Document:

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                                                                    EXHIBIT 10.4

                                [RCRe Letterhead]

                                   May 5, 2000

Folksamerica Holding Company, Inc.
Folksamerica Reinsurance Company
One Liberty Plaza, 19th Floor
New York, NY  10008

                           Re: AVIATION RETRO PROGRAM

Gentlemen:

      Reference is made to the Asset Purchase Agreement, dated as of January 10,
2000, by and among Risk Capital Holdings, Inc., Risk Capital Reinsurance
Company, Folksamerica Holding Company, Inc. and Folksamerica Reinsurance Company
(the "AGREEMENT"). Capitalized terms used without definition herein have the
meanings given to them in the Agreement.

            1. NET FINANCIAL POSITION LOSS. The Company represents and warrants
      that the reinsurance protecting the aviation business (the "AVIATION
      BUSINESS") assumed by FRC pursuant to the Transfer and Assumption
      Agreement (the "AVIATION RETRO PROGRAM") limits the Net Financial Position
      Loss with respect to any occurrence within the Aviation Business after
      Closing to no more than $5.4 million per occurrence (assuming that the
      reinstatements provided for in the Aviation Retro Program have not been
      exhausted). If any such Net Financial Position Loss with respect to any
      occurrence does exceed $5.4 million (i) because the maximum Net Financial
      Position Loss under the Aviation Retro Program is, in fact, greater than
      $5.4 million per occurrence (other than as a result of the exhaustion of
      the reinstatements provided for in the Aviation Retro Program) or (ii) as
      a result of the expiration of the Aviation Retro Program after June 30,
      2001 (such excess amount above $5.4 million being referred to as the
      "EXCESS LOSS"), FRC shall give prompt notice thereof to the Company.
      Within 30 days of the Company's receipt of notice from FRC that FRC has
      paid the Excess Loss and subject to Section 4 below and Purchaser's
      compliance with Section 5 below, the Company shall pay FRC an amount equal
      to the Excess Loss. The aggregate amount of all such payments by the
      Company (plus, for purposes of Section 3 hereof, the aggregate amount that
      would be payable by the Company hereunder after FRC has paid all Excess
      Losses), less the aggregate amount paid to the Company pursuant to Section
      2 below, is referred to herein as the "EXCESS LOSS PAYMENT AMOUNT."

            For the avoidance of doubt, the parties expressly agree that:

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                  (a) the Company shall not be responsible for any Excess Loss
            resulting from (i) the failure to collect amounts due from any
            reinsurer (other than as a result of a final judicial determination
            that the reinsurer is not required to pay any such amount because
            the reinsurance provided was based on incorrect information supplied
            to the reinsurer by the Company), (ii) any offset by any reinsurer
            against amounts due to such reinsurer (other than offsets relating
            to reinstatements due to such reinsurer that are reflected in the
            applicable Net Financial Position Loss calculation), (iii) the
            exhaustion of reinstatements provided for in the Aviation Retro
            Program, or (iv) any other cause, except for the items set forth in
            clauses (i) and (ii) of the second sentence of this Section 1; and

                  (b) the sole remedy for a breach of the representation and
            warranty in this Section 1 shall be the indemnity provided in the
            third sentence hereof.

            "NET FINANCIAL POSITION LOSS" means, with respect to any occurrence,
      (i) incurred losses paid by FRC plus case reserves as reported by
      reinsureds less (ii) reinsurance recoverables paid or payable to FRC less
      (iii) reinstatement premiums paid or payable to FRC plus (iv)
      reinstatement premiums paid or payable by FRC plus (v) broker commissions
      paid by FRC, if any, in each case, with respect to such occurrence.
      Notwithstanding the foregoing, if there is an occurrence between the 30th
      month after the Closing and the Settlement Date (defined below), for
      purposes of calculating the Net Financial Position Loss for such
      occurrence, the calculation of the losses under clause (i) above shall not
      be based on the incurred losses paid by FRC and the case reserves reported
      by the reinsureds, but rather on the industry loss established by the
      Broker (defined below) and the net participations of such reinsureds in
      the industry loss as reported to the Broker.

            2. NET PROFIT. In the event that there is a Net Profit on any
      occurrence within the Aviation Business, FRC shall pay to the Company,
      within 30 days of such occurrence, an amount equal to the Company's PRO
      RATA share, if any, of such Net Profit based upon the Excess Loss Payment
      Amount over FRC's Aggregate Net Financial Position Loss (defined below)
      immediately prior to such occurrence.

            "NET PROFIT" means, with respect to any occurrence, the excess of
      (x) reinstatement premium paid or payable to FRC less reinstatement
      premium paid or payable by FRC (including any broker commissions paid by
      FRC, if any) over (y) the gross indemnity paid or payable by FRC less
      reinsurance recoverables paid or payable, in each case, with respect to
      such occurrence.

            3. SETTLEMENT. (a) Promptly following the third anniversary of the
      Closing (the "SETTLEMENT DATE"), FRC shall redetermine the Net Financial
      Position Loss/Net Profit with respect to each occurrence within the
      Aviation Business as of the Settlement Date.

            If the Excess Loss with respect to any occurrence is greater than
      the amount paid by the Company pursuant to Section 1 above with respect to
      such occurrence, the amount of such excess shall be payable by the Company
      to FRC, and if the Excess Loss with

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      respect to any occurrence is less than the amount paid by the Company
      pursuant to Section 1 above with respect to such occurrence, the amount of
      such deficiency shall be payable by FRC to the Company.

            If the Net Profit with respect to any occurrence is greater than the
      amount paid by FRC to the Company pursuant to Section 2 above with respect
      to such occurrence, the amount of such excess shall be payable by FRC to
      the Company to the extent that the Excess Loss Payment Amount has not been
      reduced to zero, and if the Net Profit with respect to any occurrence is
      less than the amount paid by FRC to the Company pursuant to Section 2
      above with respect to such occurrence, the amount of such deficiency shall
      be payable by the Company to FRC.

            (b) Promptly following the Settlement Date, FRC shall determine the
      Aggregate Net Financial Position Loss/Aggregate Net Profit with respect to
      all occurrences in the aggregate within the Aviation Business as of the
      Settlement Date. "AGGREGATE NET FINANCIAL POSITION LOSS" means the sum of
      all Net Financial Position Losses with respect to each occurrence less the
      Excess Loss Payment Amount. If the Aggregate Net Financial Position Loss
      is less than zero (the absolute value of such amount being referred to as
      the "AGGREGATE NET PROFIT"), then the Aggregate Net Profit shall be
      payable by FRC to the Company.

            (c) The settlement of the payments pursuant to this Section 3, which
      shall be on a net basis, shall occur on the 15th day (or if such day is
      not a business day, on the immediately succeeding business day) following
      the Settlement Date, subject to Section 4 below.

            (d) All obligations and liabilities of each of the parties under
      this side letter shall terminate on the Settlement Date, except for the
      settlement payments in accordance with this Section 3.

            4. DISPUTES. In the event of a dispute regarding the calculation of
      either Net Financial Position Loss or Net Profit or Aggregate Net
      Financial Position Loss or Aggregate Net Profit, such dispute shall be
      resolved in accordance with the procedures set forth in Section 5 of the
      Escrow Agreement, which shall apply herein mutatis mutandis.

            5. RECORDS AND INFORMATION. At least twice per year and after each
      occurrence within the Aviation Business, representatives of the Company
      shall be entitled, upon reasonable notice during normal business hours, to
      inspect Purchaser's books and records involving the Aviation Business,
      including those relating to settlement and payment of claims and work
      papers of Purchaser's independent public accountants and actuaries and, at
      the Company's expense, to make copies of them, and to discuss them with
      Purchaser's representatives (including its independent accountants and
      actuaries).

            6. PURCHASE OF ADDITIONAL REINSURANCE. FRC shall purchase such
      additional reinsurance protections in respect of the Aviation Business as
      the Company shall request. Any such additional reinsurance protections
      shall be at the Company's expense, and any

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      amounts payable to FRC under such additional reinsurance protections shall
      be taken into account in determining the amount of Net Financial Position
      Loss and Net Profit. Any additional reinsurance protections purchased
      pursuant to this Section 6 shall be included in, and deemed to be part of,
      the Aviation Retro Program for all purposes hereof.

            7. NO MODIFICATIONS. FRC shall not amend, modify or renew any
      Aviation Business or any of the Aviation Retro Program in any manner, or
      otherwise take any action relating to aviation business, that has a
      detrimental effect on the Company.

            8. E&O CLAIMS. In the event that the Company desires to pursue any
      "errors and omissions" claims against a broker involved in the Aviation
      Business, including Willis Re, Inc. (together with its affiliates, the
      "BROKER"), FRC shall assign such claims to the Company if it is permitted
      by law to do so (or the proceeds thereof if the assignment of the claim is
      not permitted by law), and cooperate with the Company, and provide such
      assistance as the Company reasonably requests, in the pursuit of such
      claims.

            9. MISCELLANEOUS. This side letter shall constitute a supplement to
      the Agreement within the meaning of Section 11.08 thereof. This side
      letter shall be governed by, and construed in accordance with, the laws of
      the State of New York, other than any conflict of law rules which might
      result in the application of the laws of any other jurisdiction. This side
      letter may be executed in one or more counterparts.

      Please acknowledge your agreement with the foregoing by signing in
the space indicated below.

                                    RISK CAPITAL HOLDINGS, INC.
                                    RISK CAPITAL REINSURANCE COMPANY

                                    By: /s/ Peter A. Appel
                                        ---------------------------------
                                        Name:  Peter A. Appel
                                        Title: Executive Vice President & Chief
                                               Operating Officer

Agreed and acknowledged as
of the date first written above:

FOLKSAMERICA HOLDING COMPANY, INC.
FOLKSAMERICA REINSURANCE COMPANY

By: /s/ Donald A. Emeigh, Jr.
    -------------------------------
    Name:  Donald A. Emeigh, Jr.
    Title: Sr. Vice President, General Counsel
           & Secretary

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                                  EXHIBIT 10.27

                                                              April 15, 2000

Janex International, Inc.
2999 N. 44th Street
Suite 225
Phoenix, AZ  85018

Ladies and Gentlemen:

        This letter supplements the letter dated March 9, 2000 (the "Letter")
between Palmilla Ventures Limited Partnership and the Company regarding the
subject matter hereof. The undersigned Palmilla Ventures Limited Partnership in
March 1999 (the "Partnership") surrendered to the Company 10,000,000 shares
("Shares") of common stock of the Company, no par value ("Common Stock").

        Of the 10,000,000 shares surrendered by the Partnership to the Company,
5,000,000 shares were beneficially owned by the Partnership, 1,159,952 shares
were being held by the Partnership for the benefit of Daniel Lesnick, 2,182,417
shares were being held by the Partnership for the benefit of Mr. and Mrs. Howard
Moore, and 1,657,631 shares were being held for the benefit of Mr. Les Friedland
(the Partnership, Mr. Lesnick, Mr. and Mrs. Howard Moore, and Mr. Friedland are
hereinafter collectively referred to as the "Lenders"). The 2,000,000
compensation shares issuable to the Partnership pursuant to the Letter shall be
issued by the Company directly to the Lenders PRO RATA based on the number of
shares surrendered by or on behalf of each Lender in relation to the total
number of shares (10,000,000). For example, the Partnership would be entitled to
one million shares (5,000,000/10,000,000 x 2,000,000) and Mr. Friedland would be
entitled to 331,526 shares (1,657,631/10,000,000 x 2,000,000). In addition, the
shares of Common Stock (minimum 10,000,000) issuable to the Partnership pursuant
to the Letter in replacement of the Shares shall be issued by the Company
directly to the Lenders PRO RATA based on the number of shares surrendered by or
on behalf of each Lender in relation to the total number of shares. For example,
in the event that 15,000,000 shares were issued in replacement of the Shares,
7,500,000 shares would be issued to the Partnership (5,000,000/10,000,000 x
15,000,000) and 1,739,928 shares would be issued by the Company directly to Mr.
Lesnick (1,159,952/10,000,000 x 15,000,000).

        In the example in paragraph 2 of the Letter, the number of replacement
shares that would be issued would be 20,000,000; that is $20,000,000 divided by
$1.00.

        The Company agrees to indemnify the Lenders (including partners) for any
taxes arising out of the transaction contemplated by this agreement, other than
taxes related to the 2,000,000 compensation shares issuable to the Lenders
hereunder.

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        Except as supplemented hereby, the Letter remains in full force and
effect.

        If the foregoing meets with your approval, kindly confirm your agreement
by executing this letter agreement where indicated below and returning a copy to
each Lender.

                                Very truly yours,

                                PALMILLA VENTURES LIMITED PARTNERSHIP

                                /s/ Vincent Goett
                                -----------------------------------------------
                                By: Vincent Goett, its general partner

                                /s/ Melissa Goett
                                -----------------------------------------------
                                By: Melissa Goett, its general partner

                               /s/ Daniel Lesnick
                               ------------------------------------------------
                               Daniel Lesnick

                               /s/ Les Friedland
                               ------------------------------------------------
                               Les Friedland

                               /s/ Howard Moore
                               ------------------------------------------------
                               Howard Moore

                               /s/ Helene Moore
                               ------------------------------------------------
                               Helene Moore

AGREED AND ACCEPTED

Janex International, Inc.

By: /s/ Vincent Goett
    ----------------------------------------------
    Vince Goett, Chief Executive Officer,
    duly authorized

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                                                              March 9, 2000

Janex International, Inc.
2999 N. 44th Street
Suite 225
Phoenix, AZ 85018

Ladies and Gentlemen:

        This letter supercedes the letter dated March 3, 2000 between Vincent
Goett and the Company regarding the subject matter hereof. The undersigned (the
"Partnership") understands that Janex International, Inc. (the "Company") does
not currently have sufficient authorized but unissued shares of common stock to
execute its business and financial plans. You have requested that the
Partnership surrender to the Company 10,000,000 shares of common stock of the
Company, no par value ("Common Stock"), and the Partnership is willing to do so
on the terms and conditions set forth in this letter agreement.

        The Partnership agrees to surrender to the Company 10,000,000 shares of
Common Stock (the "Shares") so that such shares can be restored to the status of
authorized but unissued shares. In consideration of the Partnership surrendering
the Shares to the Company, promptly following amendment of the Company's charter
to increase to 65,000,000 the number of authorized shares of Common Stock, the
Company shall issue to the Partnership, as compensation for surrendering the
Shares, 2,000,000 shares of Common Stock. Further, in addition to the foregoing
compensation, the Company shall issue to the Partnership 10,000,000 shares of
Common Stock, in replacement of the Shares, provided that, if the "Average Price
of the Common Stock" on the date such replacement shares are issued to the
Partnership is less than the "Average Price of the Common Stock" on the date the
Partnership surrendered the Shares to the Company, then the number of shares to
be issued to the Partnership in replacement of the Shares shall be equal to that
number of shares determined by the quotient of (i) the product of 10,000,000 and
the "Average Price of the Common Stock" on the date the Partnership surrendered
the Shares to the Company, DIVIDED BY (ii) the "Average Price of the Common
Stock" on the date the replacement shares are to be issued to the Partnership.
For example, if the "Average Price of the Common Stock" is $2.00 on the date the
Partnership surrenders the Shares to the Company, and the "Average Price of the
Common Stock" on the date the replacement shares are to be issued to the
Partnership is $1.00, then, the number of replacement shares to be issued to the
Partnership shall be 16,000,000; that is, $16,000,000.00 divided by $1.00. For
purposes of this letter agreement, "Average Price of the Common Stock" means the
average closing price of the Common Stock during the preceding five trading
days, as quoted on the NASD OTC Bulletin Board (or such other exchange or
quotation system on which the Common Stock is then listed or quoted).

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        The Company agrees to indemnify the Partnership and its partners for any
taxes arising out of the transaction contemplated by this agreement, other than
taxes related to the 2,000,000 compensation shares issuable to the Partnership
hereunder.

        If the foregoing meets with your approval, kindly confirm your agreement
by executing this letter agreement where indicated below and returning a copy to
the Partnership, whereupon the Partnership will surrender the Shares to the
Company.

                                Very truly yours,

                                PALMILLA VENTURES LIMITED PARTNERSHIP

                                /s/ Vincent Goett
                                -----------------------------------------------
                                By: Vincent Goett, its general partner

                                /s/ Melissa Goett
                                -----------------------------------------------
                                By: Melissa Goett, its general partner

AGREED AND ACCEPTED

Janex International, Inc.

By: /s/ Chuck Foley
    ---------------------------------------
Chuck Foley, Chief Financial Officer,
duly authorized

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