Document:

Exhibit
10.20

 

Island Heritage -
EXECUTION COPY

15 March 2006

 

 

SHARE
PURCHASE AGREEMENT

 

THIS SHARE
PURCHASE AGREEMENT, dated as of March 15, 2006 (this “Agreement”),
is between Flagstone Reinsurance
Bermuda Limited, a Bermuda reinsurance company (the “Buyer”) and Haverford
(Bermuda) Limited, a Bermuda investment management company (the “Shareholder”).

 

SUMMARY OF
TRANSACTION

 

The Shareholder owns 63,783 common shares (the “Shares”)
of Island Heritage Insurance Company, a Cayman Island insurance company (the “Company”).
The Buyer wishes to acquire the Shares from the Shareholder on the terms set
forth in this Agreement. In consideration of the mutual covenants,
representations, warranties, and agreements hereinafter set forth, and
intending to be legally bound hereby, and in order to set forth the terms and
conditions of the Buyer’s acquisition of the Shares, the parties agree as
follows:

 

ARTICLE I

 

PURCHASE OF SHARES

 

1.01        Purchase of Shares.
The Buyer agrees to purchase the Shares from the Shareholder on the terms and
subject to the conditions set forth in this Agreement.

 

1.02        Time and Place of Closing. The closing of the transactions contemplated by this Agreement (the “Closing”)
will take place as of the close of business on 31 March 2006 (or, if the conditions to the closing
contained in this Agreement have not been satisfied or waived by such date,
then three business days after the satisfaction or waiver of the last such
condition) (the “Closing Date”), at the offices of Carter Ledyard &
Milburn LLP, or at such other place or time as the parties may agree.

 

1.03        Estimated Closing Date
Balance Sheet. No more
than five business days and no less than one full business day before the
Closing Date, the Shareholder will deliver to the Buyer an unaudited estimated
balance sheet of the Company, estimated as of the time of the Closing (the “Estimated
Closing Date Balance Sheet”), prepared in conformity with GAAP applied on a
consistent basis.

 

1.04        Consideration.
Upon the terms and subject
to the satisfaction of the conditions contained in this Agreement, in
consideration for the Shares, the Buyer will pay to the Shareholder at the
Closing, by wire transfer or certified or cashier’s check, an amount in cash
(the “Purchase Price”) equal to 1.45 times the book value as shown on
the Estimated Closing Date Balance Sheet, multiplied by the Shareholder’s Ratio.
The “Shareholder’s Ratio” shall mean the percentage obtained by dividing
the number of Shares by the total number of common shares of the Company outstanding
as of the Closing Date. The foregoing Purchase Price is subject to adjustments
as set forth in Section 1.05, below.

 

1

 

1.05        Adjustment of Purchase Price.

 

(a)           As
soon as an audit of the Closing Date financial statements is complete, and in
no event later than 90 days from the Closing Date, the Shareholder will deliver
to the Buyer audited balance sheet and related financial statements of the
Company as of the time of the Closing, prepared in conformity with GAAP applied
on a consistent basis (and on a basis consistent with that of the Estimated
Closing Date Financial Statements) and certified by the chief executive officer
and chief financial officer of the Company (the “Closing Date Financial
Statements”). Within 5 business days of the delivery of the Closing Date
Financial Statements, to the extent that the book value as shown in the Closing
Date Financial Statements is different from the book value as shown on the
Estimated Closing Date Financial Statements, the Buyer or the Shareholder, as
the case may be, shall make an appropriate payment to the other as an
adjustment to the Purchase Price.

 

(b)           As
soon as an audit of the Company’s financial statements as of March 31, 2007 is
complete, and in no event later than June 30, 2007, the Shareholder will
deliver to the Buyer audited balance sheet and related financial statements of
the Company as of March 31, 2007, prepared in conformity with GAAP applied on a
consistent basis (and on a basis consistent with that of the Estimated Closing
Date Financial Statements and the Closing Date Financial Statements) and
certified by the chief executive officer and chief financial officer of the
Company (the “March 2007 Financial Statements”). Within 5 business days
of the delivery of the March 2007 Financial Statements, to the extent that the
amount of incurred insurance losses of the Company as of the Closing Date, as
shown on the March 2007 Financial Statements, is different from the amount of
the incurred insurance losses of the Company as of the Closing Date, as shown
on the Closing Date Financial Statements, and to the extent that such
difference is attributable to losses incurred by the Company prior to the
Closing Date and solely as a result of its insurance policy underwriting
liabilities, the Buyer or the Shareholder, as the case may be, shall make an
appropriate payment to the other as an adjustment to the Purchase Price; provided
that (x) no adjustment to the Purchase Price pursuant to this paragraph (b)
shall be required if the payment otherwise required by this paragraph (b) would
be less than or equal to $300,000.

 

(c)           Payments
pursuant to paragraph (a) or (b) above shall be made in accordance with the
terms applicable thereto and without interest.

 

2

 

ARTICLE II

 

REPRESENTATIONS AND
WARRANTIES

OF THE SHAREHOLDER

 

As an inducement to the Buyer to enter into this
Agreement, the Shareholder represents and warrants to the Buyer as follows:

 

2.01        Organization; Qualification. The Shareholder is
a corporation duly organized, validly existing and in good standing under the
laws of Bermuda.

 

2.02        Capitalization.
The total authorized share
capital of the Company consists of 500,000 common shares of which a total of 320,000
shares are issued and outstanding. Other than this Agreement, there is no
subscription, option, warrant, call, right, agreement or commitment relating to
the issuance, sale, delivery or transfer (including any right of conversion or
exchange under any outstanding security or other instruments) by the Company,
or by the Shareholder, of the Shares or other share capital of the Company,
other than (a) outstanding executive options for common shares of the Company
not in excess of 20,500 shares in the aggregate and (b) the Company’s
performance share unit agreement. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
outstanding share capital of the Company. Other than the voting agreement under
the terms of the shareholder agreement between the Company and its shareholders
dated 21 June 2005, There are no voting trusts or other agreements,
arrangements or understandings applicable to the exercise of voting or any
other rights with respect to the Shares.

 

2.03        Title to Shares.
The Shareholder owns, and at
the Closing will own, the all of the Shares, free and clear of all pledges,
security interests, liens, charges, encumbrances, equities, claims, options or
limitations affecting its ability to vote the Shares.

 

2.04        Authority Relative to this Agreement. The Shareholder has
full legal power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Shareholder and constitutes a valid
and binding obligation of the Shareholder, enforceable against the Shareholder
in accordance with its terms.

 

2.05        Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Sharholder nor the consummation
of the other transactions contemplated by this Agreement will (i) violate any
material agreement or other instrument of the Company, (ii) require the
Shareholder to obtain the consent or approval of any governmental authority nor
(iii) result in a material adverse effect on the business, assets, liabilities
(financial or otherwise), results of operations, prospects or affairs of the
Company (a “Material Adverse Effect”).

 

2.06        Financial Statements.
The Shareholder has
previously furnished to the Buyer a true and correct copy of (a) the balance
sheet of the Company as of December 31, 2005, and (b) the related income
statements and cash flow statements of the Company for the fiscal year ended
December 31, 2005 (collectively the “Financial Statements”). The
Shareholder has no knowledge of any material error or omission in the Financial
Statements.

 

3

 

2.07        Undisclosed Liabilities. To the best of the
Shareholder’s knowledge after reasonable due inquiry, there are no basis for
any claim against the Company for any material liability or obligation not
fully reflected or reserved against in the Financial Statements.

 

2.08        Full Disclosure.
No representation or
warranty of the Shareholder and no information, Schedule or certificate
furnished or to be furnished by or on behalf of the Shareholder to the Buyer,
its affiliates or its agents pursuant to or in connection with this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statement
contained herein or therein not misleading. To the best of the Shareholder’s knowledge,
the Shareholder has informed the Buyer of all facts that could reasonably be
anticipated to have a Material Adverse Effect.

 

2.09        Representations and Warranties True at the Closing Date. The representations and warranties of the
Shareholder herein and in any Schedule attached hereto shall be true and
complete at the Closing Date with the same effect as though made at and as of
such time.

 

ARTICLE
III

 

REPRESENTATIONS AND
WARRANTIES

OF THE BUYER

 

As an inducement to the Shareholder to enter into
this Agreement, the Buyer represents and warrants to the Shareholder as
follows:

 

3.01        Organization.
The Buyer is an exempt
company duly organized, validly existing and in good standing under the laws of
Bermuda.

 

3.02        Authority Relative to this Agreement. The Buyer has full
legal power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable against it in accordance with its terms.

 

3.03        Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by the Buyer nor the consummation of
the other transactions contemplated by this Agreement will (i) violate any
material agreement or other instrument of the Buyer, or (ii) require the Buyer
to obtain the consent or approval of any governmental authority, other than the
Cayman Islands Monetary Authority.

 

ARTICLE IV

 

COVENANTS PENDING CLOSING

 

4.01        Consents.
The parties hereto will use
their best efforts to obtain consents, if any, of all persons and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement.

 

4

 

4.02        Public Announcements.
Except as may be required by
law, each party agrees to make no public announcements concerning the
transactions contemplated by this Agreement without the consent of the other
parties.

 

ARTICLE V

 

CLOSING CONDITIONS

 

5.01        Mutual Conditions.
The respective obligations
of the Buyer and the Shareholder to effect the transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:

 

(a)           No
Limitations. None of the
Shareholder, the Company or the Buyer shall be subject to any order, decree or
injunction of a court of competent jurisdiction or governmental agency and no
statute, rule or regulation shall be enacted or issued which (i) prevents or
delays any of the transactions contemplated by this Agreement or (ii) would
impose any limitation on the ability of the Buyer effectively to exercise full
rights of ownership of the Shares.

 

(b)           CIMA
Notices. All notifications
to the Cayman Islands Monetary Authority necessary for the consummation of the
transactions contemplated hereby shall have been made.

 

5.02        Conditions to the Obligations of the Shareholder. The obligations of the Shareholder to effect
the transactions contemplated by this Agreement shall be further subject to the
fulfillment at or prior to the Closing Date of the following conditions, any
one or more of which may be waived by the Shareholder:

 

(a)           The
Buyer shall have performed and complied with the covenants and agreements
contained in this Agreement required to be performed and complied with by it at
or prior to the Closing Date and the representations and warranties of the
Buyer set forth in this Agreement shall be true and correct as of the Closing
Date as though made at and as of the Closing Date; and

 

(b)           At
the Closing, the Buyer shall have delivered the Purchase Price to the
Shareholder as contemplated by Section 1.04.

 

5.03        Conditions to the Obligations of The Buyer. The obligations of the Buyer to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by the Buyer:

 

(a)           The
Shareholder shall have performed and complied with the covenants and agreements
contained in this Agreement required to be performed and complied with by it at
or prior to the Closing Date, and the representations and warranties of the
Shareholder set forth in this Agreement (without regard to any updated
information provided pursuant to Section 4.03 hereof) shall be true and correct
as of the Closing Date as though made at and as of the Closing Date;

 

5

 

(b)           There
shall not have been, since the date of the Financial Statements, any Material
Adverse Change;

 

(c)           At
or prior to Closing, the licenses, permits and other governmental approvals and
authorizations and the consents of third parties required to effect the
transactions contemplated by this Agreement shall have been obtained and
delivered to the Buyer; and

 

(d)           The
Buyer shall have completed its due diligence review of the business and
operations of the Company and shall not have found that any of the
representations and warranties of the Shareholder set forth in this Agreement
are incomplete or incorrect in any material respect (except for representations
and warranties which by their terms are qualified as to materiality, which
shall be complete and correct as written).

 

ARTICLE VI

 

POST-CLOSING COVENANTS

 

6.01        Commissions and Fees.
The Shareholder, on one
hand,  and the Buyer, on the other hand, each
represent and warrant to the other that no broker, finder, financial adviser or
other person is entitled to any brokerage fees, commissions or finder’s fees in
connection with the transactions contemplated hereby by reason of any action
taken by the party making such representation. The Shareholder, on the one
hand, and the Buyer, on the other hand, will pay to the other or otherwise
discharge, and will indemnify and hold the other harmless from and against, any
and all claims or liabilities for all brokerage fees, commissions and finder’s
fees (other than as described above) incurred by reason of any action taken by
such party.

 

6.02        Sales and Transfer Taxes. All sales and
transfer taxes (including all share transfer taxes, if any) incurred in
connection with this Agreement and the transactions contemplated hereby and
thereby will be borne by the Shareholder, and the Shareholder will, at its own
expense, file all necessary Tax Returns and other documentation with respect to
all such sales and transfer taxes, and, if required by applicable law, the
Buyer will join in the execution of any such Tax Returns or other
documentation.

 

ARTICLE
VII

 

GOVERNING LAW

 

7.01        Governing Law.
This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the State
of New York, without giving effect to its principles of conflicts of laws.

 

IN WITNESS WHEREOF, the Company, the Buyer and the
Shareholder each has caused this Agreement to be executed by its duly
authorized representative, each as of the date first above written.

 

6

 

	
   

  	
  HAVERFORD (BERMUDA)
  LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Byrne

  	
   

  
	
   

  	
   

  
	
   

  	
  FLAGSTONE REINSURANCE
  BERMUDA LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David BrownExhibit
10.21

 

West End -
EXECUTION COPY

14 March 2006

 

SECURITY
PURCHASE AGREEMENT

 

THIS SHARE
PURCHASE AGREEMENT, dated as of March 14, 2006 (this “Agreement”),
is between Flagstone Reinsurance
Bermuda Limited, a Bermuda reinsurance company (the “Buyer”) and
the persons listed on Exhibit A hereto (collectively, the “Securityholders”).

 

SUMMARY OF
TRANSACTION

 

The Securityholders own all of the outstanding
common shares (the “Shares”) of West End Capital Management (Bermuda)
Limited, a Bermuda exempt company (the “Company”), and all of the vested
rights to acquire capital shares of the Company (collectively with the Shares,
the “Securities”). The Buyer wishes to acquire the Securities from the Securityholders
on the terms set forth in this Agreement. In consideration of the mutual
covenants, representations, warranties, and agreements hereinafter set forth,
and intending to be legally bound hereby, and in order to set forth the terms
and conditions of the Buyer’s acquisition of the Securities, the parties agree
as follows:

 

ARTICLE I

 

PURCHASE
OF SECURITIES

 

1.01 Purchase
of Securities. The Buyer
agrees to purchase the Securities from the Securityholders on the terms and
subject to the conditions set forth in this Agreement.

 

1.02 Time
and Place of Closing. The
closing of the transactions contemplated by this Agreement (the “Closing”)
will take place as of the close of business on 31 March 2006 (or, if the conditions to the closing contained in this Agreement have
not been satisfied or waived by such date, then three business days after the
satisfaction or waiver of the last such condition) (the “Closing Date”),
at the offices of Carter Ledyard & Milburn LLP, or at such other place or
time as the parties may agree.

 

1.03 Securityholders’ Representative. The
Securityholders hereby appoint Mark Byrne and/or David Brown as the Securityholders’
Representative with the authority to act on behalf of each of the Securityholders
as set out in this Agreement.

 

1.04 Buyer’s Representative. The Buyer hereby appoints E. Daniel James as the Buyer’s
Representative with authority to act on behalf of the Buyer as set out in this
Agreement.

 

1.05 Estimated Closing Date Balance Sheet. No more than five business days and no less
than one full business day before the Closing Date, the Securityholders’
Representative will deliver to the Buyer an unaudited estimated balance sheet
of the Company, estimated as of the time of the Closing (the “Estimated
Closing Date Balance Sheet”), prepared in conformity with GAAP applied on a
consistent basis.

 

1

 

1.06 Consideration. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration
for the Securities, the Buyer will pay to the Securityholders’ Representative at
the Closing, by wire transfer or certified or cashier’s check, an amount in cash
(the “Purchase Price”) equal to (i) $2,000,000 plus (i) the Securityholders
equity as shown on the Estimated Closing Date Balance Sheet, excluding the
following items:  Investments in
Haverford Preferred shares, and the associated unsecured financing; and any
liability to affiliates of the Company.

 

1.07 Payment of Purchase Price. The Purchase Price shall be paid in two installments:

 

(a)           On
the Closing Date, the Buyer shall pay 95% of the Purchase Price, based on the
Securityholders’ equity as shown on the Estimated Closing Date Balance Sheet.

 

(b)           As
soon as an audit of the Closing Date financial statements is complete, and in
no event later than 90 days from the Closing Date, the Securityholders will deliver
to the Buyer an audited balance sheet of the Company as of the time of the
Closing, prepared in conformity with GAAP applied on a consistent basis (and on
a basis consistent with that of the Estimated Closing Date Balance Sheet) and
certified by the chief executive officer and chief financial officer of the
Company (the “Closing Date Balance Sheet”). With 5 days of the delivery
of the Closing Date Balance Sheet, Buyer will pay the remaining balance of the
Purchase Price, as based on the Securityholders’ equity as shown on the Closing
Date Balance Sheet. If the Purchase Price, as based on the Securityholders’
equity as shown on the Closing Date Balance Sheet, is less than 95% of the
Purchase Price as based on the Estimated Closing Date Balance Sheet and paid by
the Buyer on the Closing Date in accordance with paragraph (a) above, the
Sellers shall promptly refund the amount of such excess to the Buyer. Payments
pursuant to this paragraph (b) shall be made in accordance with the terms
hereof and without interest.

 

ARTICLE
II

 

REPRESENTATIONS
AND WARRANTIES

OF THE SECURITYHOLDERS

 

As an inducement to the Buyer to enter into this
Agreement, the Securityholders jointly and severally represent and warrant to the
Buyer as follows:

 

2.01 Organization;
Qualification.
The Company is a corporation
duly organized, validly existing and in good standing under the laws of Bermuda.
The Company has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. The
Company is qualified or licensed to do business in all jurisdictions in which
its business so requires.

 

2.02 Capitalization. The Securityholders own all of the
outstanding capital shares, and all of the vested rights to acquire capital
shares, of the Company. No unvested rights to acquire capital shares of the
Company shall vest after the Closing.

 

2.03 Title
to Security.
The Securityholders own, and
at the Closing will own, all of the Securities, free and clear of all pledges,
security interests, liens, charges, encumbrances, equities, claims, options or
limitations affecting its ability to vote the Shares.

 

2

 

2.04 Authority
Relative to this Agreement.
Each Securityholder each has
full legal power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each Securityholder and constitutes a
valid and binding obligation of each of them, enforceable against each of them
in accordance with its terms.

 

2.05 No
Violation.
Neither the execution and
delivery of this Agreement by the Securityholders nor the consummation of the
other transactions contemplated by this Agreement will (i) violate any material
agreement or other instrument of the Company, (ii) require the Company to
obtain the consent or approval of any governmental authority nor (iii) result
in a material adverse effect on the business, assets, liabilities (financial or
otherwise), results of operations, prospects or affairs of the Company (a “Material
Adverse Effect”).

 

2.06 Financial
Statements.
The Securityholders’
Representative has previously furnished to the Buyer a true and correct copy of
(a) the balance sheet of the Company as of December 31, 2005, and (b) the
related income statements and cash flow statements of the Company for the
fiscal year ended December 31, 2005, in each case prepared in conformity with
GAAP applied on a consistent basis (collectively the “Financial Statements”).
The Securityholders have no knowledge of any material error or omission in the
Financial Statements.

 

2.07 Undisclosed
Liabilities.
There are no claims against
the Company for any liability or obligation not fully reflected or reserved
against in the Financial Statements.

 

2.08 Absence
of Certain Changes and Events. Between the date
of the Financial Statements and the date hereof there has been no occurrence;
threatened occurrence, development or change relating to the business,
operations, financial condition or affairs of the Company which has resulted or
is likely to result in a Material Adverse Effect.

 

2.09 Title
and Condition of Assets.
The Company has good and
marketable title to all of the properties and assets reflected in the Financial
Statements.

 

2.10 Intellectual
Property.
The use by the Company of
its computer programs and other items of intellectual property does not
infringe upon or misappropriate the valid intellectual property rights of any
third party.

 

2.11 Real
Property Leases.
The Company does not own any
real property. The Company occupies its offices under leases which are valid
and binding, and are in full force and effect in accordance with and subject to
their terms; there are no existing defaults by the Company thereunder; no event
has occurred which (whether with or without notice, lapse of time, or both)
would constitute a default thereunder by the Company. A 99% owned subsidiary of
the Company has contracted to buy from a government corporation, and has paid
for, a parcel of land in Hyderabad, India.

 

2.12 Taxes. The Company has timely filed or caused to be
timely filed or will timely file or cause to be timely filed with the
appropriate taxing authorities all tax returns that are required to be filed
by, or with respect to, the assets of the Company on or before the Closing Date.
The tax returns have accurately reflected and will accurately reflect all
liability for taxes of the Company for the periods covered thereby.

 

2.13 Full
Disclosure.
No representation or
warranty of the Securityholder and no information, Schedule or certificate
furnished or to be furnished by or on behalf of the Securityholder to the
Buyer, its affiliates or its agents pursuant to or in connection with this
Agreement contains or will contain any untrue statement of a material fact

 

3

 

or omits or will omit to state a material fact necessary in order to
make the statement contained herein or therein not misleading. To the best
Knowledge of each Securityholder, the Securityholders have informed the Buyer
of all facts that could reasonably be anticipated to have a Material Adverse
Effect.

 

2.14 Representations
and Warranties True at the Closing Date. The representations
and warranties of the Securityholder herein and in any Schedule attached hereto
shall be true and complete at the Closing Date with the same effect as though
made at and as of such time.

 

ARTICLE
III

 

REPRESENTATIONS
AND WARRANTIES

OF THE BUYER

 

As an inducement to the Securityholder to enter into
this Agreement, the Buyer represents and warrants as follows:

 

3.01 Organization. The Buyer is an exempt company duly
organized, validly existing and in good standing under the laws of Bermuda.

 

3.02 No
Violation.
Neither the execution and
delivery of this Agreement by the Buyer nor the consummation of the other
transactions contemplated by this Agreement will (i) violate any material
agreement or other instrument of the Buyer, or (ii) require the Buyer to obtain
the consent or approval of any governmental authority.

 

ARTICLE
IV

 

COVENANTS
PENDING CLOSING

 

4.01 Consents. The parties hereto will use their best
efforts to obtain consents, if any, of all persons and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement.

 

4.02 Public
Announcements.
Except as may be required by
law, each party agrees to make no public announcements concerning the
transactions contemplated by this Agreement without the consent of the other
parties.

 

ARTICLE
V

 

CLOSING
CONDITIONS

 

5.01 Mutual
Conditions.
The respective obligations
of the Buyer and the Securityholders to effect the transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:

 

(a)           No
Limitations. None of the Securityholders,
the Company or the Buyer shall be subject to any order, decree or injunction of
a court of competent jurisdiction or governmental agency and no statute, rule
or regulation shall be enacted or issued which (i) prevents or delays any of
the transactions contemplated by this Agreement or (ii) would impose any
limitation on the ability of the Buyer effectively to exercise full rights of
ownership of the Securities.

 

4

 

(b)           BMA
Notices. All notifications
to the Bermuda Monetary Authority necessary for the consummation of the
transactions contemplated hereby shall have been made.

 

5.02 Conditions
to the Obligations of the Securityholders. The obligations of
the Securityholders to effect the transactions contemplated by this Agreement
shall be further subject to the fulfillment at or prior to the Closing Date of
the following conditions, any one or more of which may be waived by the Securityholders:

 

(a)           The
Buyer shall have performed and complied with the covenants and agreements
contained in this Agreement required to be performed and complied with by it at
or prior to the Closing Date and the representations and warranties of the
Buyer set forth in this Agreement shall be true and correct as of the Closing
Date as though made at and as of the Closing Date, and the Securityholders
shall have received a certificate to that effect signed on behalf of the Buyer
by an authorized officer of the Buyer;

 

(b)           At
the Closing, the Buyer shall have delivered the Purchase Price to the Securityholders
as contemplated by Section 1.07(a).

 

5.03 Conditions
to the Obligations of The Buyer. The obligations of
the Buyer to effect the transactions contemplated hereby shall be further
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any one or more of which may be waived by the Buyer:

 

(a)           The
Securityholders shall have performed and complied with the covenants and
agreements contained in this Agreement required to be performed and complied
with by it at or prior to the Closing Date, and the representations and
warranties of the Securityholders set forth in this Agreement shall be true and
correct as of the Closing Date as though made at and as of the Closing Date;

 

(b)           There
shall not have been, since the date of the Financial Statements, any Material
Adverse Change;

 

(c)           At
or prior to Closing, the licenses, permits and other governmental approvals and
authorizations and the consents of third parties required to effect the
transactions contemplated by this Agreement shall have been obtained and
delivered to the Buyer; and

 

(d)           The
Buyer shall have completed its due diligence review of the business and
operations of the Company and shall not have found that any of the
representations and warranties of the Securityholders set forth in this
Agreement are incomplete or incorrect in any material respect (except for
representations and warranties which by their terms are qualified as to
materiality, which shall be complete and correct as written).

 

ARTICLE
VI

 

POST-CLOSING
COVENANTS

 

6.01 Commissions
and Fees.
The Securityholders, on one
hand,  and the Buyer, on the other hand, each
represent and warrant to the other that no broker, finder, financial adviser or
other person is entitled to any brokerage fees, commissions or finder’s fees in
connection with the transactions contemplated hereby by reason of any action
taken by the party making such representation.

 

5

 

6.02 Sales
and Transfer Taxes.
All sales and transfer taxes
(including all stock transfer taxes, if any) incurred in connection with this
Agreement and the transactions contemplated hereby and thereby will be borne by
the Securityholders, and the Securityholders will, at their own expense, file
all necessary Tax Returns and other documentation with respect to all such
sales and transfer taxes, and, if required by applicable law, the Buyer will
join in the execution of any such Tax Returns or other documentation.

 

ARTICLE
VII

 

GOVERNING
LAW

 

7.01 Governing
Law.
This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of Bermuda,
without giving effect to its principles of conflicts of laws.

 

 

[Signature
Pages Follow]

 

6

 

IN WITNESS WHEREOF, the Company, the Buyer and the Securityholders
have caused this Agreement to be executed.

 

 

	
   

  	
  Buyer:

  
	
   

  	
   

  
	
   

  	
  FLAGSTONE REINSURANCE
  BERMUDA LIMITED

  
	
   

  	
   

  
	
   

  	
  /s/ E. Daniel James

  	
   

  
	
   

  	
  E. Daniel James

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Byrne

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Securityholders: 

  

 

7

 

Exhibit A

 

Securityholders

 

 

	
  Mark Byrne

  	
  /s/ Mark Byrne

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  David Brown

  	
  /s/ David Brown

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Tim Calveley

  	
  /s/ Tim Calveley

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Simon Biggs

  	
  /s/ Simon Biggs

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  John Goodridge

  	
  /s/ John Goodridge

  	
   

  
					

 

8

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