Document:

ex42.htm

Exhibit 4.2

 

NEITHER THIS WARRANT NOR THE SHARES OF FLAGSTONE REINSURANCE HOLDINGS, S.A. (THE “COMPANY”) ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THE REGISTERED HOLDER OF THIS WARRANT HAS AGREED THAT IT WILL NOT SELL, PLEDGE OR OTHERWISE TRANSFER THIS WARRANT EXCEPT TO AFFILIATES AND THAT NO SALE, PLEDGE OR OTHER TRANSFER OF THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE WITHOUT REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED.

 

IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED BY, AND THE RIGHTS ATTACHING TO THESE SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED HEREIN AND IN THE ARTICLES OF INCORPORATION OF THE COMPANY AND THE SHAREHOLDERS’ AGREEMENT, AS THEY MAY BE AMENDED FROM TIME TO TIME, WHICH ARE AVAILABLE FOR EXAMINATION AT THE REGISTERED OFFICE OF THE COMPANY.

 

FLAGSTONE REINSURANCE HOLDINGS, S.A.

AMENDED AND RESTATED

SHARE PURCHASE WARRANT

 

Warrant No. 003

 

This certifies that, for value received,

 

Leyton Limited

 

or its permitted assigns, are entitled, subject to the terms and conditions hereinafter set forth, to purchase the number of shares, par value $0.01 per share (the “Shares”), of Flagstone Reinsurance Holdings, S.A., a Luxembourg company (the “Company”), set forth herein for the purchase price per Share equal to the Exercise Price (as defined herein).

 

Upon delivery of this amended and restated warrant (this “Warrant”) with the Purchase Form attached hereto duly executed, together with payment of the Exercise Price for the Shares thereby purchased, at the registered office of the Company or at such other address as the Company may designate by notice in writing to the registered holder hereof (the “Holder”), the Holder shall be entitled to be registered on the Register of Members of the Company as the holder of the Shares so purchased and to receive a Share certificate or Share certificates for the Shares so purchased.  All Shares issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens and charges with respect thereto.

 

This Warrant is issued in connection with the transfer from Haverford (Bermuda) Ltd. to Leyton Limited of a portion of the amended and restated warrant dated as of 17 May, 2010 and issued by the Company to Haverford (Bermuda) Ltd. (the “Original Warrant”), in accordance with subsection 4.2 thereof.  This Warrant, together with the amended and restated warrant dated as of the date hereof and issued by the Company to Haverford (Bermuda) Ltd., replaces the Original Warrant in its entirety.  The Original Warrant shall be void and of no further force or effect.

 

This Warrant is subject to the following terms and conditions:

 

Section 1.  Underlying Shares; Exercise Price

 

1.1  Number of Shares.  Subject to adjustment in accordance with the provisions of Section 8 hereof, this Warrant shall be exercisable for 630,194 Shares.

 

1.2  Exercise Price.  Subject to adjustment in accordance with the provisions of Section 8 hereof, this Warrant shall be exercisable for a price of $14.80 per Share.

 

  

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1.3  Legend.  The Shares issuable upon exercise of the Warrant shall be in such form, and shall include such legends and restrictions on transfer, as the Company shall deem necessary or appropriate at the time of exercise in order to comply with the Company’s Articles of Incorporation, the Shareholders’ Agreement of the Company dated as of December 20, 2005 as amended from time to time (the “Shareholders’ Agreement”), and applicable law and regulation.

 

Section 2.  Term of Warrant; Conditions on Exercise

 

2.1  Term.  Subject to the terms of this Warrant, the Holder shall have the right, at any time during the period (such period, the “Term”) commencing on December 1, 2013 and ending at 5:00 p.m., New York time, on 31 December 2013 (the “Termination Date”), to purchase from the Company the number of fully paid and nonassessable Shares to which the Holder may at the time be entitled to purchase pursuant to this Warrant, upon surrender, to the Company at its registered office, of this Warrant certificate, together with the Purchase Form attached hereto duly completed and signed, and upon payment to the Company of the Exercise Price for the number of Shares in respect of which this Warrant is then being exercised.  Payment of the aggregate Exercise Price shall be made on the date of exercise in cash, or by certified or cashier’s check, or a combination thereof.  This Warrant shall terminate and expire to the extent not fully exercised on or prior to the Termination Date.

 

Section 3.  Exercise of Warrant

 

3.1  Exercise.  Upon surrender of this Warrant and payment of the Exercise Price, and (if the Holder shall not already be a party thereto) execution by the Holder of the Shareholders’ Agreement, the Company shall cause the issue of the Shares to be registered in the Register of Members of the Company and shall issue and cause to be delivered with all reasonable dispatch, to or upon the written order of the Holder and (subject to the restrictive legends on the first page of this Warrant) in such name or names as the Holder may designate, a certificate or certificates for the number of full Shares so purchased upon the exercise of this Warrant, together with cash, as provided in Section 10 hereof, in respect of any fractional Shares otherwise issuable upon such surrender.  The rights of purchase represented by this Warrant shall be exercisable, at the election of the Holder, either in full or from time to time in part and, in the event that this Warrant is exercised in respect of fewer than all of the Shares at any time prior to the date of expiration of this Warrant, a new Warrant certificate to purchase the remaining Shares will be issued.

 

Section 4.  Transferability and Form of Warrant

 

4.1  Registration.  This Warrant is numbered and registered in the books of the Company.  The Company shall be entitled to treat the Holder as the sole owner of this Warrant for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person, and shall not be liable for any registration of transfer of this Warrant which is to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer.

 

4.2  Transfer.  This Warrant shall not be transferable by the Holder other than to an Affiliate (as such term is defined in the Company’s Articles of Incorporation).  In addition, this Warrant shall be transferable only in the books of the Company maintained at its registered office and subject to the restrictive legends on the first page of this Warrant and to the Articles of Incorporation of the Company, upon delivery of this Warrant either duly endorsed by the Holder or by the Holder’s duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment, or authority to transfer.  In all cases of transfer by an attorney, the original letter of attorney, duly approved, or an official copy thereof, duly certified, shall be deposited and remain with the Company.  In case of transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced, and may be required to be deposited and remain with the Company in its discretion.  Upon any registration of transfer, the Company shall execute and deliver a new Warrant to the person entitled thereto.

 

  

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Section 5.  Payment of Taxes

 

The Company will pay all documentary stamp duties and taxes, if any, attributable to the initial issuance of Shares upon the exercise of this Warrant; provided that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in such issuance.

 

Section 6.  Mutilated or Missing Warrant

 

In case the certificate evidencing this Warrant shall be mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue and deliver in exchange and substitution for and upon cancellation of this certificate if it is mutilated, or in lieu of and substitution for this certificate if it is lost, stolen or destroyed, a new Warrant certificate of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of this Warrant and indemnity, if requested, also satisfactory to the Company.  Applicants for such substitute Warrant certificate shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe.

 

Section 7.  Purchase by the Company

 

The Company shall have the right, except as limited by law, other agreements or herein, to purchase or otherwise acquire this Warrant at such times, in such manner and for such consideration as it may deem appropriate and as shall be agreed with the Holder of this Warrant in its sole discretion.

 

Section 8.  Adjustment of Exercise Price and Number of Shares

 

8.1  Adjustments.  The Exercise Price and the number and kind of Shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of certain events, as follows:

 

(a)  In case the Company shall (i) pay a dividend in Shares or make a distribution in Shares, (ii) subdivide its issued Shares, (iii) consolidate its issued Shares into a smaller number of Shares or (iv) issue by reclassification of its Shares other securities of the Company, the number of Shares or other securities of the Company purchasable upon exercise of this Warrant shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive the kind and number of Shares or other securities of the Company which he would have owned or have been entitled to receive immediately following any such event had he fully exercised this Warrant immediately prior to any such event or any record date with respect thereto.  An adjustment made pursuant to this paragraph (a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

 

(b)  In case the Company shall issue rights, options or warrants to all or substantially all holders of its Shares, without any charge to such holders, entitling them to subscribe for or purchase Shares at a price per share which is lower at the record date mentioned below than the then current book value of the Company (“Book Value”) per Share, the number of Shares thereafter purchasable upon the exercise of this Warrant immediately prior thereto shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive the number of Shares determined by multiplying the number of Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the number of Shares outstanding on the date of issuance of such rights, options or warrants plus the number of additional Shares offered for subscription or purchase, and of which the denominator shall be the number of Shares outstanding on the date of issuance of such rights, options or warrants plus the number of Shares which the aggregate offering price of the total number of Shares so offered would purchase at such  Book Value.  Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective retroactively immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants.

 

(c)  In case the Company shall distribute to all or substantially all holders of its Shares evidences of its indebtedness or assets (excluding cash dividends or distributions out of earnings) or rights, options or warrants or convertible securities containing the right to subscribe for or purchase Shares (excluding those referred to in paragraph (b) above), then in each such case the number of Shares purchasable upon the exercise of this Warrant immediately prior thereto shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive, for the same aggregate exercise price, the number of Shares determined by multiplying the

 

  

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number of Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the then current Book Value of the Company on the date of such distribution, and of which the denominator shall be such current Book Value of the Company, less the then fair value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible securities applicable.  Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution.

 

(d)  No adjustment in the number of Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least 1 percent in the number of Shares purchasable upon the exercise of this Warrant; provided that any adjustments which by reason of this paragraph (d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

 

(e)  Whenever the number of Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price per Share payable upon exercise of this Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Shares purchasable upon the exercise of this Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Shares so purchasable immediately thereafter.

 

(f)  When the number of Shares purchasable upon the exercise of this Warrant or the Exercise Price is adjusted as herein provided, the Company shall promptly mail to the Holder by first class mail, postage prepaid, notice of such adjustment or adjustments setting forth the number of Shares purchasable upon the exercise of this Warrant and the Exercise Price of such Shares after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made.

 

(g)  For the purpose of this subsection 8.1, the term “Shares” shall mean (i) the class of shares designated as the Shares of the Company on the date of this Warrant, or (ii) any other class of shares resulting from successive changes or reclassifications of such shares consisting solely of changes in par value.  In the event that at any time, as a result of an adjustment made pursuant to this subsection 8.1, the Holder shall become entitled to purchase any shares of the Company other than Shares, thereafter the number of such other shares so purchasable upon exercise of this Warrant, and the Exercise Price of such shares, shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Shares contained in paragraphs (a) through (f), inclusive, above, and the provisions of Sections 2 and 3 and subsections 8.2 through 8.4, inclusive, with respect to the shares shall apply on like terms to any such other shares.

 

(h)  Upon the expiration of any rights, options, warrants or conversion privileges, if any thereof shall not have been exercised, the number of shares purchasable upon exercise of this Warrant and payment of the Exercise Price, to the extent this Warrant shall not then have been exercised, shall, upon such expiration, be readjusted and shall thereafter be such as they would have been had it been originally adjusted (or had the original adjustment not been required, as the case may be) on the basis of (1) the only Shares so issued were the Shares, if any, actually issued or sold upon the exercise of such rights, options, warrants or conversion rights and (2) such Shares, if any, were issued or sold for the consideration actually received by the Company for the issuance, sale or grant of all of such rights, options, warrants or conversion rights, whether or not exercised; provided that no such readjustment shall have the effect of increasing the Exercise Price by an amount in excess of the amount of the adjustment initially made in respect of the issuance, sale or grant of such rights, options, warrants or convertible rights.

 

8.2  Adjustment for Cash Dividends.  In case the Company shall pay a dividend in cash or make a distribution in cash, the Exercise Price per Share payable upon exercise of this Warrant shall be adjusted and reduced by the amount of such dividend payment.  This section shall be effective as of the date this Warrant was first issued.  .

 

8.3  No Adjustment in Certain Cases.  No adjustments shall be made pursuant to this Section 8, in connection with the issuance of any Shares (or securities convertible into  Shares) as consideration for the acquisition by the Company of assets or equity interests in any business entity.

 

 

  

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8.4  Preservation of Purchase Rights upon Reclassification, Consolidation, etc.  In case of any consolidation of the Company with or amalgamation or merger of the Company into another legal entity or in case of any sale or conveyance to another legal entity of the property, assets or business of the Company as an entirety or substantially as an entirety, the Company or such successor or purchasing entity, as the case may be, shall execute an agreement with the Holder that the Holder shall have the right thereafter upon payment of the Exercise Price in effect immediately prior to such action to purchase upon exercise of this Warrant the kind and amount of Shares and other securities and property which he would have owned or have been entitled to receive after the happening of such consolidation, amalgamation, merger, sale or conveyance had this Warrant been exercised immediately prior to such action.  Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8.  The Company shall mail an executed copy of any such agreement by first class mail, postage prepaid, to the Holder.  The provisions of this subsection 8.4 shall similarly apply to successive consolidations, mergers, sales, or conveyances.

 

Section 9.  Fractional Interests

 

The Company shall not be required to issue fractional Shares on the exercise of this Warrant.  If any fraction of a Share would, except for the provisions of this Section 9, be issuable on the exercise of this Warrant (or specified portion thereof), the Company shall pay an amount in cash equal to the then current net asset value per Share multiplied by such fraction.

 

Section 10.  No Right to Vote as Shareholders; Notices to Holder

 

Nothing contained in this Warrant shall be construed as conferring upon the Holder or the Holder’s transferees the right to vote or to consent or to receive notice as shareholders in respect of any meeting of shareholders for the election of directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company.  If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur:

 

(a)  any action which would require an adjustment pursuant to subsections 8.1 or 8.4, or

 

(b)  a dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation, amalgamation, merger, or sale of all or substantially all of its property, assets, and business as an entirety) shall be proposed;

 

the Company shall in each such case give notice in writing of such event to the Holder as provided in Section 11 hereof.  Failure to publish or mail such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any such action.

 

Section 11.  Notices

 

(a)  Any notice to the Company pursuant to this Warrant shall be in writing and shall be deemed to have been duly given if delivered or mailed certified mail, return receipt requested, to the Company at 37 Val St André, L-1128, Luxembourg, Grand Duchy of Luxembourg.  The Company may from time to time change the address to which such notices are to be delivered or mailed hereunder by notice to the Holder in accordance with paragraph (b) below.

 

(b)  Any notice pursuant to this Warrant by the Company to the Holder shall be in writing and shall be deemed to have been duly given upon receipt by the Holder, if mailed, or upon confirmation of delivery at the Holder’s address, in the books of the Company if sent by courier.

 

Section 12.  Supplements and Amendments

 

The Company may from time to time supplement or amend this Warrant, without the approval of the Holder, in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable and which shall not be inconsistent with the provisions of this Warrant and which shall not adversely affect the interest of the Holder.  Any other amendment to this Warrant may be made only by a written instrument executed by the Company and the Holder.

 

  

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Section 13.  Successors

 

All the covenants and provisions of this Warrant by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and permitted assigns hereunder.

 

Section 14.  Applicable Law

 

This Warrant shall be deemed to be a contract made under the laws of Luxembourg and for all purposes shall be construed in accordance with the laws thereof.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed as a deed by its Director.

 

Date:  25 June, 2010

 

Executed as a deed by

 

	
 

 

 

[Affix Seal]

	 
	
                                                    FLAGSTONE REINSURANCE HOLDINGS, S.A.

	  
	
                                                    By:

	  
	  	
Name:    William Fawcett

	  	
Title:       General Counsel and Corporate Secretary

ATTEST:

 

	
By:

	  
	  	
Name:

	  	
Title:Director, Leyton Limited

  

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FLAGSTONE REINSURANCE HOLDINGS, S.A.

 

AMENDED AND RESTATED

 

SHARE PURCHASE WARRANT

 

PURCHASE FORM

 

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, ______________ shares (the “Shares”) provided for therein, and requests that certificates for the Shares be issued in the name of:

 

(Please Print or Type Name, Address and Social Security Number)

 

	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  

and, if said number of Shares shall not be all the Shares purchasable hereunder, that a new Warrant Certificate for the balance of the unpurchased Shares be registered in the name of the undersigned Warrantholder as below indicated and delivered to the address stated below:

 

(Please Print)

 

	
Dated:

	  
	  	  
	
Name of Warrantholder:

	  
	  	  
	
Address:

	  
	  	  
	  	  
	  	  
	
Signature:

	  

	
Note:  The above signature must correspond with the name as written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever.

 

	
Signature Guaranteed:

	  

(Signature must be guaranteed by a bank or trust company having an office or correspondent in the United States or by a member firm of a registered securities exchange or the National Association of Securities Dealers, Inc.)

 

  

7ex1015.htm

Exhibit 10.15

FLAGSTONE RÉASURANCE SUISSE SA (BERMUDA BRANCH)

and

GARY PRESTIA

_______________________________

EMPLOYMENT AGREEMENT

_______________________________

  

  

  

THIS AGREEMENT is made as of the 31st Day of March, 2009 between Flagstone Réassurance Suisse SA (Bermuda Branch), a Bermuda registered permit company whose principal office is situated at Crawford House, 23 Church Street, Hamilton HM 11, Bermuda (the “Company”); and  Gary Prestia of Apt 404, #5 Parliament Street, Hamilton, HM12, Bermuda (the “Employee”).  This agreement supersedes any other previously dated agreements made between the Employee and the Company or any of its affiliates.

	
WHEREBY IT IS AGREED as follows:

	
1)

	
Definitions and Interpretation

Headings in this document do not affect interpretation and are for convenience only. In addition to the words and expressions hereinbefore defined the following words and expressions shall have the meanings hereinafter ascribed to them:

	
  

	
a)

	
“Affiliate” means a company which is a subsidiary of another company or 2 or more companies which are both subsidiaries of the same company or each of them is controlled by the same person.  For the purposes of this definition, "control", when used with respect to any company, means the power to direct the management and policies of such company, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing;

	
  

	
b)

	
“Bonus Payment Date” has the meaning set out in paragraph 6 of Schedule 1;

	
  

	
c)

	
“Business Day” means any day normally treated as a business day in Bermuda;

	
  

	
d)

	
“Cause” means:

	
  

	
(i)

	
a material breach by the Employee of any contract between the Employee and the Company;

	
  

	
(ii)

	
the wilful and continued failure or refusal by the Employee to perform any duties reasonably required by the Company, after notification by the Company of such failure or refusal, and failing to correct such behaviour within 20 days of such notification;

	
  

	
(iii)

	
commission by the Employee of a criminal offence or other offence of moral turpitude,

	
  

	
(iv)

	
perpetration by the Employee of a dishonest act or common law fraud against the Company or a client thereof;

	
  

	
(v)

	
the Employee wilfully engaging in misconduct which is materially injurious to the Company, including without limitation, the disclosure of any trade secrets, financial models, or computer software to persons outside the Company without the consent of the Company.

	
  

	
e)

	
“Commencement Date” has the meaning set out in paragraph 3 of Schedule 1;

  

  

  

	
  

	
f)

	
“Company Party” means the Company or its Affiliates

	
  

	
g)

	
“Employment” means the employment of the Employee pursuant to this Agreement;

	
  

	
h)

	
“Intellectual Property Rights” means rights in inventions, patents, trademarks, service marks, design rights (whether registrable or otherwise), trade and business names, copyrights (including rights in computer software), database rights and semiconductor topography rights (whether or not any of these is registered and including applications for registrations) and all rights or terms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world;

	
  

	
i)

	
“Person” means individual or entity

	
  

	
j)

	
“Staff Policy Manual” means such document or documents produced by the Company which set out the policies and procedures of the Company and which may be amended from time to time;

	
  

	
k)

	
“Termination Date” means the date on which the Employee’s employment with the Company ceases either for reason of the conclusion of the fixed term of the Employment or for reason of the termination of the Employment in accordance with the provisions of this Agreement.

	
2)

	
Appointment

	
  

	
a)

	
The Company hereby appoints the Employee and the Employee hereby accepts the position set out in paragraph 1 of Schedule 1 and shall have such responsibilities as the Company may from time to time direct.

	
  

	
b)

	
The foregoing appointment shall be subject to:

	
  

	
i)

	
satisfactory reference/background checks conducted by or on behalf of the Company; and

	
  

	
ii)

	
where applicable, this appointment shall be subject to the grant and maintenance of appropriate work permits

	
  

	
c)      

	The Employee may be expected from time to time to perform duties for and on behalf of other entities within the Flagstone group of Companies including but not limited to affiliates, subsidiaries, branches and any other entity that is controlled by, directly or indirectly, Flagstone Reinsurance Holdings Limited, for which the Employee may or may not receive additional remuneration.

  

  

  

	
3)

	
Duration of Appointment

The Employment shall be deemed to have commenced on the Commencement Date and shall continue unless terminated in accordance with the provisions of this Agreement.

	
4)

	
Place of Employment

The Employee’s place of employment is set out in paragraph 2 of Schedule 1.

	
5)

	
Compensation

	
  

	
a)

	
Salary, Benefits and Deductions from Salary

	
  

	
i)

	
The salary payable to the Employee shall be the sum as set out in paragraph 4 of Schedule 1, and shall be payable by equal monthly instalments in arrears on the last Business Day of each month.

	
  

	
ii)

	
The Company shall review the salary annually in December and the rate of salary may, at the Company’s sole discretion, be increased effective from the date of review.

	
  

	
iii)

	
The Company shall be required by law to deduct from the Employee’s salary the amounts set out in paragraph 5 of Schedule 1.

	
  

	
iv)

	
Employee shall have rights to personal use of Company aircraft to the extent set out in paragraph 9 of Schedule 1, provided that the Employee promptly shall reimburse the marginal cost to the Company of such use.  As used in the foregoing sentence, “marginal cost” means the variable operating costs to the Company of such use, including, but not limited to fuel costs, MSP, mileage, weather-monitoring costs, on-board catering and landing/ramp fees, but shall not include fixed costs which do not change based on usage, such as pilot salaries, the lease costs of the Company aircraft, and the cost of maintenance not related to trips.

	
  

	
b)

	
Bonus

	
  

	
i)

	
The Company may, but shall not be obliged to, pay an annual bonus in accordance with this paragraph 6 of Schedule 1.

	
  

	
ii)

	
Bonuses payable on the first Bonus Payment Date will be assessed on salary earned by the Employee since the Commencement Date and thereafter on salary earned since the last Bonus Payment Date.

  

  

  

 

	
  

	
iii)

	
The Company shall not be liable to pay any bonus to the Employee if the Termination Date occurs between Bonus Payment Dates.

	
  

	
c)

	
Severance

	
  

	
i)

	
If the Company terminates the Employee without Cause by providing a notice of termination as set forth in Clause 12 of this Agreement, the Company will pay the Employee, as severance:

	
  

	
a.

	
The salary payable to the Employee in the sum set out in paragraph 4 of Schedule 1 from the date the Company provided the Employee notice of termination until the expiration of the period set forth in paragraph 8 of Schedule 1 (without giving effect to the proviso therein) and (ii) a bonus calculated as follows: adding the sum of the bonuses paid to the Employee with respect to the three Bonus Payment Dates immediately preceding the notice of termination in accordance with paragraph 6 of Schedule 1 (or, if  less than three Bonus Payment Dates shall have transpired since the Commencement Date, the bonuses paid with respect to such lesser number of Bonus Payment Dates) and dividing by three (or such lesser number of Bonus Payment Dates, as the case may be).

	
  

	
ii)

	
The Company will pay the Employee the severance payment specified in Clause (5)(C)(i) above 545 days after the notice of termination is delivered to the Employee, provided the Employee shall have complied (in the reasonable judgement of the Company) with the provisions set forth in Clause 16.

	
  

	
iii)

	
For the avoidance of doubt, the Severance payments described herein are separate from obligation of the Company to pay salary during the notice period

	
6)

	
Vacation

The Employee shall be entitled to paid vacation in accordance with paragraph 7 of Schedule 1, such vacation to be taken in accordance with the Staff Policy Manual.

  

  

  

	
7)

	
Amendments and Waivers

	
  

	
(a)

	
No amendments to the provisions of this Agreement shall be effective unless in writing and signed by the parties hereto or their duly authorized representatives.

	
  

	
(b)

	
All rights, remedies and powers conferred upon the parties hereto are cumulative and shall not be deemed or construed to be exclusive of any other rights, remedies or powers now or hereafter conferred upon the parties hereto or either of them by law or otherwise.

	
  

	
(c)

	
Any failure at any time to insist upon or enforce any such right, remedy or power shall not be construed as a waiver thereof.

	
8)

	
Warranty

The Employee represents and warrants that he is not a party to any agreement, contract (whether of employment or otherwise) or understanding, which would in any way restrict or prohibit him from:

	
  

	
a)

	
Undertaking or performing any of the duties of the Employment in accordance with the terms and conditions of this Agreement; or

	
  

	
b)

	
Utilizing any materials which the Employee proposes to use in the course of his employment with the Company whether in hard copy or stored in an electronic storage device.

	
  

	 

	
9)

	
Covenants

	
  

	
a)

	
The Employee expressly covenants that all Intellectual Property Rights relating in any way to the business activities (or incidental to the use of company time and or property) of the Company or its Affiliates which may be discovered, invented, improved or developed by the Employee during his Employment with the Company, whether during regular office hours or otherwise and whosesoever discovered, invented, improved or developed will be the exclusive and sole property of the Company and its Affiliates.

	
  

	
b)

	
The Employee undertakes to disclose promptly to the Company and hereby assigns to the Company without further compensation, all rights, title and interest in the said discoveries, inventions, improvements and developments whether conceived and developed solely by the Employee or jointly with others and will on the request of the Company execute all documents and do all such things as may be requested by the Company or its Affiliates to confirm or perfect the rights title and

  

  

  

 

	
  

	
c)

	
interest in such property provided that the Company will bear all costs and expenses associated therewith.

 

10)           Notice

	
  

	
a)

	
Any notice required or authorized hereunder shall be in writing and may be served:-

i)             by personal delivery; or

	
  

	
ii)

	
by facsimile with a telephone call to ensure receipt; or

	
  

	
iii)

	
by email with a receipt evidencing that the recipient has read the email.

	
  

	
b)

	
In proving service of any notice hereunder it shall be sufficient to prove:

	
  

	
i)

	
in the case of a notice delivered personally, that it was left at the address for notices herein or any substituted address;

	
  

	
ii)

	
in the case of a notice sent by facsimile, that it was properly transmitted to the last known facsimile number; and

	
  

	
iii)

	
in the case of a notice sent by email that the computer of the person sending the email message has generated a receipt evidencing that the recipient has read the email message.

	
  

	
c)

	
The address for service of notices on the Company is at its principal place of business.

	
  

	
d)

	
The address for service of notices on the Employee is at his residence on the records of the Company.

11)           Confidentiality

	
  

	
a)

	
The Employee shall not at any time during his employment (except as is necessary and proper in the course of his employment) or at any time after the Termination Date disclose to any person any information as to the practice, business dealings or affairs of the Employer, its affiliates or any of the Employer’s customers or clients or as to any other matters which may come to his knowledge by reason of his employment with the Company.

	
  

	
b)

	
The Employee shall at the time of executing this Agreement execute the undertaking of Secrecy attached in Schedule 2.

  

  

  

	
12)

	
Notice of Termination

Subject to Clause 13, this Agreement may be terminated in accordance with paragraph 8 of Schedule 1.  The Employee agrees that, if applicable, when a notice of termination is served, he will promptly offer his resignation from the Board of Directors of the Company, and all of the Company’s subsidiaries and Affiliates.

	
13)

	
Summary Dismissal for Cause

The Company reserves the right to summarily dismiss the Employee for Cause, in which case no further payments are due to the Employee except salary up until and including the Termination Date.

	
14)

	
Misuse of Company Property

	
  

	
a)

	
The Employee shall not use any of the Company’s property including, but not limited to computer equipment and software, for personal use except moderate use of the Internet and email by the Employee, which does not interfere with the performance of their duties, and which does not include the reading or viewing of offensive or illegal material.

	
  

	
b)

	
The Company reserves the right to read all paper and computer files of the Employee on premises and any information stored on any electronic device which is the property of the Company.

	
15)

	
Outside Employment

The Employee shall not be permitted to hold any outside directorships or employment without the written consent of the Company.

	
16)

	
Non Solicitation

	
  

	
a)

	
During the 545 days after the date a notice of termination is delivered (if terminated without Cause or voluntarily initiated by the Employee) or the 545 days after the date the Employee is summarily dismissed (if terminated for Cause), the Employee will not directly, or indirectly through another Person:

	
  

	
i.

	
Solicit any employee of the Company or another Company Party to leave the employ of a Company Party, or in any way interfere with the relationship between a Company Party, on the one hand, and any employee thereof, on the other hand; provided however that the general solicitation of third parties through the use of means generally available to the public, including the placement of advertisements in the newspaper, will not be deemed to violate the clause ; or

  

  

  

	
  

	
ii.

	
Hire any individual who was an employee of a Company Party until twelve months after such individual’s employment relationship has ended.

	
  

	
b.

	
If the Employee is employed by or a consultant to another Person, the Employee will procure the compliance of that Person with the provisions of this Clause 16.

	
17)

	
Staff Policy Manual

The Employee agrees to abide by the terms of the Company Staff Policy Manual as amended from time to time. The Company Staff Policy Manual shall be available to the Employee.

	
18)

	
Miscellaneous

This Agreement shall be subject to the additional terms set out in paragraph 9 of Schedule 1.

	
19)

	
Whole Agreement

This Agreement constitutes the whole agreement between the parties.  All other agreements (if any) for service between the Company and the Employee or any other member of the Group are hereby abrogated and superseded.

	
20)

	
Severability

In the event that any provision of the Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision will, as to such jurisdiction, be modified or restricted to the extent necessary to make such provisions valid, binding and enforceable, or if such provision cannot be modified or restricted, then such provision will, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by virtue of this Agreement remain substantially unimpaired, will not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions will not invalidate or render unenforceable such provision in any other jurisdiction.

  

  

  

21)           Law and Jurisdiction

	
  

	
a.

	
The terms of this Agreement shall be governed by and construed in accordance with the laws of the Islands of Bermuda.

	
  

	
b.

	
All disputes, controversies or claims arising out of, relating to, or in connection with, this contract, or breach, termination or validity thereof, shall be finally settled by arbitration.  The arbitration shall be conducted in accordance with the Bermuda International Conciliation and Arbitration Act 1993, except as same may be modified herein or by mutual agreement of the parties.  The seat of the arbitration shall be Bermuda, and it shall be conducted in the English language.  The arbitration shall be conducted by one arbitrator who shall be selected by BIBA (Bermuda International Business Association) in the event that the parties fail to agree.  The arbitral award shall be in writing, shall state reasons for the award, and be final and binding on the parties.  The award may include an award of costs, including reasonable attorneys’ fees and disbursements.  Judgment on the award may be entered by any court having jurisdiction thereof or having jurisdiction over the parties or their assets.

IN WITNESS WHEREOF the parties hereto have set their hands the date first above written.

	
Flagstone Réassurance Suisse SA (Bermuda Branch)

 

 

 

 

 

David Brown

Chief Executive Officer

	
 

 

 

 

 

 

Gary Prestia

  

  

  

	
Schedule 1

	
1.           Position:

	
Chief Underwriting Officer

	  	  
	
2.           Place of employment:

	
The Employee’s place of employment shall be at the Company’s office in Bermuda; however the Company may require the Employee, in the performance of his duties, to travel from Bermuda to such other places and for such times as is reasonably necessary for the proper discharge of the Employee’s duties.

	  	  
	
3.           Commencement Date:

	
1st January, 2009

(Group start date 1 March 06 – current work permit start date 21/May/06)

	  	  
	
4.           Salary:

	
USD $546,000 per annum.

	  	  
	
5.           Deductions from Salary:

	
a)  Social Insurance:  This is a government administered contributory pension scheme and the contributions are split evenly between the Company and the Employee.

b)  Payroll Tax:  The Company will withhold the maximum permissible under Bermuda law from the Employee’s salary, and the balance will be paid by the Company.

c)  Medical Insurance: The Company is required to provide you with Medical Insurance under a Bermuda-approved scheme. Half of the cost of this insurance will be withheld from the Employee’s salary.

 

 

  

  

  

	
6.           Bonus and Bonus Payment Date:

	
a)  The Employee may be paid a bonus of up to 75% of salary in accordance to Paragraph 5 section 1 - 3.

b)  The Bonus Payment date shall be in Q1 of each year commencing Q1, 2009

 

	
7.           Vacation:

	
The Employee will be entitled to 25 days vacation per annum.

	  	  
	
8.           Notice of Termination:

	
This Agreement may be terminated for any reason by either party giving 180 days advanced notice in writing to the other; however, the Company may, in its sole discretion, pay salary in lieu of notice of termination given by the Company.

	  	  
	
9.           Miscellaneous:

	
a.   Housing Subsidy

The Employee will be entitled to receive a Housing Subsidy of $60,000 per annum, to be paid in arrears in twelve equal monthly instalments.

b.   Use of Company Aircraft

The Employee will be entitled to use the Company aircraft for his personal use, subject to availability, provided that the Employee promptly shall reimburse the marginal cost to the Company of such use.

 

 

	
10.        Permitted Outside employment and directorships:

	
None.

  

  

  

	
Schedule 2

Undertaking of Secrecy

TO:           Flagstone Réassurance Suisse SA (Bermuda Branch)

I HEREBY UNDERTAKE THE FOLLOWING:-

	
1.

	
That during the course of my employment with Flagstone Réassurance Suisse SA (Bermuda Branch), I will keep secret the affairs and concerns of Flagstone Reinsurance Holdings Limited and all affiliates including Flagstone Réassurance Suisse SA (Bermuda Branch), (the “Company”), and the nature and particulars of the Company including, but not limited to its investors, clients, transactions, trading models and trading strategies, or the financial results or performance figures of the Company or any client or strategy that may come to my attention during the course of my employment with the Company (“Confidential Information”).

	
2.

	
That after my departure from the Company, I will not disclose to any person the affairs of the Company, including, but not limited to its investors, clients, transactions, trading models and trading strategies or the financial results or performance figures of the Company or any client or strategy that may come to my attention during the course of my employment with the Company.

	
3.

	
That upon my departure from the Company, I will not take with me any Confidential Information belonging to or concerning the Company, or its clients, whether in printed form or on any electronic storage device.

	
4.

	
In the event that I do have in my possession any Confidential Information following my departure from the Company, I undertake to deliver such information to the Company within 3 days of my departure.  If personal delivery of such information is either not possible or inconvenient, I undertake to contact the President of the Company and arrange a suitable method of disposal of such confidential information within three days of my departure.

I hereby acknowledge that any breach of this undertaking may result in my dismissal from the Company, and that my obligations under this undertaking continue after the termination of my employment with the Company.

	
Signature

 

	
 

 

	  	  
	
Name

 

	
Gary Prestia                                                                      

 

	  	  
	
Witness

 

	  

	  	  
	
Date

 

	  

	  	  

  

  

  

January 1, 2011

FAO:  Gary Prestia

Dear Gary,

Re:           Change of Bonus Cap

We are pleased to confirm that with effect from January 1 2011 your maximum discretionary bonus cap is being increased to 90%.

All other terms and conditions of your employment remain unchanged.

We look forward to your continued contribution to the success of the company.

Yours sincerely,

David A. Brown

Chief Executive Officer

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