Document:

Exhibit 4.2

 

THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY STATE OR
FOREIGN SECURITIES LAWS. THE TRANSFER OF ANY COMMON SHARES ISSUABLE UPON THE
EXERCISE HEREOF IS SUBJECT TO THE TRANSFER RESTRICTIONS SPECIFIED IN SECTION
4.5 OF THIS WARRANT. THIS WARRANT MAY NOT BE EXERCISED AND THE WARRANT AND THE SECURITIES
ISSUABLE UPON ITS EXERCISE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, ASSIGNED OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS, UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR QUALIFICATION UNDER
ANY OTHER APPLICABLE SECURITIES LAWS.

 

CASTLEPOINT HOLDINGS, LTD.

 

AMENDED AND RESTATED WARRANT

TO PURCHASE 1,127,000 COMMON SHARES

 

Issued: April 6, 2006

Amended and Restated: May 11, 2006

Expires: April 6, 2016

 

Effective as of April 6, 2006

 

THIS AMENDED AND RESTATED
WARRANT amends and restates in its entirety (and is given in
substitution for and as a replacement for) the Warrant originally issued to the
Holder (as defined below) on March 28, 2006 to purchase the same number of
Common Shares (as defined below) set forth herein. The Company and the Holder
have agreed that this Warrant shall be issued as of April 6, 2006 (the “Issuance Date”) and effective
as of April 6, 2006 (the “Effective Date”).
This Warrant certifies that, for value received, TOWER GROUP, INC., a Delaware corporation, or its permitted assigns
(the “Holder”),
is entitled to subscribe for and purchase at the Exercise Price (defined below)
from CASTLEPOINT HOLDINGS, LTD., a
Bermuda exempted company (the “Company”), on the terms and subject to the conditions hereinafter
set forth, One Million One Hundred Twenty Seven Thousand (1,127,000) Common
Shares (defined below) of the Company. The value received by the Company in
consideration of issuing the Warrant to the Holder is the payment by the Holder
of certain operating expenses incurred by the Company prior to the Effective
Date as set forth in Section 4.6.

 

1.             DEFINITIONS. In addition to the definitions set forth
in this Warrant, as used herein, the following terms shall have the following
respective meanings:

 

“Affiliate” shall mean,
with respect to any specified person, any other person controlling, controlled
by, or under common control with, such person. For the purposes of this
definition, control when used with respect to any specified person means the
power to direct the 

 

 

management
and policies of such person, 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.

 

“Business Day” shall mean any
day except Saturday, Sunday and any day which shall be a federal legal holiday
in the United States or in Bermuda, or a day on which banking institutions in
the State of New York or Bermuda are authorized or required by law or other
government action to close.

 

“Common Shares” shall mean
common shares, $0.01 par value each, of the Company.

 

“Exercise Price” shall mean Ten
United States Dollars (U.S.$10.00) per share, subject to adjustment pursuant to
Section 5 below; provided, that at no time shall
the Exercise Price be less than the then current par value of any share to be
issued pursuant hereto.

 

 “Warrant Shares” shall mean the
number of the Company’s Common Shares issuable upon exercise of this Warrant,
subject to adjustment pursuant to the terms herein, including but not limited
to adjustment pursuant to Section 5 below.

 

2.             EXERCISE OF WARRANT. Subject to the limitations set forth in
Section 4.5 of this Warrant, the rights represented by this Warrant may be
exercised in whole or in part during the period commencing on the Effective
Date and ending on the tenth anniversary of the Issuance Date (such period
being referred to as the “Exercise Period”)
by delivery of the following to the Company at its address set forth below (or
at such other address as it may designate by notice in writing to the Holder):

 

(a)           An executed Notice of Exercise in the form attached hereto;

 

(b)           Payment of the Exercise Price by any of the following: (i) in cash, (ii) by
check, or (iii) in immediately available funds, by wire transfer to a bank
account designated in writing by the Company; and

 

(c)           This Warrant.

 

Upon the exercise of the rights represented
by this Warrant, if applicable, the Company shall use reasonable efforts to
complete as quickly as possible the requirements of Section 42A of the Bermuda
Companies Act 1981, as amended (the “Bermuda Act”), and
a certificate or certificates for the Warrant Shares so purchased, registered
in the name of the Holder or persons affiliated with the Holder, if the Holder
so designates (and subject to securities law limitations as to any such Affiliate
and the transfer restrictions contained in the Company’s Bye-laws), shall be
issued and delivered to the Holder or the Holder’s designee, as the case may
be, within five (5) Business Days after the rights represented by this Warrant
shall have been so exercised. In the event that this Warrant is being exercised
for less than all of the then current number of Warrant Shares purchasable
hereunder, the Company shall, concurrently with the issuance by the Company of
the number of Warrant Shares for which this Warrant is then being exercised, issue
a new Warrant to the Holder, which shall be identical hereto, except that the
number of remaining Warrant Shares covered thereby shall be adjusted
accordingly, and exercisable for the remaining number of Warrant Shares
purchasable hereunder.

 

2

 

The person in whose name any certificate or
certificates for Warrant Shares are to be issued upon exercise of this Warrant
shall be deemed to have become the holder of record of such shares on the
latest of (i) the date the Company receives the executed Notice of Exercise,
payment of the Exercise Price, if any, and this Warrant; (ii) if applicable,
the date the Company has complied with the requirements of Section 42A of the
Bermuda Act; and (iii) the date on which the Holder’s or designee’s name is
entered in the Register of Members of the Company, irrespective of the date of
delivery of such certificate or certificates.

 

2.1          Net Exercise. Notwithstanding any provisions
herein to the contrary, if the fair market value of one share of the Company’s
Common Shares (at the date of calculation as set forth below), is greater than
the Exercise Price, and the Company has complied with the provisions of Section
42A of the Bermuda Act (or other like statutory provision which may affect the
Company’s ability to repurchase its Common Shares or to give effect to a
cashless exercise of this Warrant), then in lieu of exercising this Warrant by
payment of cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant (including that portion of this Warrant in payment of
the Exercise Price to effect such cashless exercise) at the principal office of
the Company, together with the properly endorsed Notice of Exercise, in which
event the Company shall issue to the Holder a number of Common Shares computed
using the following formula:

 

	
   

  	
   

  	
  X
  = Y (A-B)

  
	
   

  	
   

  	
             A

  
	
   

  	
   

  	
   

  
	
  Where X =

  	
   

  	
  the
  number of Common Shares to be issued to the Holder

  
	
   

  	
   

  	
   

  
	
  Y =

  	
   

  	
  the
  number of Common Shares purchasable under the Warrant or, if only a portion
  of the Warrant is being exercised, the portion of the Warrant being canceled
  (at the date of such calculation)

  
	
   

  	
   

  	
   

  
	
  A =

  	
   

  	
  the
  fair market value of one of the Company’s Common Shares (at the date of such
  calculation) provided, that such fair market
  value shall not be less than the then current par value of the Company’s
  Common Shares

  
	
   

  	
   

  	
   

  
	
  B =

  	
   

  	
  Exercise
  Price (as adjusted to the date of such calculation)

  

 

For purposes of the above calculation, the
fair market value of one of the Company’s Common Shares shall be determined by
the Company’s Board of Directors in good faith; provided, however, that if
there is a public market for the Common Shares, the fair market value per share
shall be the average per share closing price over the five (5) trading days
immediately preceding such calculation as reported in the Wall Street Journal
(or, if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation System).

 

3

 

3.             COVENANTS OF THE COMPANY.

 

3.1          Covenants as to Warrant Shares. The Company covenants and agrees that all Warrant Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued and outstanding, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance thereof.
The Company further covenants and agrees that the Company will at all times
hereunder have authorized and reserved, free from preemptive rights, a
sufficient number of its Common Shares to provide for the exercise of the
rights represented by this Warrant. If the number of authorized but unissued
Common Shares shall not be sufficient to permit exercise of this Warrant, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued Common Shares to such
number of shares as shall be sufficient for such purposes.

 

3.2          Notices of Record
Date. In the event of any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend which is
comparable to cash dividends paid in previous quarters) or other distribution,
the Company shall mail to the Holder, at least ten (10) days prior to the date
specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.

 

3.3          Reservation of Shares.
The Company covenants and agrees that the Company will, at all times
during the Exercise Period, have authorized and reserved, free from preemptive
rights, a sufficient number of Common Shares to provide for the exercise of the
rights represented by the Warrant. The Company further covenants and agrees to
take all such actions as may be necessary to ensure that all Common Shares
delivered upon exercise of this Warrant will be duly and validly authorized and
issued and fully paid and nonassessable and free from preemptive rights with
respect to the issue thereof.

 

4.             REPRESENTATIONS AND
COVENANTS OF HOLDER.

 

4.1          Acquisition of
Warrant for Own Account. The Holder represents and warrants that it is
acquiring the Warrant and the Warrant Shares solely for its account for
investment and not with a view to or for sale or distribution of said Warrant
or Warrant Shares or any part thereof. The Holder also represents that the
entire legal and beneficial interests of the Warrant and Warrant Shares the
Holder is acquiring is being acquired for, and will be held for, its account
only.

 

4.2          Securities
Are Not Registered.

 

(a)           The Holder understands that the Warrant and the Warrant Shares have not
been registered under the Securities Act of 1933, as amended (the “Securities Act”), on the basis that no distribution or public offering of the
shares of the Company is to be effected. The Holder realizes that the basis for
the exemption may not be present if, notwithstanding its representations, the
Holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution
or 

 

4

 

otherwise),
granting any participation in, or otherwise distributing the securities. The
Holder has no such present intention.

 

(b)           The Holder recognizes that the Warrant and the Warrant Shares must be held
indefinitely unless they are subsequently registered under the Securities Act
or an exemption from such registration is available. The Holder recognizes that
the Company has no obligation to register the Warrant, or to comply with any
exemption from such registration.

 

(c)           The Holder is aware that neither the Warrant nor the Warrant Shares may be
sold pursuant to Rule 144 adopted under the Securities Act unless certain
conditions are met, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not
exceeding specified limitations. Holder is aware that the conditions for resale
set forth in Rule 144 have not been satisfied and that there can be no
assurance that the Company will satisfy these conditions in the foreseeable
future.

 

4.3          Legended
Shares.

 

The Holder understands and agrees that all
certificates evidencing the Common Shares to be issued in connection with the
exercise of this Warrant will bear legends substantially in the form set forth
below:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, ASSIGNED OR OTHERWISE TRANSFERRED (EXCEPT TO THE
COMPANY OR A SUBSIDIARY THEREOF) UNLESS (I) (A) AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE SECURITIES ACT, OR (B) A WRITTEN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED IS PROVIDED TO THE COMPANY, AND (II) THE TRANSFEREE (A) IS (i) AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT,
(ii) A “QUALIFIED INSTITUTIONAL BUYER” (AS THAT TERM IS DEFINED IN RULE 144A OF
THE SECURITIES ACT), OR (iii) A PERSON ACQUIRING SHARES PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT AND TO CURRENT OR PROPOSED DIRECTORS, OFFICERS AND
EMPLOYEES OF THE COMPANY, AND (B) IF APPLICABLE, HAS OBTAINED THE CONSENT OF
THE BERMUDA MONETARY AUTHORITY.

 

5

 

IN
ADDITION, ANY SALE, OFFER FOR SALE, PLEDGE OR HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY,
AND THE RIGHTS ATTACHING TO THESE SECURITIES ARE SUBJECT TO, THE TERMS AND
CONDITIONS CONTAINED IN THE WARRANT ISSUED ON MARCH 28, 2006 BY THE COMPANY TO
TOWER GROUP, INC. (THE “TOWER WARRANT”) AND IN THE BYE-LAWS OF THE COMPANY, AS
THEY MAY BE AMENDED FROM TIME TO TIME, WHICH ARE AVAILABLE FOR EXAMINATION BY
HOLDERS OF SECURITIES AT THE REGISTERED OFFICE OF THE COMPANY.

 

UNDER
THE TERMS OF THE TOWER WARRANT, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, ASSIGNED OR OTHERWISE
TRANSFERRED PRIOR TO MARCH 28, 2009.

 

4.4          Accredited Investor
Status. The Holder is an “accredited investor” as defined in Regulation
D promulgated under the Securities Act.

 

4.5          Transfer Restriction.
The Holder hereby acknowledges, covenants and agrees that the Warrant
Shares may not be sold, offered for sale, hypothecated, assigned or otherwise
transferred, directly or indirectly, prior to March 28, 2009.

 

4.6          Payment of Company’s
Operating Expenses. The Holder hereby covenants and agrees that the Holder
shall pay for the following operating expenses incurred by the Company prior to
the Effective Date, and that the Company shall not be liable to the Holder for
payment of such operating expenses:

 

(a)           the cost of the use of the Holder’s office
space by the Company prior to the Effective Date; and

 

(b)           the cost of the time made available to the
Company by the Holder of the following employees of the Holder prior to the
Effective Date: Michael H. Lee, Joel S. Weiner, James Dulligan, James Parylak,
Richard Weidman, Joseph Beitz and Robert Hedges.

 

5.             ADJUSTMENT OF EXERCISE
PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price in effect and the number and kind
of securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as provided
in this Section 5 and in Section 7 below. In the event of changes in the
outstanding Common Shares of the Company by reason of share dividends, splits,
recapitalizations, reclassifications, combinations or exchanges of shares,
reorganizations, liquidations, or the like, the number and class of Exercise
Shares available under the Warrant in the aggregate and the Exercise Price
shall be correspondingly adjusted to give the Holder of the Warrant, on
exercise for the same aggregate Exercise Price, the total number, class, and
kind of shares as the Holder would have owned had the Warrant been exercised
prior to the event and had the Holder continued to hold such shares until after
the event requiring adjustment. The 

 

6

 

form of this Warrant need
not be changed because of any adjustment in the number of Exercise Shares
subject to this Warrant.

 

6.             FRACTIONAL SHARES. No fractional
shares shall be issued upon the exercise of this Warrant as a consequence of
any adjustment pursuant hereto. All Warrant Shares (including fractions)
issuable upon exercise of this Warrant may be aggregated for purposes of
determining whether the exercise would result in the issuance of any fractional
share. If, after aggregation, the exercise would result in the issuance of a
fractional share, the Company shall, in lieu of issuance of any fractional
share, pay the Holder otherwise entitled to such fraction a sum in cash equal
to the product resulting from multiplying the then current fair market value of
an Exercise Share by such fraction.

 

7.             REORGANIZATION. In the event
of, at any time during the Exercise Period, any capital reorganization, or any
reclassification of the capital shares of the Company (other than a change in
par value or as a result of a share dividend or subdivision, split-up or
combination of shares), or the consolidation, amalgamation or merger of the
Company with or into another corporation (other than a merger solely to effect
a reincorporation of the Company into another state or any consolidation,
amalgamation or merger of the Company with or into any other corporation,
entity or person, or any other corporate reorganization, in which the
shareholders of the Company immediately prior to such consolidation, merger,
amalgamation or reorganization, own more than 50% of the voting power of the surviving
entity immediately after such consolidation, merger, amalgamation or
reorganization), or the sale or other disposition of all or substantially all
the properties and assets of the Company in its entirety to any other person
(an “Organic Change”), then,
as a condition of such Organic Change, lawful and adequate provisions shall be
made by the Company whereby the Holder hereof shall thereafter have the right
to purchase and receive (in lieu of the Common Shares of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby) such shares, securities or other assets or property
as may be issued or payable with respect to or in exchange for a number of
outstanding Common Shares equal to the number of shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby.

 

8.             NO SHAREHOLDER RIGHTS. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a shareholder of the
Company.

 

9.             REGISTRATION RIGHTS. The Company shall afford the Holder
certain registration rights with respect to the Warrant Shares in accordance
with the terms and subject to the conditions of that certain Registration
Rights Agreement between the Company and Tower Group, Inc., dated as of April
4, 2006.

 

10.          TRANSFER OF WARRANT. Neither this Warrant nor any of the
rights or interests of the Holder hereunder are transferable or assignable,
except by operation of law, without the prior written consent of the Company.

 

11.          LOST, STOLEN, MUTILATED OR DESTROYED
WARRANT. Upon
receipt of evidence satisfactory to the Company of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and of indemnity (other
than in connection with any 

 

7

 

mutilated Warrant surrendered to the Company for
cancellation) reasonably satisfactory to the Company, upon reimbursement of the
Company’s reasonable direct expenses, and upon such other terms as the Company
may reasonably impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), the Company shall issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

 

12.          NOTICES, ETC. All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient, if not,
then on the next Business Day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d)
three (3) days after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company at the address listed on the
signature page and to the Holder at 120 Broadway, 14th Floor, New
York, New York 10271, or at such other address as the Company or Holder may
designate by ten (10) days advance written notice to the other parties hereto.

 

13.          ACCEPTANCE. Receipt of this Warrant by the Holder
shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.

 

14.          GOVERNING LAW. This Warrant and all rights,
obligations and liabilities hereunder shall be governed by and construed under
the laws of the State of New York, without giving effect to conflicts of laws
principles.

 

15.          SEVERABILITY.
In the event that
any provision or any part of any provision of this Warrant shall be void or
unenforceable for any reason whatsoever, then such provision shall be stricken
and of no force and effect. However, unless such stricken provision goes to the
essence of the consideration bargained for by a party, the remaining provisions
of this Warrant shall continue in full force and effect, and to the extent
required, shall be modified to preserve their validity.

 

[SIGNATURE PAGE FOLLOWS]

 

8

 

IN WITNESS WHEREOF, the Company has caused
this Amended and Restated Warrant to be executed by its duly authorized officer.

 

 

Date:       May
11, 2006

 

	
   

  	
  CASTLEPOINT HOLDINGS, LTD.,

  
	
   

  	
  a Bermuda exempted company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
        /s/ Joel S.
  Weiner

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joel S. Weiner

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and Chief 

  
	
   

  	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  Clarendon House, 2 Church Street

  
	
   

  	
   

  	
   

  	
  Hamilton HM 11 Bermuda

  
	
   

  	
   

  	
  Attn:

  	
  The Secretary

  
	
   

  	
   

  	
  Facsimile:

  	
  (441) 292-4720

  
					

 

Agreed to and accepted

as of the date written above:

 

TOWER GROUP, INC.

 

 

	
  By:

  	
      /s/
  Francis M. Colalucci

  	
   

  
	
   

  	
  Name:

  	
  Francis M. Colalucci

  
	
   

  	
  Title:

  	
  Senior Vice-President
  & Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  120 Broadway

  
	
   

  	
   

  	
  New York, NY 10271-5492

  
	
   

  	
   

  	
  U.S.A.

  
	
   

  	
  Attn:

  	
  General Counsel

  
	
   

  	
  Facsimile:

  	
  (212) 271-5492

  
				

 

9

 

NOTICE OF EXERCISE

 

To:          CastlePoint Holdings,
Ltd.

 

(1)            ̈            Payment.
The undersigned hereby elects to purchase                   
Common Shares of CastlePoint Holdings, Ltd. (the “Company”) pursuant to
the terms of the attached Warrant, and tenders herewith payment the exercise
price in full, together with all applicable transfer taxes, if any.

 

 ̈            Net
Exercise. The undersigned hereby elects to purchase                  
Common Shares of CastlePoint Holdings, Ltd. (the “Company”) pursuant to the terms of the
net exercise provisions set forth in Section 2.1 of the attached Warrant, and
shall tender payment of all applicable transfer taxes, if any.

 

(2)           Please issue a
certificate or certificates representing said Common Shares in the name of the
undersigned or in such other name as is specified below:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  	
   

  

 

(3)           The undersigned
represents that (i) the aforesaid Common Shares are being acquired for the
account of the undersigned for investment and not with a view to, or for resale
in connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares; (ii) the
undersigned is aware of the Company’s business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned
is capable of evaluating the merits and risks of this investment and protecting
the undersigned’s own interests; (iv) the undersigned understands that the
Common Shares issuable upon exercise of this Warrant have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a
specific exemption from the registration provisions of the Securities Act, which exemption
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein, and, because such securities have not been registered
under the Securities Act, they must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available; (v) the undersigned is aware that the aforesaid Common Shares may
not be sold pursuant to Rule 144 adopted under the Securities Act unless
certain conditions are met and until the undersigned has held the shares for
the number of years prescribed by Rule 144, that among the conditions for use
of the Rule is the availability of current information to the public about the
Company and the Company has not made such information available and has no
present plans to do so; and (vi) the undersigned agrees not to make any
disposition of all or any part of the aforesaid Common Shares unless and until
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement, or the undersigned has provided the Company
with an opinion of counsel satisfactory to the Company, stating that such
registration is not required.

 

 

	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
    (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    (Print name)

  

 

10

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

 

	
  Name:

  	
   

  	
   

  
	
  (Please Print)

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
  (Please Print)

  
	
   

  
	
  Dated:

  	
   

  	
  , 20

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Holder’s

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Holder’s

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
												

 

NOTE: The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant.

 

11Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT
(the “Agreement”), dated as of May 1, 2006, is by and between CastlePoint Reinsurance
Company, Ltd., a Bermuda exempted company (the “Company”), and Joseph Beitz (the
“Executive”).

 

WITNESSETH THAT

 

WHEREAS, the
Executive is presently employed by CastlePoint Management Corp. pursuant to an employment
agreement dated as of April 4, 2006 (the “Existing Employment Agreement”);

 

WHEREAS, the
Executive consents to become employed by the Company instead of CastlePoint
Management Corp. and waives any and all claims under any prior contracts or
agreements, whether oral or written, between Executive and CastlePoint
Management Corp., including the Existing Employment Agreement; and

 

WHEREAS, this
Agreement is the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements concerning the same subject.

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the Company and the Executive hereby agree as follows:

 

1.                                       Term.

 

(a)                                  Term
of Employment.

 

(i)                                     The
Company shall employ the Executive, and the Executive shall serve the Company,
on the terms and subject to the conditions set forth in this Agreement,
commencing on May 1, 2006 (the “Effective Date”) and, unless sooner
terminated pursuant to section 4, continuing until May 1, 2007 or
such later date as provided in subsection 1(a)(ii) below (the “Term
of Employment”).

 

(ii)                                  The
Term of Employment shall be extended automatically for one additional year on April 30,
2007 and for one additional year on each anniversary thereafter unless and
until either party gives written notice to the other not to extend this
Agreement at least three months before such extension would be effectuated.

 

(b)                                 Term
of the Agreement. This Agreement shall become effective on the Effective
Date and shall continue in effect throughout the Term of Employment; provided,
however, the restrictive covenants contained in section 10 of this
Agreement and, as applicable, the Company’s and the Executive’s obligations
under the other provisions of this Agreement shall survive the Term of
Employment and shall continue in effect through the periods provided therein
and/or until the Company’s and/or the Executive’s obligations, as applicable,
thereunder are satisfied.

 

 

2.                                       Position
and Duties.

 

(a)                                  Positions,
Duties, and Responsibilities. The Executive shall serve as Executive Vice
President, Acting President of the Company, and upon the hiring of a President
by the Company, shall cease to serve as Executive Vice President, Acting
President of the Company and shall be employed as Executive Vice President,
Marketing of the Company, and/or in such other positions as the Chief Executive
Officer of the Company (the “CEO”), the Board of Directors of the Company (the “Board”)
or a committee of the Board may from time to time prescribe, with such
duties and responsibilities as are customarily assigned to such position(s). The
Executive shall report solely to the CEO unless the CEO, the Board or a
committee of the Board determines otherwise. The Executive agrees to serve
without additional compensation in such capacities (including, without
limitation, as an employee or director) with Company and its affiliates as the
CEO, the Board or a committee of the Board may in its discretion
prescribe. Upon termination of the Executive’s employment with the Company, any
employment, board membership or other service relationship with the Company and
any Company affiliate shall automatically terminate unless otherwise determined
by the parties hereto.

 

(b)                                 Time
and Attention. Excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive shall devote substantially all of his
attention and time during normal working hours to the business and affairs of
the Company and its affiliates. It shall not be considered a violation of the
foregoing, however, for the Executive to (i) serve on corporate, industry,
educational, religious, civic, or charitable boards or committees or (ii) make
and attend to passive personal investments in such form as will not
require any material time or attention to the operations thereof during normal
working time and will not violate the provisions of section 10 hereof, so
long as such activities in clauses (i) and (ii) do not materially
interfere with the performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement or violate section 10
of this Agreement.

 

3.                                       Compensation.
Except as otherwise expressly set forth below, the Executive’s compensation
shall be determined by, and in the sole discretion of, the Compensation
Committee of the Board (the “Committee”).

 

(a)                                  Annual
Base Salary. Subject to adjustment pursuant to this subsection 3(a),
the Executive shall receive an annual base salary of One Hundred Ninety Five
Thousand dollars ($195,000) during the Term of Employment (the annual base
salary in effect from time to time, “Annual Base Salary”). The Annual Base
Salary shall be payable in accordance with the Company’s regular payroll
practices for its senior officers, as in effect from time to time. The Annual
Base Salary shall be reviewed from time to time, but not less frequently than
annually, and, in the discretion of the Committee, may be adjusted but not
decreased below the amount set forth in the first sentence of this subsection 3(a).
To the extent Annual Base Salary is adjusted, then such adjusted salary shall
be the Executive’s Annual Base Salary for all purposes of this Agreement.

 

(b)                                 Annual
Bonus. The Executive shall have an opportunity to receive annual bonuses
during the Term of Employment (the “Annual Bonus”), subject to such terms and
conditions as the Committee. The Executive’s target Annual Bonus opportunity
shall be equal to thirty percent (30%) of his Annual Base Salary, it being
understood that the actual Annual Bonus

 

2

 

received by the Executive
will depend on the level of attainment of performance and other factors used by
the Committee to determine Annual Bonus amounts and that there is no guarantee
that an Annual Bonus will be earned. The Executive’s target Annual Bonus
opportunity shall be reviewed from time to time, but not less frequently than
annually, and, in the discretion of the Committee, may be adjusted but not
decreased below the amount set forth in the second sentence of this subsection 3(b).

 

(c)                                  Employee
Benefits; Fringe Benefits. In addition to the foregoing, during the Term of
Employment,

 

(i)                                     During
the Executive’s employment by CastlePoint Management Corp., the Committee granted
to the Executive an option to acquire thirty nine thousand (39,000) of the
common shares of CastlePoint Holdings, Ltd., the parent of CastlePoint
Management Corp. and of the Company, at an exercise price per share equal to Ten
Dollars ($10.00) per share, which option award shall continue in effect while
the Executive is employed by the Company. The other terms of the stock option
shall be as set forth in the CastlePoint Holdings, Ltd. 2006 Long-Term Equity
Compensation Plan and the option agreement entered into thereunder.

 

(ii)                                  to
the extent not duplicative of the specific benefits provided herein, subject to
the following sentence, the Executive shall be eligible to participate in all
incentive compensation, retirement, supplemental retirement, and deferred
compensation plans, policies and arrangements that are provided generally to
other senior officers of the Company.

 

(iii)                               the
Executive and, as applicable, the Executive’s covered dependents shall be
eligible to participate in all of the Company’s health and welfare benefit
plans (within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended), including participation in
international health and welfare benefit plans during the period of the
Executive’s employment in Bermuda.

 

(iv)                              the
Executive shall be entitled to receive fringe benefits provided for senior
officers of the Company, and shall be entitled to avail himself of paid
holidays, as determined from time to time by the Company.

 

(v)                                 the
Executive shall be eligible to share in a paid country club membership and he
shall be entitled to the use of a Company car and a scooter for so long as the
Executive shall be based in Bermuda; and

 

(vi)                              the
Executive and his immediate family members shall be eligible for travel to the
United States up to six (6) times per year pursuant to Company policies as
in effect from time to time.

 

(d)                                 Vacation.
The Executive shall be entitled to not less than 4 weeks of paid vacation per
calendar year during the Term of Employment. Vacation days not used within the
year shall be carried forward to subsequent years, as determined by the Company
and subject to such conditions or restrictions as the Company may prescribe.

 

3

 

(e)                                  Relocation
Allowance. The Executive shall be entitled to receive a one-time relocation
allowance of Ten Thousand Dollars ($10,000) with respect to relocation and
start-up expenses incurred in relocating himself and his family to Bermuda.

 

(f)                                    Housing
Allowance. The Executive shall be entitled to receive a housing allowance
of Eight Thousand Five Hundred Dollars ($8,500) per month and a cost-of-living
adjustment of Four Thousand Dollars ($4,000) per month during the Term of
Employment for so long as the Executive shall be based in Bermuda.

 

(g)                                 Expenses.
The Executive shall be reimbursed by the Company for reasonable business
expenses actually incurred in rendering to the Company the services provided
for hereunder during the Term of Employment, payable in accordance with
customary Company practice, after the Executive presents written expense
statements or such other supporting information as the Company may require
of its senior officers for reimbursement of such expenses.

 

(h)                                 Cost
of Repatriation. The Executive shall be entitled to receive a one-time
repatriation allowance of Eight Thousand Dollars ($8,000) with respect to
repatriation expenses incurred in returning to the United States.

 

(i)                                     Tax
Consequences. The Executive and the Company acknowledge that the amounts or
benefits to be paid or provided under subsections (c)(v), (e), (f), (g) and
(h) above may or will be subject to income taxation. The Executive
and the Company agree to negotiate in good faith any issues of income taxation
in connection with such amounts or benefits in an effort to prevent adverse tax
consequences to the Executive.

 

4.                                       Termination
of Employment.

 

(a)                                  Termination
of Employment and Term of Employment. The Company or the Executive may terminate
the Executive’s employment at any time and for any reason in accordance with
subsection 4(b) below. The Term of Employment shall be deemed to have
ended on the last day of the Executive’s employment. The Term of Employment
shall terminate upon the Executive’s death.

 

(b)                                 Notice
of Termination. Any purported termination of the Executive’s employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
the notice provisions contained in subsection 15(b) below. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice that
indicates the Date of Termination and, with respect to a termination due to
Disability, Cause or Good Reason, sets forth in reasonable detail the facts and
circumstances that are alleged to provide a basis for such termination. A
Notice of Termination from the Company shall specify whether the termination is
with or without Cause or due to the Executive’s Disability. A Notice of
Termination from the Executive shall specify whether the termination is with or
without Good Reason and, if the termination is without Good Reason, whether the
termination is due to his Disability or retirement. For avoidance of doubt, the
Executive shall not be deemed to have retired for purposes of this Agreement if
his employment is terminated by the Company (whether or not such termination is
with or without Cause or due

 

4

 

to the Executive’s
Disability), by the Executive with Good Reason, due to a Disability or due to
the Executive’s death.

 

(c)                                  Date
of Termination. For purposes of this Agreement, “Date of Termination” shall
mean the date specified in the Notice of Termination (but in no event shall
such date be earlier than the 30th day following the date the Notice of
Termination is given, unless expressly agreed to by the parties hereto) or the
date of the Executive’s death.

 

(d)                                 No
Waiver. The failure to set forth any fact or circumstance in a Notice of
Termination, which fact or circumstance was not known to the party giving the
Notice of Termination when the notice was given, shall not constitute a waiver
of the right to assert such fact or circumstance in an attempt to enforce any
right under or provision of this Agreement.

 

(e)                                  Cause.
For purposes of this Agreement, the term “Cause” means: (i) the Executive’s
gross negligence or gross misconduct or (ii) the Executive’s having been
convicted of, or entered a plea of nolo contendere to, a crime involving moral
turpitude or a felony. No act or failure to act directly related to Company
action or inaction that constitutes Good Reason shall constitute Cause under
this Agreement if the Executive has provided a Notice of Termination based on
such Good Reason event prior to the Company’s giving of the Notice of
Termination for Cause. The Executive’s termination for Cause shall be effective
when and if a resolution is duly adopted by an affirmative vote of the entire
Board (less the Executive if serving on the Board), stating that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described in
the Notice of Termination, and such conduct constitutes Cause under this
Agreement; provided, however, that the Executive shall have been given the
opportunity (i) to cure any act or omission that constitutes Cause if
capable of cure and (ii), together with counsel, during the 30-day period
following the receipt by the Executive of the Notice of Termination and prior
to the adoption of the Board’s resolution, to be heard by the Board.

 

(f)                                    Disability.
For purposes of this Agreement, the Executive shall be deemed to have a
Disability if the Executive is entitled to long-term disability benefits under
the Company’s long-term disability plan or policy, as the case may be, as
in effect on the Date of Termination.

 

(g)                                 Good
Reason. For purposes of this Agreement, the term “Good Reason” means the
occurrence (without the Executive’s express written consent) of any of the
following acts or failures to act by the Company:

 

(i)                                     any
reduction in the Executive’s Annual Base Salary or target Annual Bonus
opportunity;

 

(ii)                                  requiring
the Executive to be based more than 50 miles away from Bermuda or Buffalo, New
York;

 

(iii)                               the
material breach by the Company of any of its other obligations under this
Agreement; or

 

(iv)                              the
failure of the Company to obtain the assumption of this Agreement as
contemplated in subsection 13(b) hereof.

 

5

 

The Executive’s
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder;
provided, however, that no such event described above shall constitute Good
Reason unless the Executive has given a Notice of Termination to the Company
specifying the condition or event relied upon for such termination within 90
days from the Executive’s actual knowledge of the occurrence of such event and,
if capable of cure, the Company has failed to cure the condition or event
constituting Good Reason within the 30 day period following receipt of the
Executive’s Notice of Termination.

 

5.                                       Obligations
of the Company upon Termination.

 

(a)                                  Termination
by the Company for other than Cause or by the Executive for Good Reason. If
the Executive’s employment is terminated by the Company for any reason other
than Cause or Disability or by the Executive for Good Reason:

 

(i)                                     The
Company shall pay to the Executive, within thirty business days of the Date of
Termination, any earned but unpaid Annual Base Salary;

 

(ii)                                  The
Company shall pay to the Executive, within thirty business days of the Date of
Termination, a prorated Annual Bonus based on (A) the target Annual Bonus
opportunity in the year in which the Date of Termination occurs or the prior
year if no target Annual Bonus opportunity has yet been determined
(disregarding any reduction in target Annual Bonus opportunity that was the
basis for a termination by the Executive for Good Reason) and (B) the fraction
of the year the Executive was employed.

 

(iii)                               The
Company shall pay to the Executive, within thirty business days of the Date of
Termination, a lump-sum payment equal to the sum of 50% (100% if the Executive’s
combined service with the Company and Tower Group, Inc., the sponsor of
the Company (“Tower”), is at least three (3) years as of the Date of
Termination) of (x) the Executive’s Annual Base Salary in effect immediately
prior to the Date of Termination (disregarding any reduction in Annual Base
Salary that was the basis for a termination by the Executive for Good Reason),
and (y) the Executive’s target Annual Bonus opportunity for the year in which
the Date of Termination occurs or the prior year if no target Annual Bonus
opportunity has yet been determined (disregarding any reduction in target
Annual Bonus opportunity that was the basis for a termination by the Executive
for Good Reason);

 

(iv)                              For
a six (6) month period (one (1) year period if Executive’s combined
service with the Company and Tower is at least three (3) years as of the
Date of Termination) after the Date of Termination, the Company will arrange to
provide the Executive (and any covered dependents), without cost to the
Executive, with life, accident and health insurance benefits substantially
similar to those the Executive and any covered dependents were receiving
immediately prior to the Notice of Termination, except for any such benefits
that were waived by the Executive in writing. If the Company arranges to
provide the Executive and covered dependents with life, accident and health
insurance benefits, those benefits will be reduced to the extent comparable
benefits are actually received by, or made available to, the Executive by a
subsequent employer without cost during the six (6) month or one (1) year
period, as the case may be, following the Executive’s Date of Termination.
The Executive must

 

6

 

report to the Company any
such benefits that he actually receives or are made available. In lieu of the
benefits described in this subsection 5(a)(iv), the Company, in its sole
discretion, may elect to pay to the Executive a lump sum cash payment
equal to the total premiums that would have been paid by the Company to provide
such benefits to the Executive (determined based on the premiums paid by the
Company immediately prior to the Date of Termination). Nothing in this subsection 5(a)(iv) will
affect the Executive’s right to elect COBRA continuation coverage in accordance
with applicable law or extend the COBRA continuation coverage period; and

 

(v)                                 The
Executive shall have at least three (3) months (or until the last day of
the stock option term, whichever occurs first) to exercise any then vested
outstanding stock options.

 

(b)                                 Termination
in Connection with a Change in Control.

 

(i)                                     If,
in anticipation of or within the 24 month period following a Change in Control
(as defined below), the Executive’s employment is terminated by the Company for
any reason other than Cause or Disability or by the Executive for Good Reason,
the Executive shall receive the payments and benefits described in subsection 5(a),
and, in addition, all of the Executive’s outstanding equity-based awards shall
become fully vested on the Date of Termination.

 

(ii)                                  For
purposes of this Agreement, the term “Change in Control” means the occurrence
of any of the following events:

 

A.                                   any
“person” (within the meaning ascribed to such term in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended from time to time (the “Exchange
Act”) and used in Sections 13(d) and 14(d) thereof, including a “group”
as used in Section 13(d) thereof), other than the Company, any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, or any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as the
ownership of stock of the Company, (a “Person”) that is not on the Effective
Date the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 35% of the combined voting power of the Company’s then outstanding
securities becomes after the Effective Date the beneficial owner, directly or
indirectly, of securities of the Company representing more than 35% of the
combined voting power of the Company’s then outstanding securities;

 

B.                                     individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board of the
Company, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the directors of the
Company) shall be, for purposes of this definition, considered as though such
person were a member of the Incumbent Board;

 

7

 

C.                                     consummation
of a merger, consolidation, reorganization, share exchange or similar
transaction (a “Transaction”) of the Company with any other entity, other than
(I) a Transaction that would result in the voting securities of the Company
outstanding immediately prior thereto directly or indirectly continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or a parent company) more than 80% of the
combined voting power of the voting securities of the Company or such surviving
entity or parent company outstanding immediately after such Transaction or (II)
a Transaction effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than 35% of the combined
voting power of the Company’s then outstanding securities;

 

D.                                    the
sale, transfer or other disposition (in one transaction or a series of
related transactions) of more than 50% of the operating assets of the Company;
or

 

E.                                      the
approval by the shareholders of a plan or proposal for the liquidation or
dissolution of the Company.

 

Notwithstanding
anything to the contrary contained in the foregoing definition, an initial
public offering of the Company’s shares shall not constitute a Change in
Control for purposes of this Agreement. Any transaction with Tower and its
affiliates shall not constitute a Change in Control.

 

(c)                                  Termination
by the Company for Cause or by the Executive without Good Reason. If the
Executive’s employment is terminated by the Company for Cause, the Company
shall pay to the Executive, within thirty business days of the Date of
Termination, any earned but unpaid Annual Base Salary and all outstanding stock
options (whether or not then exercisable), restricted stock and other incentive
awards shall be forfeited. If the Executive’s employment is terminated by the
Executive without Good Reason (and not due to death, Disability or retirement),
the Company shall pay to the Executive, within thirty business days of the Date
of Termination, any earned but unpaid Annual Base Salary, the Executive shall
have three months (or until the last day of the stock option term, whichever
occurs first) to exercise any outstanding vested stock options and all of the
Executive’s unvested equity-based awards shall be forfeited as of the Date of
Termination.

 

(d)                                 Termination
due to Death or Disability. If the Executive’s employment is terminated due
to death or Disability, (i) the Company shall pay to the Executive (or to
the Executive’s estate or personal representative in the case of the Executive’s
death), within thirty business days after the Date of Termination, (A) any
earned but unpaid Annual Base Salary and (B) a prorated Annual Bonus based
on (I) the target Annual Bonus opportunity in the year in which the Date of
Termination occurs or the prior year if no target Annual Bonus opportunity has
yet been determined and (II) the fraction of the year the Executive was
employed, and (ii) all of the Executive’s outstanding equity-based awards
shall vest on the Date of Termination and the Executive’s outstanding stock
options shall remain exercisable for three years following the Date of
Termination (or until the last day of the stock option term, whichever occurs
first).

 

(e)                                  Retirement.
If the Executive retires after having attained age 62, (i) the Company
shall pay to the Executive, within thirty business days after the Date of
Termination,

 

8

 

any earned but unpaid
Annual Base Salary, (ii) the Company shall pay to the Executive, within
thirty business days after the Date of Termination, a prorated Annual Bonus
based on (A) the target Annual Bonus opportunity in the year in which the
Date of Termination occurs or the prior year if no target Annual Bonus
opportunity has yet been determined and (B) the fraction of the year the
Executive was employed, (iii) the Executive shall receive applicable
retiree benefits, if any, provided at such time by the Company to retirees or
as the Company shall determine, and (iv) the Executive’s equity based
awards shall become vested and Executive’s stock options shall remain
exercisable until the last day of the option term thereof. The Executive shall
only be deemed to have retired for purposes of this Agreement if he has
satisfied the conditions set forth in this Section 5(e) and the
Executive specifies in the Notice of Termination that the termination is due to
retirement. For avoidance of doubt, the Executive shall not be entitled to
receive benefits pursuant to this Section 5(e) if he receives
benefits under Section 5(a), (b), (c) or (d).

 

6.                                       Certain
Tax Consequences.

 

(a)                                  The
Excise Tax and Gross-Up Payment. If any payments or benefits paid or
provided or to be paid or provided to the Executive or for his benefit pursuant
to the terms of this Agreement or otherwise in connection with, or arising out
of, his employment with the Company (a “Payment” or “Payments”) would be
subject to any excise tax (the “Excise Tax”) imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the “Code”), then the Executive
will be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest, penalties, additional tax, or similar items imposed with respect
thereto and the Excise Tax), including any such taxes imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.

 

(b)                                 Determination
of Excise Tax and Gross-Up Payment. An initial determination as to whether
a Gross-Up Payment is required pursuant to this Agreement and the amount of
such Gross-Up Payment will be made at the Company’s expense by an accounting
firm selected by the Company. The accounting firm will provide its
determination, together with detailed supporting calculations and
documentation, to the Company and the Executive within 10 days after the Date
of Termination, or such other time as requested by the Company or by the
Executive. If the accounting firm determines that no Excise Tax is payable by
the Executive with respect to a Payment or Payments, it will furnish the
Executive with an opinion reasonably acceptable to the Executive to that
effect. The Gross-Up Payment, if any, will be paid by the Company to the
Executive within thirty business days of the receipt of the accounting firm’s determination.
Within 10 days after the accounting firm delivers its determination to the
Executive, the Executive will have the right to dispute the determination. The
existence of a dispute will not in any way affect the Executive’s right to
receive the Gross-Up Payment in accordance with the determination. If there is
no dispute, the determination will be binding, final, and conclusive upon the
Company and the Executive. If there is a dispute, the Company and the Executive
will together select a second accounting firm, which will review the
determination and the Executive’s basis for the dispute and then will render
its own determination, which will be binding, final, and conclusive on the
Company and on the Executive. The Company will bear all costs associated with
that determination, unless the determination is not greater than the initial
determination, in which case all such costs will be borne by the Executive.

 

9

 

(c)                                  Tax
Rate. For purposes of determining the amount of the Gross-Up Payment, the
Executive will be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and applicable state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Date of Termination, net of the maximum reduction in federal
income taxes that would be obtained from deduction of those state and local
taxes.

 

(d)                                 Withholding.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that, according to the accounting firm’s determination, an Excise Tax
will be imposed on any Payment or Payments, the Company will pay to the
applicable government taxing authorities as Excise Tax withholding, the amount
of the Excise Tax that the Company has actually withheld from the Payment or
Payments in accordance with law.

 

(e)                                  Section 409A.
The Company and Executive acknowledge that certain amounts payable under this
Agreement may be treated as non-qualified deferred compensation subject to
Section 409A. The parties agree to confer about modifications to this
Agreement to the extent required to comply with Code Section 409A and the
regulations thereunder. The Company may delay payments under this
Agreement for the period required by Code Section 409A to avoid penalties
and interest to Executive under Code Section 409A.

 

7.                                       Release.
Notwithstanding any provision herein to the contrary, the Company will require
that, prior to payment of any amount or provision of any benefit under section 5
of this Agreement (other than due to the Executive’s death), the Executive
shall have executed a complete release of the Company and its affiliates and
related parties in such form as is reasonably required by the Company, and
any waiting periods contained in such release shall have expired.

 

8.                                       Non-Exclusivity
of Rights. Except as otherwise provided in this Agreement, nothing in this
Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies for which the Executive may qualify
(other than severance policies). Vested benefits and other amounts that the Executive
is otherwise entitled to receive under any other plan, program, policy, or
practice of, or any contract or agreement with, the Company or any of its
affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, program, policy, practice,
contract or agreement, as the case may be, except as expressly modified by
this Agreement.

 

9.                                       Full
Settlement. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, except as
otherwise provided in subsections 5(a)(iv) and 15(e), the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.

 

10.                                 Non-Competition;
Confidential Information; and Non-Solicitation.

 

10

 

(a)                                  Non-Competition.
During the Term of Employment and for the six (6) month period following
the Date of Termination for any reason (or the for the one (1) year period
following the Date of Termination if the Executive’s combined service with the
Company and Tower is at least three (3) years as of the Date of
Termination and the Executive receives severance benefits pursuant to section 5(a) or
5(b)), the Executive shall not, without the prior written consent of the
Company, as a shareholder, officer, director, partner, consultant, employee or
otherwise, engage in any business or enterprise which is “in competition” (as
defined below) with the Company its affiliates, or their successors or assigns
(such entities collectively referred to hereinafter in this section 10 as
the “Company”) in Bermuda or the states of New York or New Jersey; provided,
however, that the Executive’s ownership of less than five percent of the issued
and outstanding voting securities of a publicly traded company shall not, in
and of itself, be deemed to constitute such competition. A business or
enterprise is deemed to be “in competition” if it is engaged in any business in
which the Company either (i) is engaged in as of the Date of Termination
or (ii) as of the Date of Termination, contemplates engaging in within six
(6) months following the Date of Termination (or within one (1) year
following the Date of Termination if the Executive has been employed at the
Company for at least three (3) years as of the Date of Termination and the
Executive receives severance benefits pursuant to section 5(a) or
5(b)). Notwithstanding the foregoing, upon termination of employment by the
Company for any reason, Executive shall not be prohibited from becoming
employed by Tower and its affiliates in any capacity.

 

(b)                                                                                 Confidential
Information. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge, trade
secrets, methods, know-how or data relating to the Company or its affiliates
and their businesses or acquisition prospects that the Executive obtained or
obtains during the Executive’s employment by the Company (“Confidential
Information”), provided that “Confidential Information” shall not include any
secret or confidential information, knowledge, trade secrets, methods, know-how
or data that is or becomes generally known to the public (other than as a
result of the Executive’s violation of this section 10). Except as may be
required and appropriate in connection with carrying out his duties under this
Agreement, the Executive shall not communicate, divulge, or disseminate any
material Confidential Information at any time during or after the Executive’s
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process; provided, however,
that if so required, the Executive will provide the Company with reasonable
notice to contest such disclosure.

 

(c)                                  Non-Solicitation.
During the Term of Employment and for the six (6) month period following
the Date of Termination for any reason (or the for the one (1) year period
following the Date of Termination if the Executive’s combined service with the
Company and Tower is at least three (3) years as of the Date of
Termination and the Executive receives severance benefits pursuant to section 5(a) or
5(b)), the Executive will not, directly or indirectly, initiate any action to
solicit or recruit anyone who is then an employee of the Company for the
purpose of being employed by him or by any business, individual, partnership,
firm, corporation or other entity on whose behalf he is acting as an agent,
representative, employee or otherwise.

 

(d)                                 Non-Interference
with Customers or Producers. During the Term of Employment and for the six (6) month
period following the Date of Termination for any reason

 

11

 

(or the for the one (1) year
period following the Date of Termination if the Executive’s combined service
with the Company and Tower is at least three (3) years as of the Date of
Termination and the Executive receives severance benefits pursuant to section 5(a) or
5(b)), the Executive will not interfere with any business relationship between
the Company and any of its customers or agents or brokers that produce
insurance business for the Company.

 

(e)                                  Remedies;
Severability.

 

(i)                                     The
Executive acknowledges that if the Executive shall breach or threaten to breach
any provision of subsections 10(a) through (d), the damages to the Company
may be substantial, although difficult to ascertain, and money damages
will not afford the Company an adequate remedy. Therefore, if the provisions of
subsections 10(a) through (d) are violated, in whole or in part, the
Company shall be entitled to specific performance and injunctive relief,
without prejudice to other remedies the Company may have at law or in
equity.

 

(ii)                                  If
any term or provision of this section 10, or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this section 10, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this section 10 shall be valid and enforceable to the fullest
extent permitted by law. Moreover, if a court of competent jurisdiction deems
any provision of subsections 10(a) through (d) to be too broad in
time, scope, or area, it is expressly agreed that such provision shall be
reformed to the maximum degree that would not render it unenforceable.

 

11.                                 Attorneys’
Fees. Each party shall pay its own legal fees, court costs, litigation
expenses and/or arbitration expenses (as applicable) in connection with any
dispute, litigation or arbitration regarding the validity or enforceability of,
or liability under or otherwise involving, any provision of this Agreement,
except that if the Executive prevails on the majority of material claims
disputed, the Company shall pay all reasonable legal fees, court cost,
litigation expenses and/or arbitration expenses.

 

12.                                 Indemnification.
The Executive shall be indemnified by the Company for actions taken in his
position as an officer, director, employee and agent of the Company to the
greatest extent permitted by applicable law. The Executive shall also be
covered as an insured by a liability insurance policy secured by and maintained
by the Company covering acts of officers and members of the Board.

 

13.                                 Successors.

 

(a)                                  Assignment
of Agreement. This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.

 

(b)                                 Successors
of the Company. No rights or obligations of the Company under this
Agreement may be assigned or transferred except that the Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to

 

12

 

perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in
this Agreement, “Company” shall mean the Company as herein before defined and
any successor that executes and delivers the agreement provided for in this section 13
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

 

14.                                 Arbitration.
Except for matters covered under section 10, in the event of any dispute
or difference between the Company and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights hereunder, either the
Executive or the Company may, by written notice to the other, require such
dispute or difference to be submitted to arbitration. The arbitrator or
arbitrators shall be selected by agreement of the parties or, if they cannot
agree on an arbitrator or arbitrators within 30 days after the date arbitration
is required by either party, then the arbitrator or arbitrators shall be
selected by the American Arbitration Association upon the application of the
Executive or the Company. The determination reached in such arbitration shall
be final and binding on both parties without any right of appeal or further
dispute. Execution of the determination by such arbitrator may be sought
in any court of competent jurisdiction. The arbitrators shall not be bound by
judicial formalities and may abstain from following the strict rules of
evidence and shall interpret this Agreement as an honorable engagement and not
merely as a legal obligation. Unless otherwise agreed by the parties, any such
arbitration shall take place in New York, New York.

 

15.                                 Miscellaneous.

 

(a)                                  Governing
Law and Captions. This Agreement shall be governed by, and construed in
accordance with, the laws of New York without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

 

(b)                                 Notices.
All notices and other communications under this Agreement shall be in writing
and shall be given by hand delivery or by facsimile (provided confirmation of
receipt of such facsimile is received) to the other party or by registered or
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other nationally-recognized overnight courier that requires signatures of
recipients upon delivery and provides tracking services, addressed as follows:

 

If to the
Executive:

 

Joseph P.
Beitz

110 Norwood
Lane

Orchard Park,
New York  14127

 

If to the Company:

 

CastlePoint Reinsurance Company, Ltd.

c/o CastlePoint Holdings, Ltd.

Clarendon House

2 Church Street

 

13

 

Hamilton HM 11, Bermuda

Attention:  The Secretary

Facsimile: 441-292-4720

 

or to such
other address as either party furnishes to the other in writing in accordance
with this subsection 15(b). Copies (which shall not constitute notice) of
notices to the Company shall also be sent to: Roslyn Tom, Baker &
McKenzie, 1114 Avenue of Americas, New York, New York 10036, or to such other
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices and
communications shall be effective when actually received by the addressee.

 

(c)                                  Amendment.
This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.

 

(d)                                 Severability.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in
part, the remaining portion of such provision, together with all other provisions
of this Agreement, shall remain valid and enforceable and continue in full
force and effect to the fullest extent consistent with law.

 

(e)                                  Withholding.
Notwithstanding any other provision of this Agreement, the Company may withhold
from amounts payable under this Agreement all federal, state, local, and
foreign taxes that are required to be withheld by applicable laws or
regulations.

 

(f)                                    Waiver.
The Executive’s or the Company’s failure to insist upon strict compliance with
any provision of, or to assert any right under, this Agreement (including,
without limitation, the right of the Executive to terminate employment for Good
Reason) shall not be deemed to be a waiver of such provision or right or of any
other provision of or right under this Agreement.

 

(g)                                 Entire
Understanding; Counterparts. The Executive and the Company acknowledge that
this Agreement supersedes and terminates any other severance and/or employment
agreements between the Executive and the Company or any Company affiliates.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument.

 

(h)                                 Rights
and Benefits Unsecured. The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated, or subject to
attachment, garnishment, levy, execution, or other legal or equitable process
except as required by law. Any attempts by the Executive to anticipate,
alienate, assign, sell, transfer, pledge or encumber the same shall be void.
Payments hereunder shall not be considered assets of the Executive in the event
of insolvency or bankruptcy.

 

14

 

(i)                                     Non-contravention.
The Company represents that the Company is not prevented from entering into, or
performing this Agreement by the terms of any law, order, rule or
regulation, its by-laws or declaration of trust, or any agreement to which it
is a party.

 

(j)                                     Section and
Subsection Headings. The section and subsection headings in
this Agreement are for convenience of reference only; they form no part of
this Agreement and shall not affect its interpretation.

 

15

 

IN WITNESS
WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to
the authorization of the Board, the Company has caused this Agreement to be
executed, all as of the day and year first above written.

 

 

	
   

  	
  CASTLEPOINT
  REINSURANCE COMPANY,

  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   /s/ Joel S. Weiner

  	
   

  
	
   

  	
  Name:

  	
  Joel S.
  Weiner

  
	
   

  	
  Its:

  	
  Chief
  Financial Officer and Senior Vice

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joseph
  Beitz

  	
   

  
	
   

  	
  Joseph Beitz

  
						

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]