Document:

exv10w52

Exhibit 10.52

GUY CARPENTER

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

			
	 	 	 
	Effective July 1, 2008
	 	DOC. July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	 
	 	Preamble	 	 	4	 
	1
	 	Business Covered	 	 	4	 
	2
	 	Retention and Limit	 	 	4	 
	3
	 	Term	 	 	5	 
	4
	 	Special Termination	 	 	5	 
	5
	 	Territory	 	 	7	 
	6
	 	Exclusions	 	 	7	 
	7
	 	Special Acceptance	 	 	9	 
	8
	 	Premium	 	 	9	 
	9
	 	Other Reinsurance	 	 	10	 
	10
	 	Reinstatement	 	 	10	 
	11
	 	Definitions	 	 	10	 
	12
	 	Extra Contractual Obligations/Excess of Policy Limits	 	 	13	 
	13
	 	Run-Off Reinsurers	 	 	14	 
	14
	 	Net Retained Liability	 	 	16	 
	15
	 	Original Conditions	 	 	17	 
	16
	 	No Third Party Rights	 	 	17	 
	17
	 	Notice of Loss and Loss Settlements	 	 	17	 
	18
	 	Commutation	 	 	18	 
	19
	 	Sunset	 	 	19	 
	20
	 	Late Payments	 	 	19	 
	21
	 	Offset	 	 	20	 
	22
	 	Currency	 	 	20	 
	23
	 	Unauthorized Reinsurance	 	 	21	 
	24
	 	Taxes	 	 	23	 
	25
	 	Access to Records	 	 	23	 
	26
	 	Confidentiality	 	 	24	 
	27
	 	Indemnification and Errors and Omissions	 	 	25	 
	28
	 	Insolvency	 	 	25	 
	29
	 	Arbitration	 	 	26	 
	30
	 	Service of Suit	 	 	28	 
	31
	 	Agency	 	 	29	 
	32
	 	Governing Law	 	 	29	 
	33
	 	Entire Agreement	 	 	29	 
	34
	 	Intermediary	 	 	29	 
	35
	 	Mode of Execution	 	 	30	 

			
	 	 	 
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	 	DOC. July 25, 2008
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     GUY CARPENTER

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Articles	 	 	 	Page
	(Cont’d)
	 	 	 	 	 	 
	 

	 	Company Signing Block
	 	 	30	 
	 
	 	 	 	 	 	 
	Attachments
	 	 	 	 	 	 
	 

	 	Nuclear Risk Exclusion
	 	 	31	 

			
	 	 	 
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GUY CARPENTER

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

by

THE SUBSCRIBING REINSURER(S) IDENTIFIED

IN THE INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the liability that may accrue to the
Company as a result of loss or losses under Policies classified by the Company as Workers’
Compensation and/or Employers Liability (including losses arising from the United States Longshore
and Harbor Workers’ Compensation Act, Jones Act, Federal Employers Liability Act, and any other
Federal Act), in force at the inception of this Contract, or written or renewed during the term of
this Contract by or on behalf of the Company, subject to the terms and conditions herein contained.

ARTICLE 2

RETENTION AND LIMIT

	A.	 	The Reinsurer shall be liable in respect of each Loss Occurrence, for the Ultimate Net Loss
over and above an initial Ultimate Net Loss of $5,000,000 each Loss Occurrence, subject to a
limit of liability to the Reinsurer of $5,000,000 each Loss Occurrence, and subject further
to a limit of liability to the Reinsurer of $10,000,000 as respects all Loss Occurrences
subject to this Contract.

			
	 	 	 
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	B.	 	Notwithstanding the foregoing, as respects Employers Liability business, no more than
$2,000,000 any one claimant, any one Loss Occurrence shall contribute to the Ultimate Net
Loss.

	C.	 	Notwithstanding the above, the Reinsurer’s liability for all Loss Occurrences subject to
this Contract as respects Acts of Terrorism covered hereunder shall be $5,000,000.

	D.	 	If one Loss Occurrence involves losses allocated to this Contract and its predecessor or
successor contract, the Company’s retention for the Loss Occurrence
shall be proportionate, with the amount of Ultimate Net Loss to be retained by the
Company for each contract being reduced to that percentage which the Company’s Ultimate
Net Loss attaching to each contract bears to the total of all the Company’s Ultimate Net
Loss in respect of the same Loss Occurrence. The limit of the Reinsurer’s liability
shall be calculated in the same manner.

ARTICLE 3

TERM

	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the
loss, July 1, 2008, applying to Loss Occurrences commencing at or after that time and
date, and shall remain in effect until 12:01 a.m., Local Standard Time at the place of
the loss, July 1, 2009.

	B.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after
expiration or termination (as provided in the Special Termination Article) of this
Contract.

	C.	 	However, at the Company’s option, the Reinsurer shall remain liable hereunder in respect of
Policies in force prior to expiration or termination, until the termination, natural
expiration or renewal of such Policies, whichever occurs first. In such event, the Company
shall pay to the Reinsurer an additional premium equal to the rate set forth in the Rate and
Premium Article, multiplied by the Gross Net Earned Premium Income during the run-off period,
payable within 30 days after the end of each quarter.

	D.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s
liability hereunder shall continue if the Company is required by statute or regulation to
continue coverage, until the earliest date on which the Company may cancel the Policy.

ARTICLE 4

SPECIAL TERMINATION

	A.	 	The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract
at any time by giving written notice to the Subscribing Reinsurer in the event of any
of the following circumstances:

			
	 	 	 
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	 	1.	 	The Subscribing Reinsurer ceases underwriting operations.
	 
	 	2.	 	A state insurance department or other legal authority orders the Subscribing
Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under
regulatory supervision.
	 
	 	3.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary), or there have been instituted against
it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator,
trustee in bankruptcy, or other agent known by whatever name, to take possession of its
assets or control of its operations.
	 
	 	4.	 	The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the
Subscribing Reinsurer’s accounting system) as reported in such financial statements of
the Subscribing Reinsurer as designated by the Company, has been reduced by 20% of the
amount thereof at any date during the prior 12-month period (including the period prior
to the inception of this Contract).
	 
	 	5.	 	The Subscribing Reinsurer has merged with or has become acquired or controlled by
any company, corporation, or individual(s) not controlling the
Subscribing Reinsurer’s operations at the inception of this Contract. However, at the
option of the Company, this provision shall not apply if the surviving entity is rated by
A.M. Best as “A-” or better and maintains the liability of the insurance and/or
reinsurance business of the acquired entity.
	 
	 	6.	 	The Subscribing Reinsurer has retroceded its entire liability under this Contract
without the Company’s prior written consent.
	 
	 	7.	 	The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-”
and/or an S&P rating of less than “BBB+.” However, as respects Underwriting Members of
Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less than
“BBB+” by S&P shall apply.

	B.	 	Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article,
at the sole discretion of the Company. The reinsurance premium due the Subscribing Reinsurer
hereunder (including any minimum reinsurance premium) shall be pro rated based on the period
of the Subscribing Reinsurer’s participation hereon, and the Subscribing Reinsurer shall
immediately return any excess reinsurance premium received. In the event that the Subscribing
Reinsurer is terminated on a cut-off basis, the minimum reinsurance premium shall be waived.
Reinstatement premium, if any, shall be calculated based on the Subscribing Reinsurer’s
reinsurance premium earned during the period of the Subscribing Reinsurer’s participation
hereon.

	C.	 	Additionally, in the event of any of the circumstances listed in paragraph A of this Article,
the Company shall have the option to commute the Subscribing Reinsurer’s liability for

			
	 	 	 
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	 	 	losses on Policies covered by this Contract. In the event the Company and the
Subscribing Reinsurer cannot agree on the commutation amount, they shall appoint an
actuary and/or appraiser to assess such amount and shall share equally any expense of
the actuary and/or appraiser. If the Company and the Subscribing Reinsurer cannot
agree on an actuary and/or appraiser, the Company and the Subscribing Reinsurer each
shall nominate three individuals, of whom the other shall decline two, and the final
appointment shall be made by drawing lots. Payment by the Subscribing Reinsurer of the
amount of liability ascertained shall constitute a complete and final release of both
parties in respect of liability arising from the Subscribing Reinsurer’s participation
under this Contract.

	D.	 	The Company’s option to require commutation under paragraph C above shall survive
the termination or expiration of this Contract.

ARTICLE 5

TERRITORY

The territorial limits of this Contract shall be identical with those of the Company’s Policies.

ARTICLE 6

EXCLUSIONS

	A.	 	This Contract shall not apply to and specifically excludes:

	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance
companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from
its participation or membership, whether voluntary or involuntary, in any Insolvency
Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, howsoever denominated, established or governed,
that provides for any assessment of or payment or assumption by the Company of part or
all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors
or assigns, that has been declared by any competent authority to be insolvent, or that is
otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part.
	 
	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any
insurance written by or through any pool, association, or syndicate,
including pools, associations, or syndicates in which membership by the Company is
required under any statutes or regulations.

			
	 	 	 
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	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority. Nevertheless, this Exclusion
shall not apply to loss or damage occasioned by riots, strikes, civil commotion,
vandalism, malicious damage, and Acts of Terrorism.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive
substances intended for use as an explosive, ammunitions, fuses, arms, or fireworks;
however, this exclusion shall not apply to the incidental packaging, handling or storage
of same in connection with the sale or transportation by owner operators of such
substances.
	 
	 	7.	 	Loss arising from Professional Sports Teams.
	 
	 	8.	 	Loss sustained by Commercial Airline Personnel on board the aircraft and arising
while the aircraft is In Flight. The following definitions shall apply to this Exclusion:

	 	a.	 	“Commercial Airline” shall mean an organization in the business of
transporting passengers and/or goods by aircraft;
	 
	 	b.	 	“Personnel” shall mean employees of the Commercial Airline acting
within the scope of their employment; and
	 
	 	c.	 	“In Flight” shall mean from the time the door(s) close for departure to
the time the door(s) open for arrival.

	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally
involved in the manufacture, distribution, installation, testing, remediation, removal,
storage, disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid
owner operations when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or structures
in excess of three stories.
	 
	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation
Act, Jones Act, Federal Employers Liability Act, Maritime Employers Liability Act, and
any other federal act if the payroll for such business is greater than 10% of the total
payroll for the original insured’s total operations including such business.

			
	 	 	 
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	 	15.	 	As respects Acts of Terrorism, losses directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with biological,
chemical, or nuclear or radiation pollution or contamination.
	 
	 	 	 	This exclusion shall not be construed to apply to loss or damage occasioned by riots,
strikes, civil commotion, vandalism or malicious damage as those terms have been
interpreted by United States courts to apply to insurance policies.
	 
	 	16.	 	Financial Guaranty.

	B.	 	If the Company becomes involved in a risk excluded by the foregoing either by an existing
insured extending its operations or if the Company inadvertently issues a Policy falling
within the scope of one or more of the preceding exclusions, such Policy shall be covered
hereunder, provided that the Company issues, or causes to be issued, the required notice of
cancellation within 30 days after a member of the executive or managerial staff at the
Company’s home office having underwriting authority in the class of business involved becomes
aware that the Policy applies to excluded classes, unless the Company is prevented from
canceling said Policy within such period by applicable statute or regulation, in which case
such Policy shall be covered hereunder until the earliest date on which the Company may
cancel.

ARTICLE 7

SPECIAL ACCEPTANCE

Business that is not within the scope of this Contract may be submitted to the Reinsurer for
special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered
hereunder, subject to the terms and conditions of this Contract, except as modified by the special
acceptance. The Reinsurer shall be deemed to have accepted a risk, if it has not responded within
five days after receiving the underwriting information on such risk. Any renewal of a special
acceptance agreed to for a predecessor contract to this Contract shall automatically be covered
hereunder.

ARTICLE 8

PREMIUM

	A.	 	The Company shall pay the Reinsurer a deposit premium of $1,271,220 for the term of this
Contract, to be paid in the amount of $317,805 on July 1 and October 1, 2008, and January 1
and April 1, 2009.

			
	 	 	 
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	B.	 	Within 45 days following the expiration of this Contract, the Company shall furnish to the
Reinsurer a statement of the Gross Net Earned Premium Income for the term of this Contract and
calculate a premium at a rate of 1.05%, multiplied by the Company’s Gross Net Earned Premium
Income. Should the premium so calculated exceed the deposit premium paid in accordance with
paragraph A of this Article, the Company shall immediately pay the Reinsurer the difference.
Should the premium so calculated be less than the deposit premium paid in accordance with
paragraph A of this Article, the Reinsurer shall immediately pay the Company the difference,
subject to a minimum premium for the term of this Contract of $1,016,980.

	C.	 	The Company shall furnish the Reinsurer with such information as may be required by the
Reinsurer for completion of its NAIC annual statements.

ARTICLE 9

OTHER REINSURANCE

The Company is permitted to have other treaty reinsurance, recoveries under which shall inure
solely to the benefit of the Company and shall be entirely disregarded in applying all of the
provisions of this Contract.

ARTICLE 10

REINSTATEMENT

	A.	 	Loss payments under this Contract shall reduce the limit of coverage afforded by the amounts
paid, but the limit of coverage shall be reinstated from the time of the occurrence of the
loss, and for each amount so reinstated, the Company agrees to pay an additional premium
calculated at pro rata of 100% of the Reinsurer’s premium for the term of this Contract, being
pro rata only as to the fraction of the Reinsurer’s limit of liability hereunder (i.e., the
fraction of $5,000,000) so reinstated. Nevertheless, the Reinsurer’s liability hereunder shall
not exceed the limits as provided in the Retention and Limit Article.

	B.	 	If at the time of a loss settlement hereon the reinsurance premium, as calculated in
accordance with the Premium Article, is unknown, the above calculation of reinstatement
premium shall be based upon the deposit premium, subject to adjustment when the reinsurance
premium is finally established.

ARTICLE 11

DEFINITIONS

	A.	1. 	 	 “Ultimate Net Loss” means the actual loss paid by the Company or which the
Company becomes liable to pay, including structured settlements with claimants or

			
	 	 	 
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	 		 	outside insurers, such loss to include Loss Adjustment Expense, Extra Contractual
Obligations and Loss in Excess of Policy Limits as defined in the Extra Contractual
Obligations/Excess of Policy Limits Article.
	 
	 	2.	 	Salvages and all recoveries (including amounts due under all reinsurances that
inure to the benefit of this Contract, whether recovered or not), shall be first deducted
from such loss to arrive at the amount of liability attaching hereunder.
	 
	 	3.	 	All salvages, recoveries or payments recovered or received subsequent to loss
settlement hereunder shall be applied as if recovered or received prior to the aforesaid
settlement, and all necessary adjustments shall be made by the parties hereto.
	 
	 	4.	 	Ultimate Net Loss shall not be reduced by the amount of any deductibles, whether or
not recovered by the Company. “Deductibles” shall mean any insurance plan, however
denominated, where the insured participates in, and is responsible for, reimbursing the
Company for losses up to a specified limit.
	 
	 	5.	 	The Company shall be deemed to be “liable to pay” a loss when a judgment has been
rendered that the Company does not plan to appeal, and/or the Company has obtained a
release, and/or the Company has accepted a proof of loss.
	 
	 	6.	 	Nothing in this clause shall be construed to mean that losses are not recoverable
hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

	B.	 	“Loss Occurrence” means each and every disaster, casualty, accident, or loss or series of
disasters, casualties, accidents or losses arising out of one event. The Company shall be the
sole judge of what constitutes one event.

	 	1.	 	As respects a Loss Occurrence involving Occupational Disease or Other Disease or
Cumulative Trauma, the following shall apply:

	 	a.	 	Per Event Coverage. As respects losses arising from
Occupational Disease or Other Disease, regardless of the specific kind or class,
suffered by employees of one or more employers, all such losses sustained by the
Company from one event not exceeding 72 hours in duration shall, together with
losses not classified as Occupational Disease or Other Disease, be deemed to be a
single “Loss Occurrence.”

	 	b.	 	Per Employee Coverage. As respects losses arising from
Occupational Disease or Other Disease or Cumulative Trauma suffered by a single
employee, and not covered under subparagraph (a) above, subject loss shall also be
limited to events not exceeding 72 hours in duration.

	 	2.	 	As respects natural disasters, the term “Loss Occurrence” shall mean any one or
more occurrence, disaster or casualty arising out of or caused by the perils described
below (a natural Act of God) during any continuous period of 168 hours.

			
	 	 	 
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	 	a.	 	As regards the perils of tornado, cyclone, windstorm, hurricane and/or
hail, “Loss Occurrence” shall mean all losses occasioned by tornadoes, cyclones,
windstorm, hurricanes or hailstorms occurring during any continuous period of 168
hours, and arising from the same atmospheric disturbance.
	 
	 	b.	 	As regards the peril of earthquake, “Loss Occurrence” shall mean all
losses occasioned by earthquakes, including ensuing fire, flood or tidal wave
occurring during any continuous period of 168 hours.
	 
	 	c.	 	As regards the following perils, “Loss Occurrence” shall mean all
losses occasioned by the following perils during any continuous period of 168 hours.

	 	i.	 	Volcanic eruption,
	 
	 	ii.	 	Flood, tides, tidal wave,
	 
	 	iii.	 	Landslide/mudslide,
	 
	 	iv.	 	Meteors.

	 	With respect to natural disasters as defined above, the Company may choose the date and
time when any such period of consecutive hours commences and if any Loss Occurrence is
of greater duration than the above period(s), the Company may divide that Loss
Occurrence into two or more “Loss Occurrences,” provided no two periods overlap and
provided no period commences earlier than the date and time of the happening of the
first recorded individual loss to the Company in that Loss Occurrence.

	C.	 	“Gross Net Earned Premium Income” means gross earned manual premium adjusted for experience
and schedule credit/debit modifications, State/NCCI safety credit and other allowable credits,
premium discount, deductible credits, expense constants and Policy fees, less returns and
cancellations and less the earned portion of premiums ceded by the Company for reinsurance
that inures to the benefit of this Contract, if any.

	D.	 	“Loss Adjustment Expense” means costs and expenses incurred by the Company in connection with
the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a
specific claim or loss, or alleged loss, including but not limited to:

	 	1.	 	court costs;
	 
	 	2.	 	costs of supersedeas and appeal bonds;
	 
	 	3.	 	monitoring counsel expenses;
	 
	 	4.	 	legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto, including but not limited to declaratory judgment actions;

			
	 	 	 
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	 	5.	 	post-judgment interest;
	 
	 	6.	 	pre-judgment interest, unless included as part of an award or judgment;
	 
	 	7.	 	salary charges for staff adjusters, fieldsmen or other employees while actually
engaged in the settlements of the losses; and
	 
	 	8.	 	subrogation, salvage and recovery expenses.

	 	 	“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees,
except salaries as provided in subparagraph (7) above, and office and other overhead
expenses.

	E.	 	“Policy(ies)” means any binder, policy, or contract of insurance or reinsurance issued,
accepted or held covered provisionally or otherwise, by or on behalf of the Company.

	F.	 	“Occupational Disease,” “Other Disease” and “Cumulative Trauma” shall be defined by the
applicable state or federal statutes, regulations, or case law having jurisdiction over such
losses.

	G. 	1.	 	 An “Act of Terrorism” as used in this Contract shall be as defined in Section 102 of
the Terrorism Risk Insurance Act of 2002, as amended (“TRIA”), except as hereinafter
provided.
	 
	 	2.	 	“Act of Terrorism” in respect of losses not covered by TRIA shall be defined as in
the Company’s original Policies or, if not defined therein, shall mean: the use of force
or violence and/or the threat thereof committed for political, religious, or ideological
purposes and with the intention to influence any government and/or to put the public, or
any section of the public, in fear.
	 
	 	3.	 	This Contract also covers loss, damage, cost, or expense directly or indirectly
caused by, contributed by, resulting from, or arising out of or in connection with any
action in controlling, preventing, suppressing, retaliating against, or responding to any
“Act of Terrorism” set forth above.

ARTICLE 12

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

	A.	 	This Contract shall cover 90% of any Extra Contractual Obligations, as provided in the
definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those
liabilities not covered under any other provision of this Contract and that arise from the
handling of any claim on business covered hereunder, such liabilities arising because of, but
not limited to, the following: failure by the Company to settle within the Policy limit, or
by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of

			
	 	 	 
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	 	 	settlement or in the preparation of the defense or in the trial of any action against its
insured or reinsured or in the preparation or prosecution of an appeal consequent upon such
action.

	B.	 	This Contract shall cover 90% of any Loss in Excess of Policy Limits, as provided in the
definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss in
excess of the Policy limit, having been incurred because of, but not limited to, failure by
the Company to settle within the Policy limit or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or
in the trial of any action against its insured or reinsured or in the preparation or
prosecution of an appeal consequent upon such action.

	C.	 	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to
have occurred on the same date as the loss covered under the Company’s Policy, and shall
constitute part of the original loss.

	D.	 	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss”
means any amounts for which the Company would have been contractually liable to pay had it not
been for the limit of the original Policy.

	E.	 	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of
Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

	F.	 	However, this Article shall not apply where the loss has been incurred due to final legal
adjudication of fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual or corporation
or any other organization or party involved in the presentation, defense or settlement of any
claim covered hereunder.

	G.	 	In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 13

RUN-OFF REINSURERS

	A.	 	“Run-off Reinsurer” means any Subscribing Reinsurer that:

	 	1.	 	has been ordered by a state insurance department or other legal authority to cease
writing business, or has been placed under regulatory supervision or in rehabilitation;
or
	 
	 	2.	 	has ceased reinsurance underwriting operations; or
	 
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	 	4.	 	in any other way has assigned its interests or delegated its obligations under
this Contract to an unaffiliated entity.

	 	 	Notwithstanding the foregoing, the provisions of subparagraphs (3) and (4) above shall not
apply to or be enforceable against Lloyd’s Syndicates to the extent those Syndicates are
subject to and/or are required to comply with the Lloyd’s 2006 Claims Scheme.

	B.	 	Notwithstanding any other provision of this Contract, in the event that a Subscribing
Reinsurer becomes a Run-off Reinsurer at any time, the Company may elect, by giving written
notice to the Run-off Reinsurer at any time thereafter, that all or any of the following
shall apply to the Run-off Reinsurer’s participation hereunder:

	 	1.	 	If the Run-off Reinsurer does not pay a claim or raise a query concerning the claim
within 30 days of billing, it shall be estopped from denying such claim and must pay immediately.
	 
	 	2.	 	If payment of any claim has been received from Subscribing Reinsurers constituting
at least 70% of the interests and liabilities of all Subscribing Reinsurers that
participated on this Contract and are active as of the due date; it being understood that
said date shall not be later than 90 days from the date of transmittal by the
Intermediary of the initial billing for each such payment, the Run-off Reinsurer shall be
estopped from denying such claim and must pay within 10 days following transmittal to the
Run-off Reinsurer of written notification of such payments. In no event shall the
provisions of this subparagraph apply to payments due from Subscribing Reinsurers
who are active as of the due date of the claim. For purposes of this subparagraph, a
Subscribing Reinsurer shall be deemed to be active if it is not a Run-off Reinsurer.
	 
	 	3.	 	Should the Run-off Reinsurer refuse to pay claims as required by the subparagraphs
1 and/or 2 above, the interest penalty specified in the Late Payments Article shall be
increased by 0.5% for each 30 days that a payment is past due, subject to a maximum
increase of 7.0%.
	 
	 	4.	 	The Run-off Reinsurer’s liability for losses for Policies covered by this Contract
shall be commuted. In the event the Company and the Run-off Reinsurer cannot agree on the
commutation amount, they shall appoint an actuary and/or appraiser to assess such amount
and shall share equally any expense of the actuary and/or appraiser. If the Company and
the Run-off Reinsurer cannot agree on an actuary and/or appraiser, the Company and the
Run-off Reinsurer each shall nominate three individuals, of whom the other shall decline
two, and the final appointment shall be made by drawing lots. Payment by the Run-off
Reinsurer of the amount of liability ascertained shall constitute a complete and final
release of both parties under this Contract.
	 
	 	5.	 	The Run-off Reinsurer shall have no right of access to the Records of the Company
if the Run-off Reinsurer has denied payment of any claim hereunder or there is a

			
	 	 	 
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	 	 	 	pending arbitration between the Company and the Run-off Reinsurer regarding any claim
hereunder. A reservation of rights shall be considered a denial of a claim.
	 
	 	6.	 	In the event that either party demands arbitration of a dispute between the
Company and the Run-off Reinsurer, and the amount in dispute is less than $100,000,
unless the arbitration notice includes a demand for rescission of this Contract,
notwithstanding the terms of the Arbitration Article, the dispute shall be resolved by
a sole arbitrator and the following procedures shall apply:

	 	a.	 	The sole arbitrator shall be chosen by mutual agreement of the parties
within 15 business days after the demand for arbitration. If the parties have not
chosen an arbitrator within the 15 business days after the receipt of the
arbitration notice, the arbitrator shall be chosen in accordance with the Neutral
Arbitrator Selection Procedure modified for a single arbitrator, established by the
AIDA Reinsurance and Insurance Arbitration Society — U.S. (ARIAS) and in force on
the date the arbitration is demanded. The nominated arbitrator must be available
to read any written submissions and hear testimony within 60 calendar days of being
chosen.
	 
	 	b.	 	Within 10 business days after the arbitrator has been appointed, the
parties shall be notified of deadlines for the submission of briefs and documentary
evidence, as determined by the arbitrator. There shall be no discovery or hearing
unless the parties agree to engage in limited discovery and/or a hearing. Also,
the arbitrator can determine, without the consent of the parties, that a limited
hearing is necessary.
	 
	 	c.	 	The arbitrator shall render a decision no later than 10 business days
from the later of the date on which the briefs are submitted or the close of the
hearing, if any. The decision of the arbitrator shall be in writing and shall be
final and binding.

	C.	 	The Company’s waiver of any rights provided in this Article is not a waiver of that
right or other rights at a later date.

ARTICLE 14

NET RETAINED LIABILITY

	A.	 	This Contract applies only to that portion of any loss that the Company and/or its agents
retains net for its own account (prior to deduction of any reinsurance that inures solely to
the benefit of the Company).

	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not
be increased by reason of the inability of the Company to collect from any other reinsurer(s),
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	 	 	reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or
otherwise.

ARTICLE 15

ORIGINAL CONDITIONS

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and
interpretations, and to the same modifications and alterations as the respective Policies of the
Company. However, in no event shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.

ARTICLE 16

NO THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no instance shall any
insured, claimant or other third party have any rights under this Contract except as may be
expressly provided otherwise herein.

ARTICLE 17

NOTICE OF LOSS AND LOSS SETTLEMENTS

	A.	 	The Company shall advise the Reinsurer promptly of all losses that, in the opinion of the
Company, may result in a claim hereunder and of all subsequent developments thereto that may
materially affect the position of the Reinsurer.

	B.	 	The Company alone and at its full discretion shall adjust, settle or compromise all claims
and losses.

	C.	 	As respects losses subject to this Contract, all loss settlements made by the Company,
whether under strict Policy terms or by way of compromise, and any Extra Contractual
Obligations and/or Loss in Excess of Policy Limits, shall be binding upon the Reinsurer, and
the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement
immediately upon receipt of proof of loss.

			
	 	 	 
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ARTICLE 18

COMMUTATION

	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one or
any number of the Workers’ Compensation losses under this Contract. There will be no
obligation on the part of either party to so commute.

	B.	 	Should the Company become liable for any loss hereunder, and be required to make periodic
payments to or otherwise set up on its books reserves for such loss, at any time after seven
years following the date of such loss and upon mutual agreement of the Company and the
Reinsurer, said loss (including Loss Adjustment Expenses) may be commuted. If the value of
said loss, including amounts falling to the share of the Reinsurer, cannot be agreed upon by
the parties to this Contract, said value may be determined by employing one of the following:

	 	1.	 	A present value calculation based on the following criteria:

	 	a.	 	In respect of all unindexed benefits, the present value calculation
shall be determined based upon an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation.
	 
	 	b.	 	In respect of all future medical costs, the present value calculation
shall be based upon the Company’s evaluation of long term medical care and
rehabilitation requirements, using an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation, and an annual escalation equal to
the Medical Care Consumer Price Index (CPI-MC) at the time of commutation.
	 
	 	c.	 	Where applicable, impaired life expectancy, survivors’ life expectancy,
as well as remarriage probability shall be reflected in the calculation by
employing tables required by statute.

	 	2.	 	The Company may determine the present value by purchasing (or obtaining a quotation
for) an annuity from any A. M. Best’s Class VIII IIA+II rated or better annuity writer,
with an AAA rating by Standard & Poor’s.

	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability
for such loss and the lump sum payment thereof shall constitute a complete release of both
parties from liability hereunder for the commuted losses.

	D.	 	This Article shall survive the expiration or termination of this Contract.

			
	 	 	 
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ARTICLE 19

SUNSET

Notwithstanding the provisions of paragraph C of the Indemnification and Errors and Omissions
Article, coverage hereunder shall apply only to Loss Occurrences notified by the Company to the
Reinsurer within 84 months from the effective date of this Contract.

ARTICLE 20

LATE PAYMENTS

	A.	 	In the event any payment due either party is not received by the Intermediary by the payment
due date, the party to whom payment is due may, by notifying the Intermediary in writing,
require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on
the amount past due calculated for each such payment on the last business day of each month as
follows:

	 	1.	 	The number of full days that have expired since the overdue date or the last
monthly calculation, whichever the lesser; times
	 
	 	2.	 	l/365th of the sum of the six-month United States Treasury Bill rate as quoted in
The Wall Street Journal on the first business day of the month for which the calculation
is made, plus 1%; times
	 
	 	3.	 	The amount past due, including accrued interest.

	 	 	Interest shall accumulate until payment of the original amount due plus interest penalties has
been received by the Intermediary.

	B.	 	The due date shall, for purposes of this Article, be determined as follows.

	 	1.	 	Payments from the Reinsurer to the Company shall be due on the date on which the
demand for payment (including delivery of bordereaux or quarterly or monthly reports) is
received by the Reinsurer, and shall be overdue 30 days thereafter.
	 
	 	2.	 	Payments from the Company to the Reinsurer shall be due on the dates specified
within this Contract. Payments shall be overdue 30 days thereafter except for the first
installment of premium, if applicable, which shall be overdue 60 days from inception or
30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Company receives payment for the
claim giving rise to such reinstatement premium, and payment shall be overdue 30 days
thereafter. In the event a due date is not specifically stated for a given payment, the
overdue date shall be 30 days following the date of billing.

			
	 	 	 
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	C.	 	If the information contained in the Company’s demand for payment is insufficient or not in
accordance with the conditions of this Contract, then within 30 days the Reinsurer shall
request from the Company all additional information necessary to validate its claim and the
payment due date as defined in paragraph B shall be deemed to be the date upon which the
Reinsurer received the requested additional information. This paragraph is only for the
purpose of establishing when a payment is overdue, and shall not alter the provisions of the
Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations.

	D.	 	Should the Reinsurer dispute a claim presented by the Company and the timeframes set out in
paragraph B be exceeded, interest as stipulated in paragraph A shall be payable for the entire
overdue period, but only for the amount of the final settlement with the Reinsurer.

	E.	 	In the event arbitration is necessary to settle a dispute, the panel shall have the authority
to make a determination awarding interest to the prevailing party. Interest, if any, awarded
by the panel shall supersede the interest amounts outlined herein.

	F.	 	Any interest owed pursuant to this Article may be waived by the party to which it is owed.
Waiver of such interest, however, shall not affect the waiving party’s rights to other
interest amounts due as a result of this Article.

	G.	 	For purposes of this Article, reinsuring Underwriting Members of Lloyd’s, London, shall be
considered to be one entity.

ARTICLE 21

OFFSET

All amounts due either the Company or the Reinsurer, whether by reason of reinsurance premium,
Ultimate Net Loss, or any other amount due under this Contract shall be subject to the right of
recoupment and offset and upon the exercise of the same, only the net balance shall be due. All
claims for amounts of reinsurance premium, Ultimate Net Loss, or any other amount due under this
Contract, whether or not fixed in amount at the time of the insolvency of any party to this
Contract, arising from coverage placed in effect under this Contract prior to the insolvency of
any party to this Contract shall be deemed pre-liquidation debts and subject to this Article. In
the event of insolvency of the Company, offset shall be in accordance with applicable law.

ARTICLE 22

CURRENCY

	A.	 	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean
United States Dollars.

			
	 	 	 
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	B.	 	For purposes of this Contract, where the Company receives premiums or pays losses in
currencies other than United States Dollars, such premiums or losses shall be converted into
United States Dollars at the actual rates of exchange at the time of receipt or payment by the
Company.

ARTICLE 23

UNAUTHORIZED REINSURANCE

	A.	 	This Article applies only to a Subscribing Reinsurer who does
not qualify for full credit with any insurance regulatory
authority having jurisdiction over the Company’s reserves.

	B.	 	The Company agrees, in respect of its Policies or bonds falling within the scope of this
Contract, that when it files with its insurance regulatory authority, or sets up on its books
liabilities as required by law, it shall forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations”
shall be defined as follows:

	 	1.	 	unearned premium (if applicable);
	 
	 	2.	 	known outstanding losses that have been reported to the Reinsurer and Loss
Adjustment Expense relating thereto;
	 
	 	3.	 	losses and Loss Adjustment Expense paid by the Company but not recovered from the
Reinsurer;
	 
	 	4.	 	losses incurred but not reported and Loss Adjustment Expense relating thereto.

	C.	 	The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement
or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of
funding provided it is acceptable to the insurance regulatory authorities having jurisdiction
over the Company’s reserves.

	D.	 	When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the
Company of a clean, irrevocable and unconditional LOC issued by a bank and containing
provisions acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be
issued for a period of not less than one year, and shall be automatically extended for one
year from its date of expiration or any future expiration date unless 30 days (or such other
time period as may be required by insurance regulatory authorities), prior to any expiration
date the issuing bank shall notify the Company by certified or registered mail that the
issuing bank elects not to consider the LOC extended for any additional period.

			
	 	 	 
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	E.	 	The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to
the provisions of this Contract may be drawn upon at any time, notwithstanding any other
provision of this Contract, and be utilized by the Company or any successor, by operation of
law, of the Company including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company, for the following purposes, unless otherwise provided
for in a separate Trust Agreement:

	 	1.	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of which is
due under the terms of this Contract and that has not been otherwise paid;
	 
	 	2.	 	to make refund of any sum that is in excess of the actual amount required to pay
the Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s
Obligations, if funding is provided by a Trust Agreement);
	 
	 	3.	 	to fund an account with the Company for the Reinsurer’s Obligations. Such cash
deposit shall be held in an interest bearing account separate from the Company’s other
assets, and interest thereon not in excess of the prime rate shall accrue to the benefit
of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets
in the account that are in excess of the Reinsurer’s Obligations (or in excess of 102% of
the Reinsurer’s Obligations, if funding is provided by a Trust Agreement). If the assets
are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;
	 
	 	4.	 	to pay the Reinsurer’s share of any other amounts the Company claims are due under
this Contract.

	F.	 	If the amount drawn by the Company is in excess of the actual amount required for E(1) or
E(3), or in the case of E(4), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company or the Reinsurer.

	G.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorized
representatives of the Company.

	H.	 	At annual intervals, or more frequently at the discretion of the Company, but never more
frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s
Obligations for the sole purpose of amending the LOC or other method of funding, in the
following manner:

	 	1.	 	If the statement shows that the Reinsurer’s Obligations exceed the balance of the
LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the
statement, secure delivery to the Company of an amendment to the LOC increasing the
amount of credit by the amount of such difference. Should another method of

			
	 	 	 
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	 	 	 	funding be used, the Reinsurer shall, within the time period outlined above, increase
such funding by the amount of such difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s Obligations are less than
the balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the
trust account balance if funding is provided by a Trust Agreement), as of the statement
date, the Company shall, within 30 days after receipt of written request from the
Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC
reducing the amount of credit available by the amount of such excess credit. Should
another method of funding be used, the Company shall, within the time period outlined
above, decrease such funding by the amount of such excess.

ARTICLE 24

TAXES

	A.	 	In consideration of the terms under which this Contract is issued, the Company undertakes not
to claim any deduction of the premium hereon when making Canadian tax returns or when making
tax returns, other than Income or Profits Tax returns, to any state or territory of the United
States of America or to the District of Columbia.

	B.	1. 	 	Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as imposed under
the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.
	 
	 	2.	 	In the event of any return of premium becoming due hereunder, the Subscribing
Reinsurer shall deduct the applicable percentage of the premium from the amount of the
return, and the Company or its agent should take steps to recover the Tax from the U.S.
Government.

ARTICLE 25

ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of
the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files
(“Records”) relating to business reinsured under this Contract during regular business hours after
giving five working days’ prior notice. This right shall be exercisable during the term of this
Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer shall
not have any right of access to the Records of the Company if it is not current in all undisputed
payments due the Company.

			
	 	 	 
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ARTICLE 26

CONFIDENTIALITY

	A.	 	The Reinsurer hereby acknowledges that the documents, information and data provided to it by
the Company, whether directly or through an authorized agent, in connection with the placement
and execution of this Contract (“Confidential Information”) are proprietary and confidential
to the Company. Confidential Information shall not include documents, information or data
that the Reinsurer can show:

	 	1.	 	are publicly known or have become publicly known through no unauthorized act of the
Reinsurer;
	 
	 	2.	 	have been rightfully received from a third person without obligation of
confidentiality; or
	 
	 	3.	 	were known by the Reinsurer prior to the placement of this Contract without an
obligation of confidentiality.

	B.	 	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential
Information to any third parties, including any affiliated companies, except:

	 	1.	 	when required by retrocessionaires subject to the business ceded to this Contract;
	 
	 	2.	 	when required by regulators performing an audit of the Reinsurer’s records and/or
financial condition; or
	 
	 	3.	 	when required by external auditors performing an audit of the Reinsurer’s records
in the normal course of business.

	 	 	Further, the Reinsurer agrees not to use any Confidential Information for any purpose not
related to the performance of its obligations or enforcement of its rights under this
Contract.
	 
	C.	 	Notwithstanding the above, in the event that the Reinsurer is required by court order, other
legal process or any regulatory authority to release or disclose any or all of the
Confidential Information, the Reinsurer agrees to provide the Company with written notice of
same at least 10 days prior to such release or disclosure and to use its best efforts to
assist the Company in maintaining the confidentiality provided for in this Article.

	D.	 	The provisions of this Article shall extend to the officers, directors and employees of the
Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

			
	 	 	 
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ARTICLE 27

INDEMNIFICATION AND ERRORS AND OMISSIONS

	A.	 	The Reinsurer is reinsuring, to the amount herein provided, the obligations of the Company
under any original insurance or reinsurance. The Company shall be the sole judge as to:

	 	1.	 	what shall constitute a claim or loss covered under any original insurance or
reinsurance written by the Company;
	 
	 	2.	 	the Company’s liability thereunder;
	 
	 	3.	 	the amount or amounts that it shall be proper for the Company to pay thereunder.

	B.	 	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and
liability(ies) of the Company under any original insurance or reinsurance.

	C.	 	Except for the conditions as provided for in the Sunset Article of this Contract, any
inadvertent error, omission or delay in complying with the terms and conditions of this
Contract shall not be held to relieve either party hereto from any liability that would attach
to it hereunder if such error, omission or delay had not been made, provided such error,
omission or delay is rectified immediately upon discovery.

ARTICLE 28

INSOLVENCY

	A.	 	If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article will apply severally to each such company. Further,
this Article and the laws of the domiciliary state will apply in the event of the insolvency
of any company covered hereunder. In the event of a conflict between any provision of this
Article and the laws of the domiciliary state of any company covered hereunder, that
domiciliary state’s laws will prevail.

	B.	 	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk
or obligation assumed by the Reinsurer, if required by applicable law) shall be payable
directly to the Company, or to its liquidator, receiver, conservator or statutory successor,
either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed
and allowed in the liquidation proceeding, whichever may be required by applicable statute,
without diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay all or a portion
of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory
successor of the Company shall give written notice to the Reinsurer of the pendency of a claim
against the Company indicating the Policy or bond reinsured, which claim would involve a
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	 	 	time after such claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding where such claim is to be
adjudicated any defense or defenses that it may deem available to the Company or its
liquidator, receiver, conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to the approval of the court, against the Company as
part of the expense of conservation or liquidation to the extent of a pro rata share of the
benefit that may accrue to the Company solely as a result of the defense undertaken by the
Reinsurer.

	C.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this reinsurance Contract as though such expense had been incurred by the Company.

	D.	 	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this
Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company
or to its liquidator, receiver, conservator or statutory successor, (except as provided by
Section 4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of
such law have been met, if New York law applies) or except (1) where the Contract specifically
provides another payee in the event of the insolvency of the Company, or (2) where the
Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees under such
Policies and in substitution for the obligations of the Company to such payees. Then, and in
that event only, the Company, with the prior approval of the certificate of assumption on New
York risks by the Superintendent of Insurance of the State of New York, or with the prior
approval of such other regulatory authority as may be applicable, is entirely released from
its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 29

ARBITRATION

	A.	 	Any dispute arising out of the interpretation, performance or breach of this Contract,
including the formation or validity thereof, shall be submitted for decision to a panel of
three arbitrators. Notice requesting arbitration will be in writing and sent certified
registered mail, return receipt requested.

	B.	 	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 to appoint its arbitrator within 30 days after being requested
to do so by the other party, the latter, after 10 days’ notice by certified or registered mail
of its intention to do so, may appoint the second arbitrator.

			
	 	 	 
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	C.	 	If the two arbitrators are unable to agree upon the third arbitrator within 30 days of their
appointment, the third arbitrator shall be selected by the American Arbitration Association.

	D.	 	All arbitrators shall be disinterested active or former executives of insurance or
reinsurance companies or Underwriters at Lloyd’s, London, with expertise or experience in the
area being arbitrated. If a member of the panel dies, becomes disabled or is otherwise
unwilling or unable to serve, a substitute shall be selected in the same manner as the
departing member was chosen and the arbitration shall continue.

	E.	 	Within 45 days after notice of appointment of all arbitrators, the panel shall meet and
determine timely periods for briefs, discovery procedures and schedules for hearings.

	F.	 	The panel shall be relieved of all judicial formality and shall not be bound by the strict
rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract,
the arbitrators may at their discretion, consider underwriting and placement information
provided by the Company to the Reinsurer, as well as any correspondence exchanged by the
parties that is related to this Contract. Unless the panel agrees otherwise, arbitration
shall take place in Fort Lauderdale, Florida, but the venue may be changed when deemed by the
panel to be in the best interest of the arbitration proceeding. 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.

	G.	 	The panel shall make its decision considering the custom and practice of the applicable
insurance and reinsurance business within 60 days following the termination of the hearings.
Judgment upon the award may be entered in any court having jurisdiction thereof.

	H.	 	At the Company’s sole option, if more than one Subscribing Reinsurer is involved in
arbitration where there are common questions of law or fact and a possibility of conflicting
awards or inconsistent results, all such Subscribing Reinsurers shall constitute and act as
one party for purposes of this Article and communications shall be made by the Company to
each of the Subscribing Reinsurers constituting the one party; provided, however, that
nothing herein shall impair the rights of such Subscribing Reinsurers to assert several,
rather than joint defenses or claims, nor be construed as changing the liability of the
Subscribing Reinsurers under the terms of this Contract from several to joint (if applicable).

	I.	 	If more than one of the Subscribing Reinsurers are involved in an arbitration as respondent,
the time for the appointment of their party-appointed arbitrator shall be extended to 60
days. This provision shall not change the liability of each of the Subscribing Reinsurers
under the terms of this Contract from several to joint.

	J.	 	Each party shall bear the expense of its own arbitrator and shall jointly and equally bear
with the other party the cost of the third arbitrator. The remaining costs of the arbitration
shall be allocated by the panel. The panel may, at its discretion, award such further costs

			
	 	 	 
	Effective July 1, 2008
	 	DOC July 25, 2008
	2175-10-0004	 	 

27 of 32

 

GUY CARPENTER

	 	 	and expenses as it considers appropriate, including but not limited to attorneys’ fees, to
the extent permitted by law.

ARTICLE 30

SERVICE OF SUIT

	A.	 	This Article applies only to those Subscribing Reinsurers not domiciled in the United States
of America, and/or not authorized in any state, territory and/or district of the United States
of America where authorization is required by insurance regulatory authorities.

	B.	 	This Article shall not be read to conflict with or override the obligations of the parties to
arbitrate their disputes as provided for in the Arbitration Article. This Article is intended
as an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an
alternative to the Arbitration Article for resolving disputes arising out of this Contract.

	C.	 	In the event of the failure of the Reinsurer to pay any amount claimed to be due hereunder,
the Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of
competent jurisdiction within the United States. Nothing in this Article constitutes or
should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in
any court of competent jurisdiction in the United States, to remove an action to a United
States District Court, or to seek a transfer of a case to another court as permitted by the
laws of the United States or of any state in the United States. The Reinsurer, once the
appropriate court is selected, whether such court is the one originally chosen by the Company
and accepted by Reinsurer or is determined by removal, transfer, or otherwise, as provided for
above, shall comply with all requirements necessary to give said court jurisdiction and, in
any suit instituted against the Reinsurer upon this Contract, shall abide by the final
decision of such court or of any appellate court in the event of an appeal.

	D.	 	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750 Seventh
Avenue, New York, New York 10019-6829, or another party specifically designated in the
applicable Interests and Liabilities Agreement attached hereto. The above-named are
authorized and directed to accept service of process on behalf of the Reinsurer in any such
suit.

	E.	 	Further, pursuant to any statute of any state, territory or district of the United States
that makes provision therefor, the Reinsurer hereby designates the Superintendent,
Commissioner or Director of Insurance, or other officer specified for that purpose in the
statute, or his successor or successors in office, as its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract, and hereby
designates the above-named as the person to whom the said officer is authorized to mail such
process or a true copy thereof.

			
	 	 	 
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	 	DOC July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

ARTICLE 31

AGENCY

For purposes of sending and receiving notices and payments required by this Contract, Guarantee
Insurance Company shall be deemed the agent of all other reinsured Companies referenced in this
Contract. In no event, however, shall any reinsured Company be deemed the agent of another with
respect to the terms of the Insolvency Article.

ARTICLE 32

GOVERNING LAW

This Contract shall be governed as to performance, administration and interpretation by the laws
of the State of Florida, exclusive of conflict of law rules. However, with respect to credit for
reinsurance, the rules of all applicable states shall apply.

ARTICLE 33

ENTIRE AGREEMENT

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. The Contract may not be modified or changed except by an amendment
to this Contract in writing signed by both parties.

ARTICLE 34

INTERMEDIARY

Guy Carpenter & Company, LLC, is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including notices, statements, premiums, return
premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages, and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through Guy Carpenter &
Company, LLC, 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435. Payments by the Company to
the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed payment to the Company only to the extent that such payments are
actually received by the Company.

			
	 	 	 
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	 	DOC July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

ARTICLE 35

MODE OF EXECUTION

	A.	 	This Contract may be executed by:

	 	1.	 	an original written ink signature of paper documents;
	 
	 	2.	 	an exchange of facsimile copies showing the original written ink signature of
paper documents;
	 
	 	3.	 	electronic signature technology employing computer software and a digital
signature or digitizer pen pad to capture a person’s handwritten signature in such a
manner that the signature is unique to the person signing, is under the sole control of
the person signing, is capable of verification to authenticate the signature and is
linked to the document signed in such a manner that if the data is changed, such
signature is invalidated.

	B.	 	The use of any one or a combination of these methods of execution shall constitute a legally
binding and valid signing of this Contract. This Contract may be executed in one or more
counterparts, each of which, when duly executed, shall be deemed an original.

IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized
representative(s) this 12 day of Aug, in the year of 2008.

Signed in Fort Lauderdale, Florida

	 	 	 	 	 	 	 
	ATTEST	 	GUARANTEE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	/s/ Simone O. Resende

	 	By:	 	/s/ [ILLEGIBLE]	 	 
	Broward County, Florida 

	 	
	 	 

	 	 
	

	 	Title:
	 	CUO	 	 
	 

	 	 	 	 	 	 
	 

	 	Reference:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective July 1, 2008
	 	DOC: July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

NUCLEAR RISK EXCLUSION

This Agreement does not apply to “Ultimate Net Loss” arising from, whether directly or indirectly,
whether proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation or
radioactive contamination, all whether controlled or uncontrolled; or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation or
radioactive contamination, all whether controlled or uncontrolled, caused directly or
indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;
	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb. 

	 
	As used in this Exclusion:

“Fissionable Substance” means;

	 	 	 	any prescribe substance that is, or from which can be obtained, a substance capable of
releasing atomic energy by nuclear fission.

“Nuclear Facility” means;

	 	 	 	any Nuclear Reactor,
	 
	 	 	 	any apparatus designed or used to sustain nuclear fission in a self-supporting chain
reaction or to contain a critical mass of plutonium, thorium and uranium or any one or
more of them;
	 
	 	 	 	any equipment or device designed or used for (i) separating the isotopes of plutonium,
thorium and uranium or any one or more of them, (ii) processing or utilizing spent
fuel, or (iii) handling, processing or packaging Waste;
	 
	 	 	 	any equipment or device used for the processing, fabricating or alloying of Special
Nuclear Material if at any time the total amount of such material in the custody of the
insured at the premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or
more than 250 grams of uranium 235,

			
	 	 	 
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	 	DOC. July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

	 	 	 	any equipment or device used for the processing, fabricating or alloying of plutonium,
thorium or uranium enriched in the isotope uranium 233 or in the isotope uranium 235,
or any one or more of them if at any time the total amount of such material in the
custody of the Insured at the premised where such equipment or device is located
consists of or contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235;
	 
	 	 	 	any structure, basin, excavation, premises or place prepared or used for the storage or
disposal of Waste or Radioactive Material, and includes the site on which any of the
foregoing is located, all operations conducts on such site and all premises used for
such operations;

“Nuclear Hazard” means: the radioactive, toxic, explosive or other hazardous properties of
Radioactive Material or Nuclear Material.

“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.

“Nuclear Reactor” means any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of fissionable material.

“Radioactive Material” means uranium, thorium, plutonium, neptunium, their respective derivatives
and compounds, radioactive isotopes of other elements and any other substances that the Atomic
Energy Control Board may, by regulation designate as being prescribed substances capable of
releasing atomic energy, or as being requisite for the production, use or application of atomic
energy.

“Source Material,” “Special Nuclear Material”, and “Byproduct Material” have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory thereof.

“Spent Fuel” means any fuel element or fuel component, solid or liquid, which has been sued or
exposed to radiation in the Nuclear Reactor.

“Waste”
means any waste material (i) containing Byproduct Material and (ii) resulting from the
operation by any person or organization of any Nuclear Facility.

			
	 	 	 
	Effective July 1, 2008
	 	DOC July 25, 2008
	2175-10-0004	 	 

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GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

MAX BERMUDA LTD.

(the “Subscribing Reinsurer”)

as respects the

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be   50.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special Termination
Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(1) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

Brokerage for Guy Carpenter (US) hereunder is 10.00% of gross ceded premium.

The
brokerage rate on reinstatement premium shall be 50.00% of the above rate.

			
	 	 	 
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	 	DOC: July 25, 2008
	2175-10-0004	 	 

1 of 2

 

GUY CARPENTER

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 30th day of July, in the year 2008.

MAX BERMUDA LTD.

	 	 	 
	/s/ [ILLEGIBLE]

	 	/s/ [ILLEGIBLE]
	 

Market
Reference Number: 21604

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective July 1, 2008
	 	DOC July 25, 2008
	2175-10-0004	 	 

2 of 2

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

CERTAIN INSURANCE COMPANIES ON WHOSE BEHALF THIS AGREEMENT

HAS BEEN SIGNED

(AS PER SCHEDULE ATTACHED HERETO)

(the “Subscribing Reinsurer”)

as respects the

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company’’)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth in
the Contract shall be      25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m.. Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special
Termination Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(1) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: July 25, 2008
	2175-10-0004 (London)	 	 

1 of 2

 

GUY CARPENTER

Brokerage for this Contract is 15.00% of gross ceded premium, of which 10.00% is for Guy Carpenter
(US) and 5.00% is for Guy Carpenter & Company Limited, as London correspondent broker.

No brokerage will be paid on reinstatement premium.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 7th day of August, in the years 2008.

CERTAIN INSURANCE COMPANIES ON WHOSE BEHALF THIS AGREEMENT

HAS BEEN SIGNED

(AS PER SCHEDULE ATTACHED HERETO)

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: July 25, 2008
	2175-10-0004 (London)	 	 

2 of 2

 

	 	 	 	 	 
	BUREAU REFERENCE

	 	 	 	0807240003663 
	PROPORTION

	 	CODE
	 	MEMBER COMPANY AND REFERENCE
	%
	 	 	 	 
	25.0000000

	 	A8408
	 	ASPEN INSURANCE UK LIMITED
	 

	 	 	 	U07433508A0Q
	 
	 	 	 	 
	25.0000000 %

	 	TOTAL	 	 

Page 1

 

 

1S37-010103

Companies Treaty Attestation Clause

We the
Reinsurers hereby severally agree to reinsure the Reinsured in
the manner and proportions
set forth in this reinsurance contract.

The
subscribing Reinsures obligations under this contract are several and
not joint and are limited solely to the extent of their individual signed subscriptions. The subscribing Reinsurers are
not responsible for the subscription of any co-subscribing Reinsurer who for any reason does not
satisfy all or part of its obligations.

In witness whereof the name of the Managing Director of ins-sure Services Limited is subscribed on
behalf of each of the Reinsurers in accordance with the provisions of the Services Agreement that
each of the Reinsurers has with London Processing Centre Limited (a wholly owned subsidiary or
ins-sure Services Limited)

           
                 
              /s/ [ILLEGIBLE]    
              
                
     Managing Director

This wording is not valid unless it bears the signature of the Managing Director of Ins-sure Services Limited

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the
original document is stored on the Insurer’s Market Repository to which your broker has access.

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

CERTAIN UNDERWRITING MEMBERS OF LLOYD’S, LONDON, ON WHOSE

BEHALF THIS AGREEMENT HAS BEEN SIGNED.

(AS PER SCHEDULE ATTACHED HERETO)

(the “Subscribing Reinsurer”)

as respects the

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be       25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special Termination
Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: July 25, 2008
	2175-10-0004 (London)	 	 

1 of 2

 

GUY CARPENTER

Brokerage for this Contract is 15.00% of gross ceded premium, of which 10.00% is for Guy Carpenter
(US) and 5.00% is for Guy Carpenter & Company Limited, as London correspondent broker.

No brokerage will be paid on reinstatement premium.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows.

on this 11th day of August, in the year 2008.

CERTAIN UNDERWRITING MEMBERS OF LLOYD’S, LONDON, ON WHOSE

BEHALF THIS AGREEMENT HAS BEEN SIGNED.

(AS PER SCHEDULE ATTACHED HERETO)

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

SECOND WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: July 25, 2008
	2175-10-0004 (London)	 	 

2 of 2

 

Now Know
[ILLEGIBLE] that We the Underwriters, Members of the Syndicates whose definitive numbers in
the after-mentioned List of Underwriting Members of Lloyd’s are set out in the attached Table,
hereby bind ourselves each for his own part and not one for another, our Executors and
Administrators, and in respect of his due proportion only, to pay or make good to the Assured or
to the Assured’s Executors or Administrators or to indemnify him or them against all such loss,
damage or liability as herein provided, such payment to be made after such loss, damage or
liability is proved and the due proportion for which each of us, the Underwriters, is liable shall
be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or
Proportion of the total sum insured
[ILLEGIBLE] 

			
	 	 	 
	BUREAU REFERENCE      61899 25/07/08
	 	BROKER NUMBER     0775

	 	 	 	 	 
	PROPORTION	 	SYNDICATE	 	UNDERWRITER’S
	%	 	 	 	REFERENCE
	10.7144
	 	4472
	 	1149080108FL
	7.1428
	 	2987
	 	BA442508A000
	7.1428
	 	1955
	 	0009380108
	 	 	 	 	 
	TOTAL LINE
	 	No. OF SYNDICATES	 	 
	25.0000
	 	3	 	 

THE LIST OF UNDERWRITING MEMBERS

OF LLOYDS IS IN RESPECT OF 2008

YEAR OF ACCOUNT

BUREAU USE ONLY

USE3 45 9414

Page 1 of 1

 

 

     Now Know
Ye that We the Underwriters, Members of the Syndicates whose definitive numbers
in the after-mentioned List of Underwriting Members
of Lloyd’s are set out in the attached Table, hereby bind ourselves each for his own part and not
one for another, our Executors and Administrators, and in respect
of his due proportion only, to pay or make good to the Assured or to the Assured’s Executors or
Administrators or to indemnify him or them against all such loss,
damage or liability as herein provided, such payment to be made after such loss, damage or
liability is proved and the due proportion for which each of us, the
Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List,
of the Amount, Percentage or Proportion of the total sum insured
[ILLEGIBLE] which is in the Table set opposite the definitive number of the Syndicate of which
such Underwriter is a Member AND FURTHER THAT the List of
Underwriting Members of Lloyd’s referred to above shows their respective Syndicates and
Shares therein, is deemed to be incorporated in and to form part of
[ILLEGIBLE] bears the number specified in the attached Table and is available for
inspection at Lloyd’s Policy Signing Office by the Assured or his or their
[ILLEGIBLE] and a true copy of the material parts of the said List certified by the
General Manager of Lloyd’s Policy Signing Office will be furnished to the
[ILLEGIBLE] on application.

     In Witness whereof the General Manager of Lloyd’s Policy Signing Office has subscribed
his name on behalf of each of us.

	 	 	 
	 

	 	LLOYD’S POLICY SIGNING OFFICE,
	 
	 	/s/ [ILLEGIBLE]

	

	Definite Numbers of Syndicates
and Amount, Percentage or Proportion of the
Total Sum insured hereunder shared between
the Members of those Syndicates.

	 	General ManagerEX-10.4 AMENDED & RESTATED ASSUMED 2005 STOCK PLAN

Exhibit 10.4

MIMEDX GROUP, INC.

AMENDED AND RESTATED ASSUMED 2005 STOCK PLAN

(FORMERLY THE SPINEMEDICA CORP. 2005 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN)

1. Definitions

     In addition to other terms defined herein, the following terms shall have the meanings given
below:

     (a) Administrator means the board, and, upon its delegation of all or part of its
authority to administer the Plan to the Committee, the Committee.

     (b) Affiliate means any Parent or Subsidiary of the Corporation, and also includes any
other business entity which is controlled by, under common control with or controls the
Corporation; provided, however, that the term “Affiliate” shall be construed in a manner in
accordance with the registration provisions of applicable federal securities laws and any
requirements imposed under Code Section 409A, related regulations or other guidance.

     (c) Applicable Laws means any applicable laws, rules or regulations (or similar
guidance), including but not limited to the Securities Act, the Exchange Act and the Code.

     (d) Award means, individually or collectively, a grant under the Plan of an Option
(including an Incentive Option or Nonqualified Option); a Stock Appreciation Right (including a
Related SAR or a Freestanding SAR); a Restricted Award (including a Restricted Stock Award or a
Restricted Unit Award); a Dividend Equivalent Award; or any other award granted under the Plan.

     (e) Award Agreement means an agreement (which may be in written or electronic form, in
the Administrator’s discretion, and which includes any amendment or supplement thereto) between the
Corporation and a Participant specifying the terms, conditions and restrictions of an Award granted
to the Participant. An Award Agreement may also state such other terms, conditions and
restrictions, including but not limited to terms, conditions and restrictions applicable to shares
or any other benefit underlying an Award, as may be established by the Administrator.

     (f) Board or Board of Directors means the Board of Directors of the
Corporation.

     (g) Cause means, unless the Administrator determines otherwise, a Participant’s
termination of employment or service resulting from the Participant’s (i) termination for “cause”
as defined under the Participant’s employment, consulting or other agreement with the Corporation
or an Affiliate, if any, or (ii) if the Participant has not entered into any such employment,
consulting or other agreement (or if any such agreement does not address the effect of a “clause”
termination), then the Participant’s termination shall be for “Cause” if termination results due to
the Participant’s (A) dishonesty; (B) refusal or continued failure to perform his duties for the
Corporation, as determined by the Administrator or its designee; (C) engaging in fraudulent
conduct; or (D) engaging in any conduct that could be materially damaging to the

-1-

 

Corporation
without a reasonable good faith belief that such conduct was in the best interest of the
Corporation. The determination of “Cause” shall be made by the Administrator and its determination
shall be final and conclusive. Without in any way limiting the effect of the foregoing, for the
purposes of the Plan and any Award, a Participant’s employment or service shall be deemed to have
terminated for Cause if, after the Participant’s employment or service has terminated, facts and
circumstances are discovered that would have justified, in the opinion of the Administrator, a
termination for Cause.

     (h) Change in Control:

     (i) General: Except as may be otherwise provided in an individual Award Agreement or as
may be otherwise required in order to comply with Code Section 409A, a Change in Control
shall be deemed to have occurred on the earliest of the following dates:

     (A) The date any entity or person, other than a person or entity who was a
shareholder of the Corporation as of the Effective Date of the Plan, shall have
become the beneficial owner of, or shall have obtained voting control over, fifty
percent (50%) or more of the outstanding Common Stock of the Corporation;

     (B) The date of the shareholders of the Corporation approve a definitive
agreement (X) to merge or consolidate the Corporation with or into another
corporation or other business entity (each, a “corporation”), in which the
Corporation is not the continuing or surviving corporation or pursuant to which any
shares of Common Stock of the Corporation would be converted into cash, securities
or other property of another corporation, other than a merger or consolidation of
the Corporation in which the holders of Common Stock immediately prior to the merger
or consolidation continue to own immediately after the merger or consolidation at
least fifty percent (50%) of Common Stock, or, if the corporation is not the
surviving corporation, the common stock (or other voting securities) of the
surviving corporation; provided, however, that if consummation of such merger or
consolidation is subject to the approval of federal, state or other regulatory
authorities, then, unless the Administrator determines otherwise, a “Change in
Control” shall not be deemed to occur until the later of the date of shareholder
approval of such merger or consolidation or the date of final regulatory approval of
such merger or consolidation; or (Y) to sell or otherwise dispose of all or
substantially all the assets of the Corporation; or

     (C) Notwithstanding the foregoing, a Change in Control shall not be deemed to
have occurred in the event the Corporation forms a holding company as a result of
which the holders of the Corporation’s voting securities immediately prior to the
transaction hold, in approximately the same relative proportions as they hold prior
to the transaction, substantially all of the voting securities of a holding company
owning all of the Corporation’s voting securities after the completion of the
transaction.

     (D) A Change in Control shall not be deemed to have occurred as a

-2-

 

result of an
initial public offering of the Common Stock of the Corporation, or the creation or
development of a public market (as defined herein) for the shares of Common Stock of
the Corporation.

     (For the purposes herein, the term “person” shall mean any individual,
corporation, partnership, group, association or other person, as such term is
defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than the
Corporation, a subsidiary of the Corporation or any employee benefit plan(s)
sponsored or maintained by the Corporation or any subsidiary thereof, and the term
“beneficial owner” shall have the meaning given the term in Rule 13d-3 under the
Exchange Act.)

     (E) The Administrator shall have full and final authority, in its discretion,
to determine whether a Change in Control of the Corporation has occurred pursuant to
the above definition, the date of the occurrence of such Change in Control and any
incidental matters relating thereto.

     (ii) Definition Applicable to Awards subject to Code Section 409A: Notwithstanding the
preceding provisions of Section 1(h)(i), in the event that any Awards granted under the Plan
are deemed to be deferred compensation subject to the provisions of Code Section 409A, then
distributions related to such Awards may be permitted, in the Administrator’s discretion,
upon the occurrence of one or more of the following events (as they are defined and
interpreted under Code Section 409A, related regulations or other guidance): (A) a change
in the ownership of the corporation, (B) a change in effective control of the Corporation,
or (C) a change in the ownership of a substantial portion of the assets of the Corporation.

     (i) Code means the Internal Revenue Code of 1986, as amended.

     (j) Committee means the Compensation Committee of the Board, which may be appointed to
administer the Plan.

     (k) Common Stock means the common stock of MiMedx Group, Inc., $0.001 par value per
share.

     (l) Corporation means MiMedx Group, Inc., a Florida corporation, together with any
successor thereto.

     (m) Covered Employee shall have the meaning given the term in Section 162(m) of the
Code and related regulations.

     (n) Director means a member of the Board or of the board of directors of an Affiliate.

     (o) Disability shall, except as may be otherwise determined by the Administrator or
required under Code Section 409A or related regulations or other guidance, have the meaning given
in any employment agreement, consulting agreement or other similar agreement, if any, to which a
Participant is a party, or, if there is no such agreement (or if any such agreement does not
address the effect of termination due to disability), “Disability” shall mean the inability to

-3-

 

engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death, or which has lasted or can be expected
to last for a continuous period of not less than 12 months. The Administrator shall have discretion
to determine if a termination due to Disability has occurred.

     (p) Displacement shall, as applied to any Participant, be as defined in any employment
agreement, consulting agreement or other similar agreement, if any, to which the Participant is a
party, or, if there is no such agreement (or if any such agreement does not address the effect of a
termination due to displacement), “Displacement” shall mean the termination of the Participant’s
employment or service due to the elimination of the Participant’s job or position without fault on
the part of the Participant (as determined by the Administrator).

     (q) Dividend Equivalent Award means a right granted to a Participant pursuant to
Section 10 to receive the equivalent value (in cash or shares of Common Stock) of dividends paid on
Common Stock.

     (r) Effective Date means the effective date of the Plan, as provided in Section 4.

     (s) Employee means any person who is an employee of the Corporation or any Affiliate
(including entities which becomes Affiliates after the Effective Date of the Plan). For this
purpose, an individual shall be considered to be an Employee only if there exists between the
individual and the
Corporation or an Affiliate the legal and bona fide relationship of employer and Employee;
provided, however, that, with respect to Incentive Options, “Employee” means any person who is
considered an employee of the Corporation or any Parent or Subsidiary for purposes of Treas. Reg.
Section 1.421-1(h) (or any successor provision related thereto).

     (t) Exchange Act means the Securities Exchange Act of 1934, as amended.

     (u) Fair Market Value per share of the Common Stock shall be established in good faith
by the Administrator and, unless otherwise determined by the Administrator, the Fair Market Value
shall be determined in accordance with the following provisions: (A) if the shares of Common Stock
are listed for trading on the New York Stock Exchange or the American Stock Exchange, the Fair
Market Value shall be the closing sales price per share of the shares on the New York Stock
Exchange or the American Stock Exchange (as applicable) on the date immediately preceding the date
an Option is granted or other determination is made (such date of determination being referred to
herein as a “valuation date”), or, if there is no transaction on such date, then on the trading
date nearest preceding the valuation date for which closing price information is available, and,
provided further, if the shares are quoted on the Nasdaq National Market or the Nasdaq SmallCap
Market of the Nasdaq Stock Market but are not listed for trading on the New York Stock Exchange or
the American Stock Exchange, the Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such system on the date immediately or
nearest preceding the valuation date for which such information is available, and, provided
further, if the shares are not listed for trading on the New York Stock Exchange or the American
Stock Exchange or quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value shall be the average between the highest bid and lowest asked prices for such stock on
the date immediately or nearest preceding the valuation date as reported on the Nasdaq OTC Bulletin
Board Service or by the National

-4-

 

Quotation Bureau, Incorporated or a comparable service; or (B) if
the shares of Common Stock are not listed or reported in any of the foregoing, then the Fair Market
Value shall be determined by the Administrator based on such valuation measures or other factors as
it deems appropriate. Notwithstanding the foregoing, (i) with respect to the grant of Incentive
Options, the Fair Market Value shall be determined by the Administrator in accordance with the
applicable provisions of Section 20.2031-2 of the Federal Estate Tax Regulations, or in any other
manner consistent with the Code Section 422 and accompanying regulations; and (ii) Fair Market
Value shall be determined in accordance with Section 409A, related regulations or other guidance to
the extent required by such provisions.

     (v) Freestanding SAR means an SAR that is granted without relation to an Option, as
provided in Section 8.

     (w) Incentive Option means an Option that is designated by the Administrator as an
Incentive Option pursuant to Section 7 and intended to meet the requirements of incentive stock
options under Code Section 422 and related regulations.

     (x) Independent Contractor means an independent contractor, consultant or advisor
providing services to the Corporation or an Affiliate.

     (y) Nonqualified Option means an Option granted under Section 7 that is not intended
to qualify as an incentive stock option under Code Section 422 and related regulations.

     (z) Option means a stock option granted under Section 7 that entitles the holder to
purchase from the Corporation a stated number of shares of Common Stock at the price set forth in
an Award Agreement.

     (aa) Option Period means the term of an Option, as provided in Section 7(d)(i).

     (bb) Option Price means the price at which an Option may be exercised, as provided in
Section 7(b).

     (cc) Parent means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     (dd) Participant means an individual employed by, or providing services to, the
Corporation or an Affiliate who satisfies the requirements of Section 6 and is selected by the
Administrator to receive an Award under the Plan.

     (ee) Performance Measures mean one or more performance factors which may be
established by the Administrator with respect to an Award. Performance factors may be based on such
corporate, business unit or division and/or individual performance factors and criteria as the
Administrator in its discretion may deem appropriate; provided, however, that, if and to the extent
that Section 162(m) of the Code is applicable, then such performance factors shall be limited to
one or more of the following (as determined by the Administrator in its discretion): (i) cash
flow; (ii) return on equity; (iii) return on assets; (iv) earnings per share; (v) operations
expense efficiency milestones; (vi) consolidated earnings before or after taxes (including earnings
before interest, taxes, depreciation and amortization); (vii) net income; (viii) operating

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income;
(ix) book value per share; (x) return on investment; (xi) return on capital; (xii) improvements in
capital structure; (xiii) expense management; (xiv) profitability of an identifiable business unit
or product; (xv) maintenance or improvement of profit margins; (xvi) stock price or total
shareholder return; (xvii) market share; (xviii) revenues or sales; (xix) costs; (xx) working
capital; (xxi) economic wealth crated; (xxii) strategic business criteria; (xxiii) efficiency
ratio(s); (xxiv) achievement of division, group, function or corporate financial, strategic or
operational goals; and (xxv) comparisons with stock market indices or performances of metrics of
peer companies. If and to the extent that Section 162(m) of the Code is applicable, the
Administrator shall, within the time and in the manner prescribed by Section 162(m) of the Code
and related regulations, define in an objective fashion the manner of calculating the Performance
Measures it selects to use for Participants during any specific performance period and determine
whether such Performance Measures have been met. Such performance factors may be adjusted or
modified due to extraordinary items, transactions, events or developments, or in recognition of, or
in anticipation of, any other unusual or nonrecurring events affecting the Corporation or the
financial statements of the Corporation, or in response to, or in anticipation of, changes in
Applicable Laws, accounting principles or business conditions, in each case as determined by the
Administrator.

     (ff) Plan means the MiMedx Group, Inc. Amended and Restated Assumed 2005 Stock Plan
(formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan), as it may be
hereafter amended and/or restated.

     (gg) Related SAR means an SAR granted under Section 8 that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the Corporation,
unexercised, of that portion of the Option to which the SAR relates.

     (hh) Restricted Award means a Restricted Stock Award and/or a Restricted Stock Unit
Award, as provided in Section 9.

     (ii) Restricted Stock Award means shares of Common Stock awarded to a Participant
under Section 9. Shares of Common Stock subject to a Restricted Stock Award shall cease to be
restricted when, in accordance with the terms of the Plan and the terms and conditions established
by the Administrator, the shares vest and become transferable and free of substantial risk of
forfeiture.

     (jj) Restricted Stock Unit means a Restricted Award granted to a Participant pursuant
to Section 9 which is settled (i) by the delivery of one share of Common Stock for each Restricted
Stock Unit, (ii) in cash in an amount equal to the Fair Market Value of one share of Common Stock
for each Restricted Stock Unit, or (iii) in a combination of cash and Shares equal to the Fair
Market Value of one share of Common Stock for each Restricted Stock Unit, as determined by the
Administrator. A Restricted Stock Unit Award represents the promise of the Corporation to deliver
shares, cash or a combination thereof, as applicable, upon vesting of the Award and compliance with
such other terms and conditions as may be determined by the Administrator.

     (kk) Retirement shall, as applied to any Participant, be as defined in any employment
agreement, consulting agreement or other similar agreement, if any, to which the Participant is a

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party, or, if there is no such agreement (or if any such agreement does address the effect of
termination due to retirement), “Retirement” shall mean retirement in accordance with the
retirement policies and procedures established by the Corporation, as determined by the
Administrator.

     (ll) SAR means a stock appreciation right granted under Section 8 entitling the
Participant to receive, with respect to each share of Common Stock encompassed by the exercise of
such SAR, the excess of the Fair Market Value on the date of exercise over the SAR base price,
subject to the terms of the Plan and any other terms and conditions established by the
Administrator. References to “SARs” include both Related SARs and Freestanding SARs unless the
context requires otherwise.

     (mm) Securities Act means the Securities Act of 1933, as amended.

     (nn) Shareholders Agreement means that certain Shareholders Agreement which may be
entered into between the Corporation and certain or all shareholders of the Corporation, as it may
be amended.

     (oo) Subsidiary means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     (pp) Termination Date means the date of termination of a Participant’s employment or
service with the Company as a non-employee Director or Independent Contractor, for any reason, as
determined by the Administrator in its discretion.

2. Purpose

     The purpose of the Plan is to encourage and enable selected Employees, Directors and
Independent Contractors of the Corporation and its Affiliates to acquire or to increase their
holdings of Common Stock of the Corporation and other proprietary interests in the Corporation in
order to promote a closer identification of their interests with those of the Corporation and its
shareholders, thereby further stimulating their efforts to enhance the efficiency, soundness,
profitability, growth and shareholder value of the Corporation. This purpose may be carried out
through the grant of Awards to selected Employees, Directors and Independent Contractors, which may
include the grant to selected Participants of Options in the form of Incentive Stock Options and
Nonqualified Options; SARs in the form of Related SARs and Freestanding SARs; Restricted Awards in
the form of Restricted Stock Awards and Restricted Stock U nits; and/or Dividend Equivalent Awards.

3. Administration of the Plan

     (a) The Plan shall be administered by the Board of Directors of the Corporation, or, upon its
delegation, by the Committee. In the event that the Corporation shall become subject to the
reporting requirements of the Exchange Act, the Committee shall be comprised solely of two or more
“non-
employee directors,” as such term is defined in Rule 16b-3 under the Exchange Act, or as may
otherwise be permitted under Rule 16b-3, unless the Board determines otherwise. Further, in the
event that the provisions of Section 162(m) of the Code or related regulations become applicable to
the Corporation, the Plan shall be administered by a committee comprised

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of two or more “outside
directors” (as such term is defined in Section 162(m) or related regulations) or as may otherwise
be permitted under Section 162(m) and related regulations. For the purposes of the Plan, the term
“Administrator” shall refer to the Board and, upon its delegation to the Committee of all or part
of its authority to administer the Plan, to the Committee. Notwithstanding the foregoing, the Board
shall have sole authority to grant Awards to Directors who are not Employees of the Corporation or
its Affiliates.

     (b) Subject to the provisions of the Plan, the Administrator shall have full and final
authority in its discretion to take any action with respect to the Plan including, without
limitation, the authority (i) to determine all matters relating to Awards, including selection of
individuals to be granted Awards, the types of Awards, the number of shares of the Common Stock, if
any, subject to an Award, and all terms, conditions, restrictions and limitations of an Award; (ii)
to prescribe the form or forms of Award Agreements evidencing any Awards granted under the Plan;
(iii) to establish, amend and rescind rules and regulations for the administration of the Plan; and
(iv) to construe and interpret the Plan, Awards and Award Agreements made under the Plan, to
interpret rules and regulations for administering the Plan and to make all other determinations
deemed necessary or advisable for administering the Plan. Except to the extent otherwise required
or restricted under Code Section 409A or related regulations or other guidance, (i) the
Administrator shall have the authority, in its sole discretion, to accelerate the date that any
Award which was not otherwise exercisable, vested or earned shall become exercisable, vested or
earned in whole or in part without any obligation to accelerate such date with respect to any other
Award granted to any recipient; and (ii) the Administrator also may in its sole discretion modify
or extend the terms and conditions for exercise, vesting or earning of an Award. The Administrator
may determine that a Participant’s rights, payments and/or benefits with respect to an Award
(including but not limited to any shares issued or issuable and/or cash paid or payable with
respect to an Award) shall be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events may include, but shall not be limited to,
termination of employment for cause, violation of policies of the Corporation or an Affiliate,
breach of non-solicitation, noncompetition, confidentiality, proprietary rights and invention
assignment agreements or other restrictive covenants that may apply to the Participant, or other
conduct by the Participant that is determined by the Administrator to be detrimental to the
business or reputation of the Corporation or any Affiliate. In addition, the Administrator shall
have the authority and discretion to establish terms and conditions of Awards (including but not
limited to the establishment of subplans) as the Administrator determines to be necessary or
appropriate to conform to the applicable requirements or practices of jurisdictions outside of the
United States. In addition to action by meeting in accordance with Applicable Laws, any action of
the Administrator with respect to the Plan may be taken by a written instrument signed by all of
the members of the Board or Committee, as appropriate, and any such so taken by written consent
shall be as fully effective as if it had been taken by a majority of the members at a meeting duly
held and called. No member of the Board or Committee, as applicable, shall be liable while acting
as Administrator for any action or determination made in good faith with respect to the Plan, an
Award or an Award Agreement. The members of the Board or Committee, as applicable, shall be
entitled to indemnification and reimbursement in the manner provided in the Corporation’s articles
of incorporation and bylaws and/or under Applicable Laws.

     (c) Notwithstanding the other provisions of Section 3, the Administrator may

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delegate to one
or more officers of the Corporation the authority to grant Awards, and to make any or all of the
determinations reserved for the Administrator in the Plan and summarized in Section 3(b) with
respect to such Awards (subject to any restrictions imposed by Applicable Laws, and such terms and
conditions as may be established by the Administrator); provided, however, that, if and to the
extent required by
Section 16 of the Exchange Act or Section 162(m) of the code, the Participant, at the time of
said grant or other determination, (i) is not deemed to be an officer or director of the
Corporation within the meaning of Section 16 of the Exchange Act; and (ii) is not deemed to be a
Covered Employee as defined under Section 162(m) of the Code and related regulations. To the extent
that the Administrator has delegated authority to grant Awards pursuant to this Section 3(c) to one
or more officers of the Corporation, references to the Administrator shall include references to
such officer or officers, subject, however, to the requirements of the Plan, Rule 16b-3, Section
162(m) of the Code and other Applicable Laws.

4. Effective Date; Term

     The Effective Date of the Plan shall be January 24, 2007. Awards may be granted under the Plan
on and after the Effective Date, but not after January 24, 2017. Awards that are outstanding at the
end of the Plan term (or such earlier termination date as may be established by the Board pursuant
to Section 12(a)) shall continue in accordance with their terms, unless otherwise provided in the
Plan or an Award Agreement.

5. Shares of Stock Subject to the Plan; Award Limitations

     (a) Shares of Stock Subject to the Plan: Subject to adjustments as provided in Section 5(d),
the aggregate number of shares of Common Stock that may be issued pursuant to Awards granted under
the Plan shall not exceed one million nine hundred thousand (1,900,000) shares. The number of
Shares reserved to the Plan may be changed by the Board in its discretion at any time. Shares
delivered under the Plan shall be authorized but unissued shares, treasury shares or shares
purchased on the open market or by private purchase. The Corporation hereby reserves sufficient
authorized shares of Common Stock to meet the grant of Awards hereunder.

     (b) Award Limitations: Notwithstanding any provision in the Plan to the contrary, the maximum
number of shares of Common Stock that may be issued to any one Participant under the Plan pursuant
to the grant of Incentive Options shall not exceed one million (1,000,000) shares, subject to
adjustments pursuant to Section 5(d). For purposes of Section 5(b) an Option and Related SAR shall
be treated as a single Award.

     (c) Shares Not Subject to Limitations: The following will not be applied to the share
limitations of Section 5(a) above: (i) dividends, including dividends paid in shares, or dividend
equivalents paid in cash in connection with outstanding Awards; (ii) Awards which by their terms
are settled in cash rather than the issuance of shares; (iii) any shares subject to an Award under
the Plan which Award is forfeited, cancelled, terminated, expires or lapses for any reason or any
shares subject to an Award which shares are repurchased or reacquired by the Corporation; and (iv)
any shares surrendered by a Participant or withheld by the Corporation to pay the Option Price or
purchase price for an Award or shares used to satisfy any tax withholding requirement in connection
with the exercise, vesting or earning of an Award if, in accordance with the terms of the Plan, a
Participant pays such Option Price or purchase price or

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satisfies such tax withholding by either
tendering previously owned shares or having the Corporation withhold shares.

     (d) Adjustments: If there is any change in the outstanding shares of Common Stock because of a
merger, consolidation or reorganization involving the Corporation or an Affiliate, or if the Board
of Directors of the Corporation declares a stock dividend, stock split distributable in shares of
Common Stock, reverse stock split, combination or reclassification of the Common Stock, or if there
is a similar change in the capital stock structure of the Corporation or an Affiliate affecting the
Common Stock, the number of shares of Common Stock reserved for issuance under the Plan shall be
correspondingly adjusted, and the Administrator shall make such adjustments to Awards and to any
provisions of this Plan
as the Administrator deems equitable to prevent dilution or enlargement of Awards or as may be
otherwise advisable.

6. Eligibility

     An award may be granted only to an individual who satisfies all of the following eligibility
requirements on the date the Award is granted:

     (a) The individual is either (i) an Employee, (ii) a Director, or (iii) an Independent
Contractor.

     (b) With respect to the grant of Incentive Options, the individual is otherwise eligible to
participate under Section 6, is an Employee of the Corporation or a Parent or Subsidiary and does
not own, immediately before the time that the Incentive Option is granted, stock possessing more
than 10% of the total combined voting power of all classes of stock of the Corporation or a Parent
or Subsidiary. Notwithstanding the foregoing, an Employee who owns more than 10% of the total
combined voting power of the Corporation or a Parent or Subsidiary may be granted an Incentive
Option if the Option Price is at least 110% of the Fair Market Value of the Common Stock, and the
Option Period does not exceed five years. For this purpose, and individual will be deemed to own
stock which is attributable to him under Section 424(d) of the Code.

     (c) With respect to the grant of substitute awards or assumption of awards in connection with
a merger, consolidation, acquisition, reorganization or similar business combination involving the
Corporation or an Affiliate, the recipient is otherwise eligible to receive the Award and the terms
of the award are consistent with the Plan and Applicable Laws (including, to the extent necessary,
the federal securities laws registration provisions and Section 409A and Section 424(a) of the Code
and related regulations or other guidance).

     (d) The individual, being otherwise eligible under this Section 6, is selected by the
Administrator as an individual to whom an Award shall be granted (as defined above, a
“Participant”).

7. Options

     (a) Grant of Options: Subject to the limitations of the Plan, the Administrator may in its
sole and absolute discretion grant Options to such eligible individuals in such numbers, subject to
such terms and conditions, and at such times as the Administrator shall determine. Both Incentive
Options and Nonqualified Options may be granted under the Plan, as determined

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by the Administrator;
provided, however, that Incentive Options may only be granted to Employees of the Corporation or a
Parent or Subsidiary. To the extent that an Option is designated as an Incentive Option but does
not qualify as such under Section 422 of the Code, the Option (or portion thereof) shall be treated
as a Nonqualified Option. An option may be granted with or without a Related SAR.

     (b) Option Price: The Option Price shall be established by the Administrator and stated in the
Award Agreement evidencing the grant of the Option; provided, that (i) the Option Price of an
Option shall be no less than 100% of the Fair Market Value per share of the Common Stock as
determined on the date the Option is granted (or 110% of the Fair Market Value with respect to
Incentive Options granted to an Employee who owns stock possessing more than 10% of the total
voting power of all classes of stock of the Corporation or a parent or Subsidiary, as provided in
Section 6(b)); and (ii) in no event shall the Option Price per share of any Option be less than the
par value per share (if any) of the Common Stock. Notwithstanding the foregoing, the Administrator
may in its discretion authorize the grant of substitute or assumed options of an acquired entity
with an Option Price not equal to at least 100% of the Fair Market
Value on the date of grant, if such options are assumed or substituted in accordance with Reg.
Section 1.424-1 (or any successor provision thereto) and if the option price of any such assumed or
substituted option was at least equal to 100% of the fair market value of the underlying stock on
the original date of grant, or if the terms of such assumed or substituted option otherwise comply
with Code Section 409A, related regulations and other guidance. The preceding sentence shall also
apply to SARs that are assumed or substituted in a corporate transaction, to the extent required
under Code Section 409A, related regulations or other guidance.

     (c) Date of Grant: An Incentive Option shall be considered to be granted on the date that the
Administrator acts to grant the Option, or on any later date specified by the Administrator as the
effective date of the Option. A Nonqualified Option shall be considered to be granted on the date
the Administrator acts to grant the Option or any other date specified by the Administrator as the
date of grant of the Option.

     (d) Option Period and Limitations on the Right to Exercise Options:

     (i) The Option Period shall be determined by the Administrator at the time the Option
is granted and shall be stated in the Award Agreement. With respect to Incentive Options,
the Option Period shall not extend more than 10 years from the date on which the Option is
granted (or five years with respect to Incentive Options granted to an Employee who owns
stock possessing more than 10% of the total combined voting power of all classes of stock of
the corporation or a Parent or Subsidiary, as provided in Section 6(b)). Any Option or
portion thereof not exercised before expiration of the Option Period shall terminate. The
Period or periods during which, and conditions pursuant to which, an Option may become
exercisable shall be determined by the Administrator in its discretion, subject to the terms
of the Plan.

     (ii) An Option may be exercised by giving written notice to the Corporation in form
acceptable to the Administrator at such place and subject to such conditions as may be
established by the Administrator or its designee. Such notice shall specify the number of
shares to be purchased pursuant to an Option and the aggregate purchase price to be 

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paid
therefore and shall be accompanied by payment of such purchase price. Unless an Award
Agreement provides otherwise, such payment shall be in the form of cash or cash equivalent;
provided that, where permitted by the Administrator and Applicable Laws (and subject to such
terms and conditions as may be established by the Administrator), payment may also be made:

     (A) By delivery (by either actual delivery or attestation) of shares of Common
Stock owned by the Participant for a time period, if any, determined by the
Administrator and otherwise acceptable to the Administrator;

     (B) With respect only to purchases upon exercise of an Option after a public
market for the Common Stock exists, by delivery of written notice of exercise to the
Corporation and delivery to a broker of written notice of exercise and irrevocable
instructions to promptly deliver to the Corporation the amount of sale or loan
proceeds to pay the Option Price;

     (C) By cash bonuses, loans or such other payment methods as may be approved by
the Administrator (and subject to such terms as may be established by the
Administrator), and which methods are acceptable under Applicable Laws; or

     (D) By any combination of the foregoing methods.

Shares tendered or withheld in payment on the exercise of an Option shall be valued at their Fair
Market Value on the date of exercise, as determined by the Administrator. For the purposes of the
Plan, a “public market” for the Common Stock shall be deemed to exist (i) upon consummation of a
firm commitment underwritten public offering of the Common Stock pursuant to an effective
registration statement under the Securities Act, or (ii) if the Administrator otherwise determines
that there is an established public market for the Common Stock.

     (iii) Unless the Administrator determines otherwise, no Option granted to a Participant
who was an Employee at the time of grant shall be exercised unless the Participant is, at
the time of exercise, an Employee, and has been and Employee continuously since the date the
Option was granted, subject to the following:

     (A) The employment relationship of a Participant shall be treated as continuing
intact for any period that the Participant is on military or sick leave or other
bona fide leave of absence, provided that the period of such leave does not exceed
three months, or, if longer, as long as the Participant’s right to reemployment is
guaranteed either by statute or by contract. The employment relationship of a
Participant shall also be treated as continuing intact while the Participant is not
in active service because of Disability. The Administrator shall have sole authority
to determine whether a Participant is disabled and, if applicable, the Participant’s
Termination Date.

     (B) Unless the Administrator determines otherwise, if the employment of a
Participant is terminated because of Disability or death, the Option may be

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exercised only to the extent exercisable on the Participant’s Termination Date,
except that the Administrator may in its sole discretion accelerate the date for
exercising all or any part of the Option which was not otherwise exercisable on the
Termination Date. The Option must be exercised, if at all, prior to the first to
occur of the following, whichever shall be applicable: (X) the close of the
one-year period following the Termination Date (or such period stated in the Award
Agreement); or (Y) the close of the Option Period. In the event of the
Participant’s death, such Option shall be exercisable by such person or persons as
shall have acquired the right to exercise the Option by will or by the laws of
intestate succession.

     (C) Unless the Administrator determines otherwise, if the employment of the
Participant is terminated for any reason other than Disability, death or for
“Cause,” his Option may be exercised to the extent exercisable on his Termination
Date, except that the Administrator may in its sole discretion accelerate the date
for exercising all or any part of the Option which was not otherwise exercisable on
the Termination Date. The Option must be exercised, if at all, prior to the first to
occur of the following, whichever shall be applicable: (X) the close of the period
of three months next succeeding the Termination Date (or such other period stated in
the Award Agreement); or (Y) the close of the Option Period. If the Participant
dies following such termination of employment and prior to the earlier of the dates
specified in (X) or (Y) of this subparagraph (C), the Participant shall be treated
as having died while employed under subparagraph (B) (treating for this purpose the
Participant’s date of termination of employment as the Termination Date). In the
event of the Participant’s death, such Option shall be exercisable by such person or
persons as shall have acquired the right to exercise the Option by will or by the
laws of intestate succession.

     (D) Unless the Administrator determines otherwise, if the employment of the
Participant is terminated for “Cause,” his Option shall lapse and no longer be
exercisable as of his Termination Date, as determined by the Administrator.

     (E) Notwithstanding the foregoing, the Administrator may, in its sole
discretion (subject to any requirements imposed under Code Section 409A, related
regulations or other guidance), accelerate the date for exercising all or any part
of an Option which was not otherwise exercisable on the Termination Date, extend the
period during which an Option may be exercised, modify the terms and conditions to
exercise, or any combination of the foregoing.

     (iv) Unless the Administrator determines otherwise, an Option granted to a Participant
who was a Director but who was not an Employee at the time of grant may be exercised only to
the extent exercisable on the Participant’s Termination Date (unless the termination was for
Cause), and must be exercised, if at all, prior to the first to occur of the following, as
applicable: (X) the close of the period of three months next succeeding the Termination Date
(or such other period stated in the Award Agreement); or (Y) the close of the Option Period.
If the services of a Participant are terminated for Cause, his Option shall lapse and no
longer be exercisable as of his Termination Date, as determined

-13-

 

by the Administrator.
Notwithstanding the foregoing, the Administrator may in its sole discretion (subject to any
requirements imposed under Code Section 409A, related regulations or other guidance)
accelerate the date for exercising all or any part of an Option which was not otherwise
exercisable on the Termination Date, extend the period during which an Option may be
exercised, modify the other terms and conditions to exercise, or any combination of the
foregoing.

     (v) Unless the Administrator determines otherwise, an Option granted to a Participant
who was an Independent Contractor at the time of grant (and who does not thereafter become
an Employee, in which case he shall be subject to the provisions of Section 7(d)(iii)) may
be exercised only to the extent exercisable on the Participant’s Termination date (unless
the termination was for Cause), and must be exercised, if at all, prior to the first to
occur of the following, as applicable: (X) the close of the period of three months next
succeeding the Termination Date (or such other period stated in the Award Agreement); or (Y)
the close of the Option Period. If the services of a Participant are terminated for Cause,
his Option shall lapse and no longer be exercisable as of his Termination Date, as
determined by the Administrator. Notwithstanding the foregoing, the Administrator may in
its sole discretion (subject to any requirements imposed under Code Section 409A, related
regulations or other guidance) accelerate the date for exercising all or any part of an
Option which was not otherwise exercisable on the Termination Date, extend the period during
which an Option may be exercised, modify the other terms and conditions to exercise, or any
combination of the foregoing.

     (e) Notice of Disposition: If shares of Common Stock acquired upon exercise of an Incentive
Option are disposed of within two years following the date of grant or one year following the
transfer of such shares to a Participant upon exercise, the Participant shall, promptly following
such disposition, notify the Corporation in writing of the date and terms of such disposition and
provide such other information regarding the disposition as the Administrator may reasonably
require.

     (f) Limitation on Incentive Options: In no event shall there first become exercisable by an
Employee in any one calendar year Incentive Options granted by the Corporation or any Parent or
Subsidiary with respect to shares having an aggregate Fair Market Value (determined at the time an
Incentive Option is granted) greater than $100,000. To the extent that any Incentive Options are
first
exercisable by a Participant in excess of such limitation, the excess shall be considered a
Nonqualified Option.

     (g) Nontransferability: Incentive Options shall not be transferable (including by sale,
assignment, pledge or hypothecation) other than by will or the laws of intestate succession or, in
the Administrator’s discretion, as may otherwise be permitted in accordance with Treas. Reg.
Section 1.421-1(b)(2) or any successor provision thereto. Nonqualified Options shall not be
transferable (including by sale, assignment, pledge or hypothecation) other than by will or the
laws of intestate succession, except for such transfers to immediate family members or related
entities as may be permitted by the Administrator in a manner consistent with the registration
provisions of the Securities Act. Except as may be permitted by the preceding sentence, an Option
shall be exercisable during the Participant’s lifetime only by him or by his guardian or legal
representative. The designation of a beneficiary in accordance with the Plan does not
constitute a transfer.

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8. Stock Appreciation Rights

     (a) Grant of SARs: Subject to the limitations of the Plan, the Administrator may in its sole
and absolute discretion grant SARs to such eligible individuals, in such numbers, upon such terms
and at such times as the Administrator shall determine. SARs may be granted to the holder of an
Option (a “Related Option”) with respect to all or a portion of the shares of Common Stock subject
to the Related Option (a “Related SAR”) or may be granted separately to an eligible individual (a
“Freestanding SAR”). The base price per share of an SAR shall be no less than 100% the Fair Market
Value per share of the Common Stock on the date the SAR is granted (except as may be otherwise
permitted in the case of substituted or assumed SARs in accordance with Section 7(b)).

     (b) Related SARs: A Related SAR may be granted either concurrently with the grant of the
Related Option or (if the Related Option is a Nonqualified Option) at any time thereafter prior to
the complete exercise, termination, expiration or cancellation of such Related Option; provided,
however, that Related SARs must be granted in accordance with Code Section 409A, related
regulations and other guidance. The base price of a Related SAR shall be equal to the Option Price
of the Related Option. Related SARs shall be exercisable only at the time and to the extent that
the Related Option is exercisable (and may be subject to such additional limitations on
exercisability as the Administrator may provide in the Award Agreement), and in no event after the
complete termination or full exercise of the Related Option. Notwithstanding the foregoing, a
Related SAR that is related to an Incentive Option may be exercised only to the extent that the
Related Option is exercisable and only when the Fair market Value exceeds the Option Price of the
Related Option. Upon the exercise of a Related SAR granted in connection with a Related Option, the
Option shall be canceled to the extent of the number of shares as to which the Related SAR is
exercised, and upon the exercise of a Related Option, the Related SAR shall be canceled to the
extent of the number of shares as to which the Related Option is exercised or surrendered.

     (c) Freestanding SARs: An SAR may be granted without relationship to an Option (as defined
above, a “Freestanding SAR”) and, in such case, will be exercisable upon such terms and subject to
such conditions as may be determined by the Administrator, subject to the terms of the Plan.

     (d) Exercise of SARs:

     (i) Subject to the terms of the Plan, SARs shall be exercisable in whole or in part
upon such terms and conditions as may be established by the Administrator and stated in the
applicable Award Agreement. The period during which an SAR may be exercisable shall not
exceed 10 years from the date of grant or, in the case of Related SARs, such shorter Option
Period as may apply to the Related Option. Any SAR or portion thereof not exercised
before expiration of the period established by the Administrator shall terminate.

     (ii) SARs may be exercised by giving written notice to the Corporation in

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form
acceptable to the Administrator at such place and subject to such terms and conditions as
may be established by the Administrator or its designee. Unless the Administrator determines
otherwise, the date of exercise of an SAR shall mean the date on which the Corporation shall
have received proper notice from the Participant of the exercise of such SAR.

     (iii) Each Participant’s Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise an SAR following termination of the
Participant’s employment or service with the Corporation. Such provisions shall be
determined in the sole discretion of the Administrator, need not be uniform among all SARs
issued pursuant to this Section 8, and may reflect distinctions based on the reasons for
termination of employment or service. Notwithstanding the foregoing, unless the
Administrator determines otherwise, no SAR may be exercised unless the Participant is, at
the time of exercise, a eligible Participant, as described in Section 6, and has been a
Participant continuously since the date the SAR was granted, subject to the provisions of
Sections 7(d)(iii), (iv) and (v).

     (e) Payment Upon Exercise: Subject to the limitations of the Plan, upon the exercise of an
SAR, a Participant shall be entitled to receive payment from the Corporation in an amount
determined by multiplying (i) the difference between the Fair Market Value of a share of Common
Stock on the date of exercise of the SAR over the base price of the SAR by (ii) the number of
shares of Common Stock with respect to which the SAR is being exercised. Notwithstanding the
foregoing, the Administrator in its discretion may limit in any manner the amount payable with
respect to an SAR. The consideration payable upon exercise of an SAR shall be paid in cash, shares
of Common Stock (valued at Fair Market Value on the date of exercise of the SAR) or a combination
of cash and shares of Common Stock, as determined by the Administrator.

     (f) Nontransferability: Unless the Administrator determines otherwise, (i) SARs shall not be
transferable (including by sale, assignment, pledge or hypothecation) other than by will or the
laws of intestate succession, and (ii) SARs may be exercised during the Participant’s lifetime only
by him or by his guardian or legal representative. The designation of a beneficiary in accordance
with the Plan does not constitute a transfer.

9. Restricted Awards

     (a) Grant of Restricted Awards: Subject to the limitations of the Plan, the Administrator may
in its sole and absolute discretion grant Restricted Awards to such individuals in such numbers,
upon such terms and at such times as the Administrator shall determine. Such Restricted Awards may
be in the form of Restricted Stock Awards and/or Restricted Stock Units that are subject to certain
conditions, which conditions must be met in order for the Restricted Award to vest and be earned
(in whole or in part) and no longer subject to forfeiture. Restricted Stock Awards shall be payable
in shares of Common Stock. Restricted Stock Units shall be payable in cash or shares of Common
Stock, or partly in cash and partly in shares of Common Stock, in accordance with the terms of the
Plan and the discretion of the Administrator. The Administrator shall determine the nature, length
and starting date of the period, if any, during which a Restricted Award may be earned (the
“Restriction Period”), and shall determine the

-16-

 

conditions which must be met in order for a
Restricted Award to be granted or to vest or be earned (in whole or in part), which conditions may
include, but are not limited to, payment of a stipulated purchase price, attainment of performance
objectives, continued service or employment for a certain period of time (or a combination of
attainment of performance objectives and continued service), Retirement,
Displacement, Disability, death or any combination of such conditions. In the case of
Restricted Awards based upon performance criteria, or a combination of performance criteria and
continued service, the Administrator shall determine the Performance Measures applicable to such
Restricted Awards (subject to Section 1(ee)).

     (b) Vesting of Restricted Awards: Subject to the terms of the Plan and Code Section 409A,
related regulations or other guidance, the Administrator shall have sole authority to determine
whether and to what degree Restricted Awards have vested and been earned and are payable and to
establish and interpret the terms and conditions of Restricted Awards. The Administrator may
(subject to any restrictions imposed under Code Section 409A, related regulations or other
guidance) accelerate the date that any Restricted Award granted to a Participant shall be deemed to
be vested or earned in whole or in part, without any obligation to accelerate such date with
respect to other Restricted Awards granted to any Participant.

     (c) Forfeiture of Restricted Awards: Unless the Administrator determines otherwise, if the
employment or service of a Participant shall be terminated for any reason and all or any part of a
Restricted Award has not vested or been earned pursuant to the terms of the Plan and the individual
Award, such Award, to the extent not then vested or earned, shall be forfeited immediately upon
such termination and the Participant shall have no further rights with respect to the Award or any
shares of Common Stock, cash or other benefits related to the Award.

     (d) Shareholder Rights; Share Certificates: The Administrator shall have sole discretion to
determine whether a Participant shall have dividend rights, voting rights or other rights as a
shareholder with respect to shares subject to a Restricted Stock Award which has not yet vested or
been earned. If the Administrator so determines, a certificate or certificates for whole shares of
Common Stock subject to a Restricted Stock Award may be issued in the name of the Participant as
soon as practicable after the Award has been granted; provide, however, that, notwithstanding the
foregoing, the Administrator or its designee shall have the right to retain custody of certificates
evidencing the shares subject to a Restricted Stock Award and to require the Participant to deliver
to the Corporation a stock power, endorsed in blank, with respect to such Award, until such time as
the Restricted Stock Award vests (or is forfeited) and is no longer subject to a substantial risk
of forfeiture.

     (e) Nontransferability: Unless the Administrator determines otherwise, Restricted Awards that
have not vested shall not be transferable (including by sale, assignment, pledge or hypothecation)
other than by will or the laws of intestate succession, and the recipient of a Restricted Award
shall not sell, transfer, assign, pledge or otherwise encumber shares subject to the Award until
the Restriction Period has expired and until all conditions to vesting have been met. The
designation of a beneficiary in accordance with the Plan does not constitute a transfer.

-17-

 

10. Dividends and Dividend Equivalents

     Awards granted under the Plan shall, to the extent vested, earn dividends or dividend
equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to a
Participant’s account. Any crediting of dividends or dividend equivalents may be subject to such
restrictions and conditions as the Administrator may establish, including reinvestment in
additional shares of Common Stock or share equivalents. Notwithstanding the other provisions
herein, any dividends or dividend equivalent rights related to an Award shall be structured in a
manner so as to avoid causing the Award to be subject to Code Section 409A or shall otherwise be
structured so that the Award and dividends or dividend equivalents are in compliance with Code
Section 409A, related regulations or other guidance.

11. No Right or Obligation of Continued Employment or Service

     Neither the Plan, the grant of an Award nor any other action related to the Plan shall confer
upon the Participant any right to continue in the service of the Corporation or an Affiliate as an
Employee, Director or Independent Contractor or to interfere in any way with the right of the
Corporation or an Affiliate to terminate the Participant’s employment or service at any time.
Except as otherwise provided in the Plan, an Award Agreement or as may be determined by the
Administrator, all rights of a Participant with respect to an Award shall terminate upon the
termination of the Participant’s employment or service.

12. Amendment and Termination of the Plan

     (a) Amendment and Termination: The Plan may be amended, altered and/or terminated at any time
by the Administrator; provided, however, that approval of an amendment to the Plan by the
shareholders of the Corporation shall be required to the extent, if any, that shareholder approval
of such amendment is required by Applicable Laws. Any Award may be amended, altered and/or
terminated at any time by the Administrator; provided, however, that any such amendment, alteration
or termination of an Award shall not, without the consent of the recipient of an outstanding Award,
materially adversely affect the rights of the recipient with respect to the Award.

     (b) Unilateral Authority of Administrator to Modify Plan and Awards: Notwithstanding Section
12(a) herein, the following provisions shall apply:

     (i) The Administrator shall have unilateral authority to amend the Plan and any Award
(without Participant consent and without shareholder approval, unless such shareholder
approval is required by Applicable Laws) to the extent necessary to comply with Applicable
Laws or changes to Applicable Laws (including but not limited to Code Section 409A and Code
Section 422, related regulations or other guidance and federal securities laws).

     (ii) The Administrator shall have unilateral authority to make adjustments to the terms
and conditions of Awards in recognition of unusual or nonrecurring events affecting the
Corporation or any Affiliate, or the financial statements of the Corporation or any
Affiliate, or of changes in accounting principles, if the Administrator determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the

-18-

 

benefits or
potential benefits intended to be made available under the Plan or necessary or appropriate
to comply with applicable accounting principles.

     (c) Cash Settlement: Notwithstanding any provision of the Plan, an Award or an Award Agreement
to the contrary, the Administrator shall have discretion (subject to (i) any requirements imposed
under Code Section 409A, related regulations or other guidance and (ii) consideration of such
accounting principles as the Administrator deems relevant) to cause any Award (or portion thereof)
granted under the Plan to be canceled in consideration of an alternative award or cash payment of
an
equivalent cash value, as determined by the Administrator in its sole discretion, made to the
holder of such canceled Award.

13. Restrictions on Awards and Shares

     (a) General: As a condition to the issuance and delivery of Common Stock hereunder, or the
grant of any benefit pursuant to the Plan, the Corporation shall required a Participant or other
person to become a party to an Award Agreement, the Shareholders Agreement, other agreement(s)
restricting the transfer, purchase or repurchase of shares of Common Stock of the Corporation,
voting agreement or such other agreements and any other employment agreements, consulting
agreements, non-competition agreements, confidentiality agreements, non-solicitation agreements or
other similar agreement imposing such restrictions as may be required by the Corporation. In
addition, without in any way limiting the effect of the foregoing, each Participant or other holder
of shares issued under the Plan shall be permitted to transfer such shares only if such transfer is
in accordance with the terms of Section 13 herein, the Award Agreement, the Shareholders Agreement
and any other applicable agreements. The acquisition of shares of Common Stock under the Plan by a
Participant or any other holder of shares shall be subject to, and conditioned upon, the agreement
of the Participant or other holder of such shares to the restrictions described in this Section 13,
the Award Agreement, the Shareholders Agreement and any other applicable agreements.

     (b) Compliance with Applicable Laws: The Corporation may impose such restrictions on Awards,
shares and any other benefits underlying Awards hereunder as it may deem advisable, including
without limitation restrictions under the federal securities laws, the requirements of any stock
exchange or similar organization and any blue sky, state or foreign securities laws applicable to
such securities. Notwithstanding any other Plan provision to the contrary, the Corporation shall
not be obligated to issue, deliver or transfer shares of Common Stock under the Plan, make any
other distribution of benefits under the Plan, or take any other action, unless such delivery,
distribution or action is in compliance with Applicable Laws (including but not limited to the
requirements of the Securities Act). The Corporation may cause a restrictive legend to be placed on
any certificate issued pursuant to an Award hereunder in such form as may be prescribed from time
to time by Applicable Laws or as may be advised by legal counsel.

14. Change in Control

     (a) Notwithstanding any other provision of the Plan to the contrary, and except as may be
otherwise provided in an Award Agreement or required under Code Section 409A, related regulations
or other guidance, in the event of a Change in Control:

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     (i) All Options and SARs outstanding as of the date of such Change in Control shall
become fully exercisable, whether or not then otherwise exercisable.

     (ii) Any restrictions, including but not limited to the Restriction Period, performance
criteria and/or vesting conditions applicable to any Restricted Award shall be deemed to
have been met, and such Awards shall become fully vested, earned and payable to the fullest
extent of the original grant of the applicable Award.

     (b) Notwithstanding the foregoing, in the event of a merger, share exchange, reorganization,
sale of all or substantially all of the assets of the Corporation or other similar transaction or
event affecting the Corporation or its shareholders or an Affiliate, the Administrator may, in its
sole and absolute discretion, determine that any or all Awards granted pursuant to the Plan shall
not vest or become exercisable on an accelerated basis, if the Corporation or the surviving or
acquiring corporation,
as the case may be, shall have taken such action, including but not limited to the assumption
of Awards granted under the Plan or the grant of substitute awards (in either case, with
substantially similar terms or equivalent economic benefits as Awards granted under the Plan), as
the Administrator determines to be equitable or appropriate to protect the rights and interest of
Participants under the Plan. For the purposes herein, if the Committee is acting as the
Administrator authorized to make the determinations provided for in this Section 14(b), the
Committee shall be appointed by the Board of Directors, two-thirds of the members of which shall
have been Directors of the Corporation prior to the merger, share exchange, reorganization or other
business combination affecting the Corporation or an Affiliate.

15. Compliance with Code Section 409A

     (a) General: Notwithstanding any other provision in the Plan or an Award to the contrary, if
and to the extent that Section 409A of the Code is deemed to apply to the Plan or any Award granted
under the Plan, it is the general intention of the Corporation that the Plan and all such Awards
shall comply with Code Section 409A, related regulations or other guidance, and the Plan and any
such Award shall, to the extent practicable, be construed in accordance therewith. Deferrals of
shares or any other benefit issuable pursuant to an Award otherwise exempt from Code Section 409A
in a manner that would cause Code Section 409A to apply shall not be permitted unless such
deferrals are in compliance with Code Section 409A, related regulations or other guidance. Without
in any way limiting the effect of the foregoing, in the event that Code Section 409A, related
regulations or other guidance require that any special terms, provisions or conditions be included
in the Plan or any Award, then such terms, provisions and conditions shall, to the extent
practicable, be deemed to be made a part of the Plan or Award, as applicable. Further, in the event
that the Plan or any Award shall be deemed not to comply with Code Section 409A or any related
regulations or other guidance, then neither the Corporation, the Administrator not its or their
designees or agents shall be liable to any Participant or other person for actions, decisions or
determinations made in good faith.

     (b) Special Code Section 409A Provisions for Nonqualified Options: Notwithstanding the other
provisions of the Plan, unless otherwise permitted under Code Section 409A, related regulations or
other guidance, (i) the Option Price for a Nonqualified Option may never be less than the Fair
Market Value of the Common Stock on the date of grant of the Option and the

-20-

 

number of shares
subject to the Option shall be fixed on the original grant date; (ii) the transfer or exercise of
the Option shall be subject to taxation under Code Section 83 and related regulations; and (iii)
the Nonqualified Option may not include any feature for the deferral of compensation other than the
deferral of recognition of income until the later of exercise or disposition of the Option or the
time the shares acquired pursuant to the exercise of the Option first became substantially vested.

     (c) Special Code Section 409A Provisions for SARs: Notwithstanding the other provisions the
Plan, unless otherwise permitted under Code Section 409A, related regulations or other guidance,
(i) compensation payable under an SAR cannot be greater than the difference between the Fair Market
Value of the Common Stock on the SAR grant date and the Fair Market Value of the Common Stock on
the SAR exercise date; (ii) the SAR base price may never be less than the Fair Market Value of the
Common Stock on the date the SAR is granted; and (iii) the SAR may not include any feature for the
deferral of compensation other than the deferral of recognition of income until the exercise of the
SAR.

     (d) Short-Term Deferrals: Except to the extent otherwise required or permitted under Code
Section 409A, related regulations or other guidance, distributions pursuant to Restricted Stock
Units or any Awards granted under the Plan that are subject to Code Section 409A must be made no
later than the later of (A) the 15th day of the third month following the Participant’s first
taxable year in which the amount is no longer subject to a substantial risk of forfeiture; or (B)
the 15th day of the third month following the end of the Corporation’s first taxable year in which
the amount is no longer subject to a
substantial risk of forfeiture. Notwithstanding the foregoing, if and to the extent that the
distribution of shares of Common Stock or any other benefit payable pursuant to an Award is deemed
to involve the deferral of compensation that is not otherwise exempt from Code Section 409A, then
(i) the distribution of such shares or benefit shall occur no later than the end of the calendar
year in which the Award vests; and (ii) if the Participant is or may be a “specified employee” (as
defined in Code Section 409A, related regulations or other guidance), a distribution due to
separation from service may not be made before the date that is six months after the date of
separation from service (or, if earlier, the date of death of the Participant), except as may be
otherwise permitted pursuant to Code Section 409A, related regulations or other guidance.

16. General Provisions

     (a) Shareholder Rights: Except as otherwise determined by the Administrator (and subject to
the provisions of Section 9(d) regarding Restricted Stock Awards), a Participant and his legal
representative, legatees or distributes shall not be deemed to be the holder of any shares subject
to an Award and shall not have any rights of a shareholder unless and until certificates for such
shares have been issued and delivered to him or them under the Plan. A certificate or certificates
for shares of Common Stock acquired upon exercise of an Option or SAR shall be promptly issued in
the name of the Participant (or his beneficiary) and distributed to the Participant (or his
beneficiary) as soon as practicable following receipt of notice of exercise and, with respect to
Options, payment of the Option Price (except as may otherwise be determined by the Corporation in
the event of payment of the Option Price pursuant to Section 7(d)(ii)(C)). Except as otherwise
provided in Section 9(d) regarding Restricted Stock Awards, a certificate for any shares of Common
Stock issuable pursuant to a Restricted Award shall be promptly issued in

-21-

 

the name of the
Participant (or his beneficiary) and distributed to the Participant (or his beneficiary) after the
Award (or portion thereof) has vested or been earned and any other conditions to distribution have
been met.

     (b) Withholding: The Corporation shall withhold all required local, state, federal, foreign
and other taxes and any other amount required to be withheld by any governmental authority or law
from any amount payable in cash with respect to an Award. Prior to the delivery or transfer of any
certificate for shares or any other benefit conferred under the Plan, the Corporation shall require
any recipient of an Award to pay to the Corporation in cash the amount of any tax or other amount
required by an governmental authority to be withheld and paid over by the Corporation to such
authority for the account of such recipient. Notwithstanding the foregoing, the Administrator may
establish procedures to permit a recipient to satisfy such obligation in whole or in part, and any
local, state, federal, foreign or other income tax obligations relating to such an Award, by
electing (the “election”) to have the Corporation withhold shares of Common Stock from the shares
to which the recipient is entitled. The number of shares to be withheld shall have a Fair Market
Value as of the date that the amount of tax to be withheld is determined as nearly equal as
possible to (but not exceeding) the amount of such obligations being satisfied. Each election must
be made in writing to the Administrator in accordance with election procedures established by the
Administrator.

     (c) Section 16(b) Compliance: If and to the extent that any Participants in the Plan are
subject to Section 16(b) of the Exchange Act, it is the general intention of the Corporation that
transactions under the Plan by such persons shall comply with Rule 16b-3 under the Exchange Act and
that the Plan shall be construed in favor of such Plan transactions meeting the requirements of
Rule 16b-3 or any successor rules thereto. Notwithstanding anything in the Plan to the contrary,
the Administrator, in its sole and absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Participants.

     (d) Code Section 162(m) Performance-Based Compensation: If and to the extent to which Section
162(m) of the Code is applicable, the Corporation intends that compensation paid under the Plan to
Covered Employees will, to the extent practicable, constitute “qualified performance-based
compensation” within the meaning of Section 162(m) and related regulations, unless otherwise
determined by the Administrator. Accordingly, Awards granted to Covered Employees which are
intended to qualify for the performance-based exception under Code Section 162(m) and related
regulations shall be deemed to include any such additional terms, conditions, limitations and
provisions as are necessary to comply with the performance-based compensation exemption of Section
162(m), unless the Administrator, in its discretion, determines otherwise.

     (e) Unfunded Plan; No Effect on Other Plans:

     (i) The Plan shall be unfunded, and the Corporation shall not be required to create a
trust or segregate any assets that may at any time be represented by Awards under the Plan.
The Plan shall not establish any fiduciary relationship between the Corporation and any
Participant or other  person. Neither a Participant nor any other

-22-

 

person shall, by reason of
the Plan, acquire any right in or title to any assets, funds or property of the Corporation
or any Affiliate, including, without limitation, any specific funds, assets or other
property which the Corporation or any Affiliate, in their discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have only a contractual
right to the Common Stock or other amounts, if any, payable under the Plan, unsecured by any
assets of the Corporation or any Affiliate. Nothing contained in the Plan shall constitute a
guarantee that the assets of such entities shall be sufficient to pay any benefits to any
person.

     (ii) The amount of any compensation deemed to be received by a Participant pursuant to
an Award shall not constitute compensation with respect to which any other employee benefits
of such Participant are determined, including, without limitation, benefits under any bonus,
pension, profit sharing, life insurance or salary continuation plan, except as otherwise
specifically provided by the terms of such plan or as may be determined by the
Administrator.

     (iii) The adoption of the Plan shall not affect any other stock incentive or other
compensation plans in effect for the Corporation or any Affiliate, nor shall the Plan
preclude the Corporation from establishing any other forms of stock incentive or other
compensation for employees or service providers of the Corporation or any Affiliate.

     (f) Applicable Laws: The Plan shall be governed by and construed in accordance with the laws
of the State of Georgia, without regard to the conflict of laws provisions of any state, and in
accordance with applicable federal laws of the United States.

     (g) Beneficiary Designation: The Administrator may in its discretion permit a Participant to
designate in writing a person or persons as beneficiary, which beneficiary shall be entitled to
receive settlement of Awards (if any) to which the Participant is otherwise entitled in the event
of death. In the absence of such designation by a Participant, and in the event of the
Participant’s death, the estate of the Participant shall be treated as beneficiary for purposes of
the Plan, unless the Administrator determines otherwise. The Administrator shall have sole
discretion to approve and interpret the form or forms of such beneficiary designation. A
beneficiary, legal guardian, legal representative or other person claiming any rights pursuant to
the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to
the Participant, except to the extent that the Plan and/or Award Agreement provide otherwise, and
to any additional restrictions deemed necessary or appropriate by the Administrator.

     (h) Gender and Number: Except where otherwise indicated by the context, words in any gender
shall include any other gender, words in the singular shall include the plural and words in the
plural shall include the singular.

     (i) Severability: If any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

     (j) Rules of Construction: Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation or other provision of

-23-

 

law shall be construed to refer to any amendment to or successor of such provision of law.

     (k) Successors and Assigns: The Plan shall be binding upon the Corporation, its successors and
assigns, and Participants, their executors, administrators and permitted transferees and
beneficiaries.

     (l) Right of Offset: Notwithstanding any other provision of the Plan or an Award Agreement,
the Corporation may reduce the amount of any payment or benefit otherwise payable to or on behalf
of a Participant by the amount of any obligation of the Participant to or on behalf of the
Corporation that is or becomes due and payable.

     (m) Effect of Changes in Status: An Award shall not be affected by any change in the terms,
conditions or status of the Participant’s employment or service, provided that the Participant
continues to be an employee of, or in service to, the Corporation or an Affiliate.

     (n) Shareholder Approval: The Plan is subject to approval by the shareholders of the
Corporation, which approval must occur, if at all, within 12 months of the Effective Date of the
Plan. Awards granted prior to such shareholder approval shall be conditioned upon and shall be
effective only upon approval of the Plan by such shareholders on or before such date.

     (o) Fractional Shares: Except as otherwise provided by an Award Agreement or the
Administrator, (i) the total number of shares issuable pursuant to the exercise, vesting or earning
of an Award shall be rounded down to the nearest whole share, and (ii) no fractional shares shall
be issued. The Administrator may, in its discretion, determine that a fractional share shall be
settled in cash.

     (p) No Future Awards: The Board has declared that no Awards (as defined in the Amended Plan)
shall be issued under the Amended Plan after the effective date of the Merger.

     (q) Continued Effect: Except as set forth herein, the Amended Plan shall remain in
full force and effect. Except as set forth herein, all Awards granted under the Original Plan shall
remain in full force and effect in accordance with the terms of the applicable Award Agreement.

-24-

 

     IN WITNESS WHEREOF, this MiMedx Group, Inc. Amended and Restated Assumed 2005 Stock Plan
(formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan), is, by the
authority of the Board of Directors of the Corporation, executed in behalf of the Corporation,
effective as of the 28th day of August 2008.

	 	 	 	 	 
	 	MIMEDX GROUP, INC.

 	 
	 	By:  	/s/ Steve Gorlin
 	 
	 	 	Name:  	Steve Gorlin 	 
	 	 	Title:  	Chairman of the Board 	 
	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	/s/ John C. Thomas, Jr.
	 	 
	 

Secretary

	 	 
	 
	 	 
	[Corporate Seal]

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