that Manager writes on behalf of Company in accordance
with Section 2.1.

 

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

 

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

 

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

 

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

 

8.16         Not represent other companies except as
permitted by Company.

 

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

 

9.             Limitations of
Authority.

 

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

 

5

 

10.          Claims.

 

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

 

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

 

6

 

covered by this Agreement, and it is further
agreed with respect to any claim or loss of any amount as follows:

 

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

 

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

 

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

 

11.          Accounting and
Reporting Procedures. Manager shall:

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

12.          Books and Records.

 

Manager shall keep such books and records as
may be (i) reasonably requested by Company; or (ii) required by law, rulings,
or orders of the insurance departments of the states having jurisdiction over:
(a) Manager or Manager’s business or (b) any Policies. Manager shall make such
books and records available for examination, audit, and copying by the
insurance departments of such states and by Company, or by their authorized
representatives. Company shall have the right to examine and review at any
reasonable time all books, records, files, and papers, including, but not by
way of limitation, claim files and underwriting files maintained and kept by
Manager which relate to this Agreement and the Policies. Manager shall
institute and maintain retention and disposal systems for claim files and
underwriting files in accordance with procedures and requirements as prescribed
by law. All books and records of Manager shall be maintained at the principal
place of business of Manager and shall be complete, accurate, and up-to-date,
and shall reflect all monies paid or received by Agent and all transactions of
Manager pursuant to this Agreement. Anything to the contrary notwithstanding,
all of the books, records, files, and papers maintained and kept by Manager
relating to underwriting and claims matters involving this Agreement or the
Policies, shall be and remain the sole and exclusive property of Company except
that upon termination of this Agreement, all right, title, and interest in and
to all Policy renewals or expirations and all records with respect to renewals
and expirations shall automatically and irrevocably transfer to and vest in
Manager provided Manager has accounted for and has made payments of all amounts
due Company and continues to do so.

 

13.          Indemnification.

 

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

 

8

 

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

 

14.          Termination of
Agreement.

 

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

 

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

 

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

 

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

 

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

 

d.             An
assignment by the other party for the benefit of creditors; the dissolution or
liquidation of the other party; the appointment of a conservator, receiver, or
liquidator for a substantial part of the other party’s property; the
institution of bankruptcy, insolvency, or similar proceedings by or against the
other party;

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

a.             Continue
to represent Company for the purpose of servicing Policies placed by Manager
with Company which are in force on, or renewed at Company’s election, or as
required by law, after the date of termination of this Agreement, and Manager
shall continue to receive its normal compensation for such services.

 

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

 

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

 

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

 

15.          Suspension of Manager’s
Authority.

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

16.          Ownership of
Expirations.

 

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

 

17.          Mediation;
Arbitration and Injunctive Relief.

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

17.8         It is understood and agreed that in the event
of any breach or threatened breach, Company may apply to a court of competent
jurisdiction for, and shall be entitled to, injunctive relief from such court,
without the requirement of posting a bond or proof of damages, designed to cure
existing breaches and to prevent a future occurrence or threatened future
occurrence of like breaches on the part of Manager. It is further understood
and agreed that the remedies and recourses herein provided shall be in addition
to, and not in lieu of, any other remedy or recourse which is available to
Company either at law or in equity in the absence of this paragraph including
without limitation the right to damages.

 

18.          Miscellaneous.

 

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

 

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

 

18.3         Manager shall not commit Company to any
expenses or obligations not specifically provided for herein without the prior
written permission of Company.

 

18.4         Company shall have the right to oversee and
supervise the operation of this Agreement, including but not limited to the
right at all reasonable times to have access to and to copy at Company’s
expense Manager’s books and records as they relate to this Agreement, which
rights shall survive the termination or expiration of this Agreement. The
director or 

 

12

 

commissioner of insurance of any state where
Manager issues Policies on behalf of Company shall have at all reasonable times
the right of access to all books, records, and bank account of Manager in a
form usable by such official.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

18.15       Any notice or other communications required or
permitted hereunder shall be sufficiently given if sent by electronic,
certified or registered mail, postage prepaid, if to Company, addressed to
Tower Insurance Company of New York, 120 Broadway, 31st Floor, New York, New
York, 10271, Attention: Stephen Kibblehouse, General Counsel, and if to Company
addressed to CastlePoint Management Corp., 120 Broadway, 17th Floor, New York,
NY 10271, Attention: General Counsel or such other address as notified by
either party to the other.

 

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

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first written above, subject to the
satisfaction of New York Insurance Law § 1505, including any conditions such
regulators may impose on the terms of this Agreement subsequent to the date
hereof.

 

	
   

  	
  CASTLEPOINT MANAGEMENT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joel S. Weiner

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TOWER INSURANCE COMPANY OF

  
	
   

  	
  NEW YORK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis M. Colalucci

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief Financial Officer

  
				

 

14

 

EXHIBIT A

 

SCHEDULE OF
AUTHORITY

 

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

 

A.            AUTHORIZED BUSINESS.
Any Specialty Program Business and Insurance Risk Sharing Business, or
Traditional Program Business, as defined below:

 

1.             “Specialty
Program Business” as used herein shall mean all Program Business other than
Traditional Program Business or Traditional Program Business that Tower and
CPIC agree shall be deemed Specialty Program Business. “Program Business” used
herein means narrowly defined classes of business that are underwritten on an
individual policy basis by Program Underwriting Agents on behalf of insurance
companies. Traditional Program Business shall mean  blocks of Program Business in excess of $5
million in gross written premium that Tower has historically underwritten,
consisting of non-auto related personal lines and the following commercial lines
of business: retail stores and wholesale trades, commercial and residential
real estate, restaurants,  grocery
stores, office and service industries, 
and artisan contractors. “Program Underwriting Agent” shall mean an
insurance intermediary that aggregates business from retail and general agents
and manages business on behalf of insurance companies, including functions such
as risk selection and underwriting, premium collection, policy form design and
client service.

 

2.             “Insurance Risk
Sharing Business” means various risk sharing arrangements such as (i) pooling
or sharing of premiums and losses between CPIC or Tower on the one hand and
other insurance companies on the other hand based upon their respective
percentage allocations or (ii) appointing other third party insurance companies
as Program Underwriting Agents with such third party insurance companies
assuming through reinsurance a portion of the business they produce as Program
Underwriting Agents.

 

Manager must obtain specific written consent
from Company to write any type of insurance risk sharing business.

 

3.             “Traditional Program Business”  shall mean 
blocks of Program Business in excess of $5 million in gross written
premium that Tower has historically underwritten, consisting of non-auto
related personal lines and the following commercial lines of business: retail
stores and wholesale trades, commercial and residential real estate,
restaurants,  grocery stores, office and
service industries,  and artisan contractors.

 

15

 

B.            GROSS NET WRITTEN
PREMIUM LIMIT.  A maximum of $50,000,000 unless Manager obtains the
prior written consent of Company. Gross Net Written Premium shall mean gross
written premium of Company less returned premium for cancellations and
reductions.

 

C.            POLICY LIMITS AND
COVERAGE CLASSIFICATIONS.

 

Small Market
Business, Middle Market Business and Large Lines Real Estate General Liability
Business.

 

	
  Coverage

  	
   

  	
  Limit

  	
   

  
	
  Commercial
  Property (including Equipment Breakdown)

  	
   

  	
  $30 Million

  	
   

  
	
  Commercial
  General Liability

  	
   

  	
  $1 Million
  per Occurrence / $2 Million Aggregate

  	
   

  

 

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

 

No other
classes of insurance may be written on Company’s insurance policies.

 

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

 

16

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