Document:

Exhibit 10.1 

 

 

 

UNEARNED
PREMIUM AND PROSPECTIVE 

QUOTA
SHARE REINSURANCE AGREEMENT

 

by
and among

 

HALLMARK
SPECIALTY INSURANCE COMPANY,

 

AMERICAN
HALLMARK INSURANCE COMPANY OF TEXAS,

 

HALLMARK
INSURANCE COMPANY, and

 

HALLMARK
NATIONAL INSURANCE COMPANY

 

and

 

STARSTONE
NATIONAL INSURANCE COMPANY

 

Dated as of October 7, 2022

 

 

 

     

     

    

 

TABLE
OF CONTENTS

 

Page

 

	ARTICLE I
	 	 	 
	DEFINITIONS
    AND TERMS
	 	 	 
	Section 1.01	Definitions	2
	Section 1.02	Interpretation	9
	 	 	 
	ARTICLE II
	 	 	 
	REINSURANCE
	 	 	 
	Section 2.01	Reinsurance
    Basis	11
	Section 2.02	Third
    Party Reinsurance	11
	Section 2.03	Follow
    the Fortunes	11
	Section 2.04	Changes
    to Reinsured Policies	11
	Section 2.05	Territory	12
	Section 2.06	Defenses	12
	Section 2.07	Ceding
    Company Representative	12
	 	 	 
	ARTICLE III
	 	 	 
	PAYMENTS
    BY THE CEDING COMPANY AND THE REINSURER
	 	 	 
	Section 3.01	Net
    Initial Consideration	12
	Section 3.02	Additional
    Consideration	13
	Section 3.03	Reimbursement
    for Net Premium Taxes on Admitted Business	13
	 	 	 
	ARTICLE IV
	 	 	 
	ACCOUNTING,
    REPORTING AND SETTLEMENT
	 	 	 
	Section 4.01	Reporting	14
	Section 4.02	Remittance	15
	Section 4.03	Late
    Payments	15
	Section 4.04	Offset
    and Recoupment Rights	15
	 	 	 
	ARTICLE V
	 	 	 
	ADMINISTRATIVE
    SERVICES
	 	 	 
	Section 5.01	Appointment
    and Acceptance	16
	Section 5.02	Power
    of Attorney	16

 

    

     

    

 

TABLE
OF CONTENTS

(continued)

 

Page

 

	Section 5.03	Reports	16
	Section 5.04	Standards	17
	Section 5.05	Ultimate
    Authority	17
	Section 5.06	Compensation	17
	Section 5.07	Claims
    Litigation	17
	Section 5.08	Legally
    Required Actions	18
	Section 5.09	Regulatory
    Matters	18
	Section 5.10	Bank
    Accounts	18
	Section 5.11	Capacity;
    Disaster Recovery; Data Privacy	19
	Section 5.12	Subcontracting	19
	Section 5.13	Independent
    Contractor	19
	Section 5.14	Termination
    of Administrative Services	20
	Section 5.15	Access
    to Books and Records	20
	 	 	 
	ARTICLE VI
	 	 	 
	ERRORS
    AND OMISSIONS
	 	 	 
	Section 6.01	Errors
    and Omissions	20
	 	 	 
	ARTICLE VII
	 	 	 
	REINSURANCE
    ALLOCATION
	 	 	 
	Section 7.01	Maximum
    Recoverables Under Third Party Reinsurance Agreements	21
	Section 7.02	Commutation
    of Shared Third Party Reinsurance Agreements	21
	Section 7.03	Changes
    to Third Party Reinsurance Agreements	21
	 	 	 
	ARTICLE VIII
	 	 	 
	DURATION
    AND TERMINATION
	 	 	 
	Section 8.01	Term
    and Termination	22
	Section 8.02	Survival	22
	Section 8.03	No
    Avoidance	22
	 	 	 

	ARTICLE IX
	 	 	 
	REINSURANCE
    CREDIT
	 	 	 
	Section 9.01	Reinsurance
    Credit	22

 

    iii

     

    

 

TABLE
OF CONTENTS

(continued)

 

Page

	 	 	 
	ARTICLE X
	 	 	 
	INSOLVENCY
	 	 	 
	Section 10.01	Insolvency
    of the Ceding Companies	23
	 	 	 
	ARTICLE XI
	 	 	 
	GENERAL
    PROVISIONS
	 	 	 
	Section 11.01	Notices	24
	Section 11.02	Entire
    Agreement	25
	Section 11.03	Governing
    Law, etc.	25
	Section 11.04	Successors
    and Assigns	26
	Section 11.05	Dispute
    Resolution	26
	Section 11.06	Specific
    Performance	29
	Section 11.07	Severability;
    Amendment; Modification; Waiver	29
	Section 11.08	Counterparts	30
	Section 11.09	No
    Third Party Beneficiaries	30
	Section 11.10	Incontestability	30

 

ANNEXES

 

Annex 1         Financial
Reporting Package (Reports to Reinsurer)

 

    iv

     

    

 

UNEARNED
PREMIUM AND PROSPECTIVE 

QUOTA
SHARE REINSURANCE AGREEMENT

 

This
UNEARNED PREMIUM AND PROSPECTIVE QUOTA SHARE REINSURANCE AGREEMENT, dated as of October 7, 2022 (this “Agreement”),
is made by and among HALLMARK SPECIALTY INSURANCE COMPANY, an Oklahoma domiciled stock property and casualty insurance company (“HSIC”),
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS, a Texas domiciled stock property and casualty insurance company (“AHIC”),
HALLMARK INSURANCE COMPANY, an Arizona domiciled stock property and casualty insurance company (“HIC”), and HALLMARK
NATIONAL INSURANCE COMPANY, an Arizona domiciled stock property and casualty insurance company (“HNIC” and, together
with HSIC, AHIC and HIC, the “Ceding Companies”), and STARSTONE NATIONAL Insurance
Company, a Delaware domiciled stock property and casualty insurance company (the “Reinsurer”). Each of the
Ceding Companies and the Reinsurer are sometimes individually referred to in this Agreement as a “party” and together as
the “parties.”

 

W
I T N E S S E T H:

 

WHEREAS,
Hallmark Financial Services, Inc., a Nevada corporation (“Equity Seller”), and Starstone U.S. Holdings, Inc.,
a Delaware corporation (“Buyer”), are parties to that certain Master Transaction Agreement, dated as of October 7,
2022 (the “Master Transaction Agreement”), pursuant to which (1) the Equity Seller has agreed to sell, and Buyer
has agreed to acquire (or cause an Affiliate of Buyer to acquire), 100% of the issued and outstanding units of Heath XS, LLC, a New Jersey
limited liability company (“HXS”), and (2) the Equity Seller and Hallmark Specialty Underwriters, Inc. have
agreed to sell to Buyer or an Affiliate of Buyer, and Buyer desires to purchase, or cause an Affiliate of Buyer to purchase, the Transferred
Assets (as defined in the Master Transaction Agreement), in each case, upon the terms and subject to the conditions set forth therein;

 

WHEREAS,
the Ceding Companies have issued, or will issue in accordance with this Agreement and the General Agency Agreement (as defined herein),
the Reinsured Policies to which the Reinsured Liabilities relate;

 

WHEREAS,
the Ceding Companies and the Reinsurer are entering into this Agreement to facilitate the transfer of the Business to the Reinsurer;

 

WHEREAS,
each Ceding Company shall cede to the Reinsurer, and the Reinsurer shall accept and reinsure, on a one hundred percent (100%) quota share
indemnity reinsurance basis, the Reinsured Liabilities in respect of the Reinsured Policies as set forth herein;

 

     

     

    

 

WHEREAS,
the Reinsurer wishes to provide the Administrative Services on behalf of the Ceding Companies with respect to the Reinsured Policies
upon the terms and subject to the conditions set forth herein; and

 

WHEREAS,
as an accommodation to the Reinsurer, the Reinsurer shall be permitted to issue additional Reinsured Policies in the name of each Ceding
Company upon the terms and subject to the conditions set forth in the General Agency Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and upon the terms and conditions hereinafter set forth, the parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS
AND TERMS

 

Section 1.01    Definitions.
As used in this Agreement, the following terms have the meanings set forth or as referenced below:

 

“Administrative
Services” has the meaning set forth in Section 5.01.

 

“Administrator”
means the Reinsurer acting in its capacity as administrator of the Reinsured Policies in accordance with the terms of this Agreement.

 

“Affiliate”
means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such specified Person. For purposes of this definition, “control” (including
the terms “controlled by” and “under common control with”) with respect to the relationship between or among
two (2) or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person whether through the ownership of voting securities, by contract or otherwise. The term “Affiliated”
shall have a correlative meaning.

 

“Agreement”
has the meaning set forth in the Preamble.

 

“Ancillary
Agreements” has the meaning set forth in the Master Transaction Agreement.

 

“Authorized
Representative” has the meaning set forth in Section 10.01(a).

 

    2 

     

    

 

“Bank
Accounts” has the meaning set forth in Section 5.10.

 

“Business”
has the meaning set forth in the Master Transaction Agreement.

 

“Business
Day” means a day that is not a Saturday, a Sunday or any other day on which commercial banking institutions are authorized
or required by Law to be closed for regular banking business in the States of Ohio or Texas.

 

“Buyer”
has the meaning set forth in the Recitals.

 

“Ceding
Companies” has the meaning set forth in the Preamble.

 

“Ceding
Company” means each of HSIC, AHIC, HIC and HNIC.

 

“Ceding
Company Representative” has the meaning set forth in Section 2.07.

 

“Closing”
has the meaning set forth in the Master Transaction Agreement.

 

“Closing
Date” has the meaning set forth in the Master Transaction Agreement.

 

“Confidential
Information” means all non-public, proprietary and/or confidential information of any kind concerning any Ceding Company or
any of its Affiliates obtained from such Ceding Company or any of its Affiliates or its or their respective Representatives in connection
with the transactions contemplated by this Agreement, except information that (i) is or becomes generally available to the public
other than as a result of any direct or indirect unauthorized disclosure, (ii) was or is independently developed or acquired without
reliance upon or use of Confidential Information provided by the Reinsurer, (iii) was known to the Reinsurer prior to disclosure
by such Ceding Company or any of its Affiliates, or (iv) has been or hereafter is obtained from a source not known, after diligent
inquiry, to be subject to a duty of confidentiality.

 

“Confidentiality
Agreement” has the meaning set forth in the Master Transaction Agreement.

 

“Contract”
means any written note, bond, mortgage, indenture, guarantee, license, franchise, permit, agreement, contract, lease, commitment, legally
binding letter of intent or other similar instrument, and any amendments thereto.

 

    3 

     

    

 

“CSIS”
means Core Specialty Insurance Services, Inc., a New Jersey corporation.

 

“Data
Protection Laws” means all Laws and industry guidelines regarding the collection, use, storage, disclosure or other processing
of personal information.

 

“Effective
Date” means September 30, 2022.

 

“Effective
Time” means 11:59:59 p.m., Eastern Standard time, on the Effective Date.

 

“Equity
Seller” has the meaning set forth in the Recitals.

 

“Excluded
Liabilities” means (i) any increased liability arising out of or relating to a Reinsured Policy (including any Extra Contractual
Obligations) to the extent caused by (a) any action of a Ceding Company or any of its Affiliates (and not by Reinsurer as Administrator
hereunder), other than at the express direction or upon the express recommendation of the Reinsurer hereunder, (b) any alleged or
actual act, error or omission (whether or not intentional, in bad faith or otherwise) of a Ceding Company or any of its Affiliates relating
to the marketing, underwriting, production, sale, issuance, cancellation or administration of the Reinsured Policies prior to the Effective
Time, (c) any breach of a Ceding Company of Section 2.03(a), (d) any action or omission of the Reinsurer as Administrator
hereunder to the extent such action or omission was (i) taken or omitted to be taken at the express direction of a Ceding Company
or any of its Affiliates and (ii) objected to in advance by the Reinsurer, unless the direction of such Ceding Company or its Affiliate
(as applicable) was made in order to comply with Law or the terms of the Reinsured Policies, or (e) any failure of a Ceding Company
or any of its Affiliates (and not by the Reinsurer as Administrator hereunder) to comply with Law following the Effective Time, other
than at the express direction or upon the express recommendation of the Reinsurer hereunder, and (ii) any and all losses and liabilities
arising from, caused by or resulting from Hurricane Ian, remnants thereof, or other weather or natural events related to any of the foregoing.

 

“Extra
Contractual Obligations” means all Liabilities and any other related expenses (including attorneys’ fees) arising out
of or relating to the Reinsured Policies other than those arising under the express terms of and within the express limits of the Reinsured
Policies, whether to contractholders, certificate holders, sponsors, insured, Governmental Bodies or any other Person arising out of
or relating to the Reinsured Policies, which such Liabilities and expenses shall include consequential, compensatory, punitive, exemplary,
special, statutory or regulatory damages (or fines, penalties, forfeitures or similar charges of a penal or disciplinary nature), or
any other form of extra contractual damages or Liabilities arising out of or relating to the Reinsured Policies, including those that
arise from any alleged or actual act, error or omission, whether or not intentional, in bad faith or otherwise, including any act, error
or omission relating to (a) the marketing, underwriting, production, sale, issuance, cancellation, termination, novation or administration
of the Reinsured Policies, (b) the investigation, defense, trial, settlement or handling of claims, benefits, or payments arising
out of or relating to the Reinsured Policies or (c) the failure to pay, or the delay in payment, of benefits, claims or any other
amounts due or alleged to be due under or in connection with the Reinsured Policies.

 

    4 

     

    

 

“General
Agency Agreement” means the General Agency Agreement, dated the date hereof, by and among HXS and the Ceding Companies.

 

“Governmental
Body” means any court or tribunal, administrative, governmental or regulatory body, stock exchange or self-regulatory organization,
legislature, department, commission, board, agency, bureau, instrumentality, division, public body or other authority of any nation or
government or any political subdivision thereof (supranational, national, federal, provincial, state or local or foreign).

 

“HXS”
has the meaning set forth in the Recitals.

 

“In-Force
Policies” means any and all Policies written, issued, assumed or renewed by or on behalf of a Ceding Company in connection
with the Business prior to the Effective Time, that are included on a seriatim list to be delivered by the Ceding Company Representative
to the Reinsurer no later than twenty (20) Business days after the date of this Agreement, but only if unearned premium reserves are
maintained in respect thereof by a Ceding Company as of the Effective Time.

 

“Interest
Rate” means the annual yield rate, on the date to which the 90-Day Treasury Rate relates, of actively traded U.S. Treasury
securities having a remaining duration to maturity of three months, as such rate is published on www.federalreserve.gov.

 

“Law”
means any binding supranational, national, federal, state, provincial, municipal, local or foreign law, statute, ordinance, rule, regulation,
constitution, treaty, code, Order, decision or settlement issued or entered into by any Governmental Body.

 

“Legally
Required Actions” has the meaning set forth in Section 5.08.

 

“Master
Transaction Agreement” has the meaning set forth in the Recitals.

 

“Methodology”
has the meaning set forth in Section 7.01.

 

“Net
Cash Settlement Amount” has the meaning set forth in Section 4.01(a).

 

“Net
Premium Taxes” has the meaning set forth in Section 3.03(a).

 

    5 

     

    

 

“Net
Premium Taxes Report” has the meaning set forth in Section 3.03(b).

 

“New
York Courts” has the meaning set forth in Section 11.05(d).

 

“Panel”
has the meaning set forth in Section 11.05(a).

 

“Payee”
has the meaning set forth in Section 10.01(a).

 

“Permits”
means all licenses, permits, waivers, orders, registrations, consents and other authorizations and approvals of or by a Governmental
Body.

 

“Person”
means any individual, corporation, partnership, limited liability company, firm, association, joint venture, joint stock company, estate,
trust, incorporated or unincorporated organization, Governmental Body or other entity of any kind or nature.

 

“Policies”
means insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements,
riders and endorsements issued or written in connection therewith and extensions thereof.

 

“Premiums”
means all premiums, considerations, deposits or similar amounts received by or on behalf of a Ceding Company in respect of the Reinsured
Policies.

 

“Procedures”
has the meaning set forth in Section 11.05(a).

 

“Quarterly
Financial Report” has the meaning set forth in Section 4.01(a).

 

“Quarterly
Settlement Period” means each quarterly period beginning on and including the first day of a calendar quarter and ending on
the last day of such calendar quarter; provided that (a) the first Quarterly Settlement Period shall begin at the Effective Time,
and (b) the final Quarterly Settlement Period shall end at the end of the Termination Date.

 

“Recoverables”
has the meaning set forth in Section 3.02.

 

    6 

     

    

 

“Reinsured
Liabilities” means all gross liabilities, obligations and expenses (including third party claims adjusting expenses) of each
Ceding Company arising under, out of or relating to the Reinsured Policies, net of any liabilities ceded by such Ceding Company under
the terms of Third Party Reinsurance Agreements, whether or not any amounts in respect of such liabilities are actually received by such
Ceding Company pursuant such Third Party Reinsurance Agreements; provided, however, “Reinsured Liabilities”
shall not include any (a) ULAE, (b) state premium taxes, municipal taxes, municipal fees, commissions, license fees or fees
related to boards, bureaus and associations (which amounts incurred (i) prior to the Effective Time shall be excluded hereunder
and (ii) on and after the Effective Time have been contemplated within the commissions payable to HXS under the General Agency Agreement),
(c) policy fees or (d) Excluded Liabilities; provided, further, however, that “Reinsured Liabilities”
shall only include liabilities (including Extra Contractual Obligations) to the extent arising from events occurring from and after the
Effective Time and shall expressly exclude loss reserves arising from events occurring prior to the Effective Time.

 

“Reinsured
Policies” means (a) In-Force Policies and (b) any and all Policies in connection with the Business written, issued
or renewed by or on behalf of a Ceding Company on and after the Effective Time as authorized in advance in writing by the Reinsurer or
HXS, including, in each case (to the extent applicable) for the avoidance of doubt, any and all renewals of Policies in connection with
the Business on or after the Effective Time (whether or not the prior Policy was written, issued or renewed prior to, on or after the
Effective Time) as authorized in advance in writing by the Reinsurer or HXS.

 

“Reinsurer”
has the meaning set forth in the Preamble.

 

“Reinsurer’s
Books and Records” has the meaning set forth in Section 5.15.

 

“Representatives”
means all managers, officers, directors, trustees, employees, accountants, counsel, consultants, advisors, representatives and agents
of a Person.

 

“Retained
Administrative Services” means the payment of claims in respect of Reinsured Policies, financial accounting responsibilities,
reporting for the Ceding Companies and managing regulatory and compliance matters.

 

“Retained
Liabilities” means liabilities under Policies written by a Ceding Company that are not being reinsured hereunder.

 

“Service
Shortfall” has the meaning set forth in Section 5.14.

 

“Settlement
Date” has the meaning set forth in Section 4.02(d).

 

    7 

     

    

 

“Shared
Third Party Reinsurance Agreements” means Third Party Reinsurance Agreements that reinsure both (a) Reinsured Liabilities
and (b) Retained Liabilities.

 

“Tax”
or “Taxes” means any and all taxes, including any interest, penalties or other additions to tax that may become payable
in respect thereof, imposed by any Governmental Body, which taxes shall include but are not limited to all income, profits, alternative
minimum, estimated, payroll, employee withholding, social security, sales, use, ad valorem, value added, insurance, premium, surplus
line, excise, franchise, gross receipts, stamp, transfer, net worth, and other taxes, fees, duties, levies, customs, tariffs, imposts,
assessments, obligations and charges of the same or of a similar nature to any of the foregoing, whether disputed or not and including
any obligations to indemnify or otherwise assume or succeed to the tax liability of any other Person.

 

“Tax
Authority” means any Governmental Body responsible for the administration or the imposition of any Tax.

 

“Tax
Returns” means any and all returns, reports, statements, certificates, schedules or claims for refund of or with respect to
any Tax which is supplied to any Tax Authority, including any amendments or supplements thereto.

 

“Term”
has the meaning set forth in Section 8.01.

 

“Termination
Date” has the meaning set forth in Section 8.01.

 

“Third
Party Reinsurance Agreements” means the reinsurance Contracts pursuant to which a Ceding Company cedes, or may in the future
cede to, any reinsurers (other than the Reinsurer or an Affiliate of such Ceding Company) risks arising under or relating to the Reinsured
Policies or the Reinsured Liabilities; provided, however, “Third Party Reinsurance Agreements” shall not include
this Agreement.

 

“Third
Party Reinsurance Premiums” means all premiums, charges, expenses, assessments or other amounts paid or payable by a Ceding
Company in accordance with the terms and conditions of the Third Party Reinsurance Agreements in connection with the reinsurance of the
Reinsured Policies or Reinsured Liabilities.

 

“ULAE”
means unallocated loss adjustment costs and expenses incurred by a Ceding Company that are associated with the service and management
of the Reinsured Policies and that are not loss adjustment expenses or Extra Contractual Obligations, such as salaries, benefits and
expenses of personnel or any other unallocated overhead expenses of such Ceding Company. For the avoidance of doubt, whether or not a
Ceding Company reflects an expense as “ULAE” on its financial statements or other books and records shall not affect whether
such expense qualifies as “ULAE” for purposes of this Agreement.

 

    8 

     

    

 

Section 1.02           Interpretation.

 

(a)            As
used in this Agreement, references to the following terms have the meanings indicated:

 

(i)              to
the Preamble or to the Recitals, Sections, Articles, Annexes, Exhibits or Schedules are to the Preamble or a Recital, Section or
Article of, or an Annex, Exhibit or Schedule to, this Agreement unless otherwise clearly indicated to the contrary;

 

(ii)             to
any Contract (including this Agreement) are to the Contract as amended, modified, or supplemented from time to time;

 

(iii)           to
any Law are to such Law as amended, modified, supplemented or replaced from time to time and all rules and regulations promulgated
thereunder, and to any section of any Law include any successor to such section;

 

(iv)            to
any Governmental Body include any successor to the Governmental Body and to any Affiliate include any successor to the Affiliate;

 

(v)            to
any “copy” of any Contract or other document or instrument are to a true and complete copy thereof;

 

(vi)           to
 “hereof,” “herein,” “hereunder,” “hereby,” “herewith” and words of similar
import refer to this Agreement as a whole and not to any particular Article, Section or clause of this Agreement, unless otherwise
clearly indicated to the contrary;

 

(vii)           to
the “date of this Agreement,” “the date hereof” and words of similar import refer to October 7, 2022; and

 

(viii)          to
 “this Agreement,” the “Master Transaction Agreement,” or the “Ancillary Agreements” includes the
Annexes, Exhibits and Schedules to this Agreement, the Master Transaction Agreement or the Ancillary Agreements, as applicable.

 

(b)            Whenever
the words “include,” “includes” or “including” are used in this Agreement, they will be deemed to
be followed by the words “without limitation.” The word “or” need not be disjunctive. Any singular term in this
Agreement will be deemed to include the plural, and any plural term the singular. All pronouns and variations of pronouns will be deemed
to refer to the feminine, masculine or neuter, singular or plural, as the identity of the Person referred to may require. Where a word
or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

 

    9 

     

    

 

(c)            Whenever
the last day for the exercise of any right or the discharge of any duty under this Agreement falls on a day other than a Business Day,
the party having such right or duty shall have until the next Business Day to exercise such right or discharge such duty. Unless otherwise
indicated, the word “day” shall be interpreted as a calendar day. With respect to any determination of any period of time,
unless otherwise set forth herein, the word “from” means “from and including”, the word “through”
means “through and including”, the word “current” means the Effective Date and the phrase “then-current”
means an applicable future current date.

 

(d)           The
table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning
or interpretation of this Agreement.

 

(e)           References
to a “party” hereto means the Ceding Company or the Reinsurer and references to “parties” hereto means the Ceding
Company and the Reinsurer unless the context otherwise requires.

 

(f)            References
to “dollars” or “$” mean United States dollars, unless otherwise clearly indicated to the contrary;

 

(g)           The
parties have participated jointly in the negotiation and drafting of this Agreement; consequently, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

(h)           No
summary of this Agreement prepared by or on behalf of any party shall affect the meaning or interpretation of this Agreement.

 

(i)            All
capitalized terms used without definition in the Annexes, Exhibits and Schedules to this Agreement shall have the meanings ascribed to
such terms in this Agreement or the Master Transaction Agreement, as applicable.

 

    10 

     

    

 

ARTICLE II

 

REINSURANCE

 

Section 2.01          Reinsurance
Basis. As of the Effective Time, the Ceding Companies hereby cede on an indemnity reinsurance basis to the Reinsurer, and the Reinsurer
hereby accepts and agrees to reinsure and indemnify the Ceding Companies for, one hundred percent (100%) of the Reinsured Liabilities.
The reinsurance effected under this Agreement shall be maintained in force, without reduction, unless such reinsurance is terminated
as provided herein.

 

Section 2.02
          Third Party Reinsurance. All Third Party Reinsurance Agreements inure to the benefit of the
Reinsurer and the risk of the collectability of reinsurance recoverables under Third Party Reinsurance Agreements is retained by the
Ceding Companies, as applicable, and no liability therefor shall pass to, or be reinsured by, the Reinsurer. In addition, this
Agreement shall not inure to the benefit of any Third Party Reinsurance Agreements. In the event that this Agreement inures to the
benefit of any Third Party Reinsurance Agreement during the term of this Agreement and that results in the Reinsurer being liable
for amounts it would not have been had this Agreement not inured to the benefit of such Third Party Reinsurance Agreement, then the
Ceding Companies shall take such actions necessary, including making equalization payments among themselves and to the Reinsurer, to
properly reflect this Agreement not so inuring.

 

Section 2.03          Follow
the Fortunes. The Reinsurer’s liability under this Agreement shall attach simultaneously with that of the Ceding Companies
under the Reinsured Policies and the reinsurance with respect to which the Reinsurer shall be liable by virtue of this Agreement shall
be subject in all respects to the same risks, terms, rates, conditions, interpretations, assessments, waivers, proportion of premiums
paid to, and reinsurance and other recoveries benefiting, the Ceding Companies as respects the Reinsured Liabilities, the true intent
of this Agreement being that the Reinsurer shall, subject to the terms, conditions, and limits of this Agreement, follow the fortunes
of the Ceding Companies with respect to the Reinsured Policies and the Reinsured Liabilities, and the Reinsurer shall be bound by all
payments and settlements in respect of the Reinsured Liabilities entered into by or on behalf of the Ceding Companies. However, in no
event will this be construed in any way to provide coverage outside the terms and conditions set forth in this Agreement.

 

Section 2.04           Changes
to Reinsured Policies.

 

(a)            The
Ceding Companies shall not make any change, amendment, modification or supplement to, or waive any term or condition of, any Reinsured
Policy, nor take any action under any Reinsured Policy, other than such changes, amendments, modifications, supplements, waivers or actions
as are required to be taken thereunder or by applicable Law, without the prior written consent of the Reinsurer. The Ceding Companies
shall follow any reasonable instructions of the Reinsurer with respect to any Reinsured Policy or Reinsured Liability, and any actions
to be taken, or omitted to be taken, or rights or remedies to be exercised, or omitted to be exercised, under any such Reinsured Policy
or Reinsured Liability, including making or permitting any modification to or as relates to any Reinsured Policy.

 

    11 

     

    

 

(b)           If
the terms of the Reinsured Policies are modified after the Effective Time by a Ceding Company or any Affiliate thereof (other than by
Reinsurer as Administrator hereunder, except to the extent undertaken by Administrator at the direction of the Ceding Company Representative
or an Affiliate thereof), such changes shall be disregarded hereunder and retained (unreinsured hereunder) by the Ceding Companies, except
to the extent such changes are required by applicable Law or the terms of the Reinsured Policies, in which case, the Reinsurer shall
assume one hundred percent (100%) of the Reinsured Liabilities resulting from such changes in accordance with the reinsurance basis set
forth in Section 2.01.

 

Section 2.05           Territory.
The reinsurance provided under this Agreement shall be coextensive with the territory of the Reinsured Policies.

 

Section 2.06           Defenses.
The Reinsurer accepts, reinsures and assumes, as applicable and to the extent set forth herein, the Reinsured Liabilities subject to
any and all defenses, setoffs and counterclaims to which any Ceding Company would be entitled with respect to the Reinsured Liabilities,
it being expressly understood and agreed by the parties hereto that no such defenses, setoffs or counterclaims are or shall be waived
by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby and that Reinsurer is and
shall be fully subrogated in and to all such defenses, setoffs and counterclaims.

 

Section 2.07          Ceding
Company Representative. As among the Ceding Companies, HSIC shall be designated as an agent of the Ceding Companies with the full
authority to make and accept payments and to otherwise act on behalf of the Ceding Companies under this Agreement (in such capacity,
the “Ceding Company Representative”). Notwithstanding any provision of this Agreement to the contrary, in no event
shall the Reinsurer be liable for a payment to more than one Person hereunder (whether to the Ceding Company Representative, any other
Ceding Company or any Payee) in respect of the same Reinsured Liability.

 

ARTICLE III

 

PAYMENTS
BY THE CEDING COMPANY AND THE REINSURER

 

Section 3.01           Net
Initial Consideration. As initial consideration for the reinsurance provided hereunder, (a) at the Closing, the initial reinsurance
premium due from the Ceding Companies to the Reinsurer, and the initial ceding commission due from the Reinsurer to the Ceding Companies,
shall be settled pursuant to Section 2.9 of the Master Transaction Agreement and (b) following the Closing, the net
amount of the payments described in clause (a) of this Section 3.01 shall be subject to a post-Closing adjustment pursuant
to Section 2.11 of the Master Transaction Agreement.

 

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Section 3.02          Additional
Consideration. As ongoing consideration for the reinsurance provided hereunder, the Reinsurer shall be entitled to one hundred percent
(100%) of all of the following amounts actually received by or on behalf of a Ceding Company (including by the Reinsurer as Administrator
hereunder) on or after the Effective Date with respect to the Reinsured Policies, the Reinsured Liabilities and Third Party Reinsurance
Agreements (collectively, the “Recoverables”):

 

(a)            all
Premiums with respect to the Reinsured Policies other than In-Force Policies (including any amounts in respect of premium financing)
net of Third Party Reinsurance Premiums, less any ceding commissions paid to HXS on Premiums pursuant to the General Agency Agreement,
dated the date hereof, among HXS and the Ceding Companies received by HXS in respect of Reinsured Policies described in clause (b) of
the definition thereof;

 

(b)            litigation
recoveries pursuant to litigation to the extent liability for such litigation and related litigation expense constitutes Reinsured Liabilities
(including litigation recoveries on In-Force Policies, solely to the extent relating to litigation arising from events occurring from
and after the Effective Time);

 

(c)            any
premium tax refunds relating to Premiums paid on or after the Effective Date;

 

(d)            all
amounts due to a Ceding Company under the Third Party Reinsurance Agreements to the extent related to the Reinsured Policies, including
all receivables, returns, commissions, amounts in respect of profit sharing and all other sums to which such Ceding Company may be entitled
thereunder (provided, that recoverables under Third Party Reinsurance Agreements with respect to Retained Liabilities shall be
retained by the Ceding Companies); and

 

(e)            any
and all other subrogations, collections and recoveries relating to the Reinsured Liabilities and the Reinsured Policies.

 

Section 3.03           Reimbursement
for Net Premium Taxes on Admitted Business.

 

(a)            The
Reinsurer shall reimburse the Ceding Companies for premium taxes paid in respect of those Reinsured Policies described in clause (b) of
the definition of Reinsured Policies that constitute admitted business, net of premium taxes paid in respect of such Reinsured Policies
attributable to Third Party Reinsurance Agreements (“Net Premium Taxes”). On a quarterly basis, the Reinsurer shall
pay to the Ceding Company Representative an estimate of Net Premium Taxes in the amount of two percent (2%) of gross written premium
attributable to such quarter minus premium attributable to Third Party Reinsurance Agreements. Such estimate shall be assessed
and paid as part of each Quarterly Financial Report referenced in Section 4.01(a).

 

(b)            No
later than ninety (90) days after the end of each calendar year, the Ceding Company Representative shall prepare and deliver to the Reinsurer
a report (the “Net Premium Taxes Report”) showing the actual amount of Net Premium Taxes paid by the Ceding Companies
for which an estimate of Net Premium Taxes has been paid as part of Quarterly Financial Reports and the difference between the actual
amount of Net Premium Taxes paid by the Ceding Companies and the estimate of Net Premium Taxes paid by the Reinsurer, along with such
supporting documentation as is requested by the Reinsurer. If the Reinsurer has an objection to the Net Premium Taxes Report, the Reinsurer
shall provide notice of such objection to the Ceding Company Representative within thirty (30) days following receipt of such Net Premium
Taxes Report. If such a notice of objection is provided, the parties shall attempt in good faith to resolve the objection between themselves.

 

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(c)            In
the event the actual amount of Net Premium Taxes paid by the Ceding Companies is greater than the estimate of Net Premium Taxes paid
by the Reinsurer, the Reinsurer shall pay to the Ceding Company Representative an amount equal to such excess by wire transfer in immediately
available funds to an account designated by the Ceding Company Representative. In the event the estimate of Net Premium Taxes paid by
the Reinsurer is greater than the actual amount of Net Premium Taxes paid by the Ceding Companies, the Ceding Company Representative
shall pay to the Reinsurer an amount equal to such excess by wire transfer in immediately available funds to an account designated by
the Reinsurer.

 

ARTICLE IV

 

ACCOUNTING,
REPORTING AND SETTLEMENT

 

Section 4.01            Reporting.

 

(a)            Within
thirty (30) days after the end of each calendar quarter, the Reinsurer shall deliver to the Ceding Company Representative a quarterly
financial report (each a “Quarterly Financial Report”) in a form to be mutually agreed by the parties no later than
thirty (30) days after the date of this Agreement, which shall report on the financial activity hereunder for the relevant Quarterly
Settlement Period and shall calculate the amount, if any, due from the Reinsurer to the Ceding Companies or due from the Ceding Companies
to the Reinsurer, as applicable, under this Agreement for the relevant Quarterly Settlement Period (the “Net Cash Settlement
Amount”).

 

(b)            Within
thirty (30) days after the end of each month, the Ceding Company Representative shall deliver to the Reinsurer the financial reports
described in Annex 1 and such other reports to be mutually agreed by the parties no later than thirty (30) days after the
date of this Agreement. The Ceding Company Representative shall also, upon reasonable prior written request, provide to the Reinsurer
such other financial and accounting reports and information (including annual actuarial opinions and work papers) necessary for the Reinsurer
to perform the Administrative Services and prepare required reports and filings with Governmental Bodies with respect to the Reinsured
Policies and Reinsured Liabilities, including Tax Returns and other Tax filings and financial statements. All such reports shall be in
a form and format to be mutually agreed upon by the parties.

 

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Section 4.02           Remittance.

 

(a)            If
the Net Cash Settlement Amount as shown on the Quarterly Financial Report shows that an amount is due from Ceding Companies to Reinsurer,
the Ceding Company Representative shall pay such amount to the Reinsurer, and if the Net Cash Settlement Amount as shown on such Quarterly
Financial Report shows that an amount is due from Reinsurer to Ceding Companies, then the Reinsurer shall pay such amount to the Ceding
Company Representative.

 

(b)            All
Net Cash Settlement Amounts (including any interest on any of the foregoing) due to the Reinsurer from the Ceding Companies shall be
remitted by the Ceding Company Representative by wire transfer in immediately available funds to an account designated by the Reinsurer.

 

(c)            All
Net Cash Settlement Amounts (including any interest on the foregoing) due to the Ceding Companies from the Reinsurer shall be remitted
by the Reinsurer to the Ceding Company Representative by wire transfer in immediately available funds to an account or accounts designated
by the Ceding Company Representative.

 

(d)            Any
payment required under this Section 4.02 with respect to any Quarterly Settlement Period shall be made within fifteen (15)
days following the delivery of the applicable Quarterly Financial Report by the party required to make such payment (the “Settlement
Date”).

 

Section 4.03           Late
Payments. As long as any amount that is owed and payable by the Ceding Companies to the Reinsurer, or the Reinsurer to the Ceding
Companies, remains unpaid, the party to whom such amount is owed shall be entitled to interest on such unpaid amount at the Interest
Rate, calculated from the date such payment is due until and including the date such payment is made.

 

Section 4.04           Offset
and Recoupment Rights. To the maximum extent permitted by Law, any debits or credits incurred on and after the Effective Time in
favor of or against either the Ceding Companies, on the one hand, or the Reinsurer, on the other hand, with respect to this Agreement
only shall be deemed mutual debits or credits, as the case may be, and shall be set off and recouped, and only the net balance shall
be allowed or paid. To the maximum extent permitted by Law, this Section 4.04 shall apply notwithstanding the initiation
or commencement of a liquidation, insolvency, rehabilitation, conservation, supervision or similar proceeding by or against the Ceding
Companies or the Reinsurer.

 

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ARTICLE V

 

ADMINISTRATIVE
SERVICES

 

Section 5.01           Appointment
and Acceptance. Except for the Retained Administrative Services or as otherwise provided in this Agreement, or unless specifically
prohibited by applicable Law, the Ceding Companies hereby appoint the Reinsurer as their exclusive agent (subject to Section 5.12)
to provide all administrative services required or reasonably necessary or appropriate with respect to the Reinsured Policies, including:
(i) the collection of Recoverables other than recoverables under Third Party Reinsurance Agreements; (ii) claims handling;
(iii) the renewal, replacement, entry into, amendment or modification of Reinsured Policies; and (iv) the administration of
agent and producer agreements (collectively, the “Administrative Services”). In each case, the Administrative Services
shall include any services or tasks that are not specifically described in this Agreement but that are an inherent, necessary or customary
part of the Administrative Services, which services or tasks shall be deemed to be included within the scope of the Administrative Services.
The parties agree that the Reinsurer shall provide all Administrative Services with respect to the Reinsured Policies, except, in each
case, for Legally Required Actions or as otherwise specifically provided for in this Agreement. The parties acknowledge and agree that,
as of the date hereof, HXS will perform certain Administrative Services pursuant to and as described in the General Agency Agreement,
dated the date hereof, among HXS and the Ceding Companies, and CSIS will perform all other Administrative Services pursuant to that certain
Intercompany Services Agreement, effective as of November 30, 2020, between CSIS and the Reinsurer. For the avoidance of doubt,
the Ceding Companies are retaining administration of Third Party Reinsurance Agreements including Shared Third Party Reinsurance Agreements
and the Reinsurer shall have no responsibility therefor.

 

Section 5.02           Power
of Attorney. Subject to the terms and conditions of this Agreement, each Ceding Company does hereby appoint and name the Reinsurer,
acting through its authorized officers and employees, as such Ceding Company’s lawful attorney-in-fact coupled with an interest
with respect to the rights, duties, privileges and obligations of such Ceding Company with respect to providing the Administrative Services,
including to: (a) take any and all lawful acts that such Ceding Company might have taken with respect to providing the Administrative
Services; and (b) proceed by all lawful means to (i) perform any and all of such Ceding Company’s obligations under the
Reinsured Policies, (ii) enforce any right and defend against any liabilities arising under the Reinsured Policies, (iii) sue
or defend (in the name of such Ceding Company, when necessary) any action arising under the Reinsured Policies, (iv) collect all
Premiums and Recoverables, or to quitclaim and release for the same, (v) sign (in such Ceding Company’s name, when necessary)
vouchers, receipts, releases and other papers in connection with any of the foregoing matters, (vi) subject to applicable Law, without
limitation of the foregoing, exercise all rights, and discharge all duties, of such Ceding Company pursuant to the Reinsured Policies
(including to renew, replace, enter into, amend or modify the same) and (vii) do everything lawfully permitted in connection with
the satisfaction of the Reinsurer’s obligations under this Agreement. In furtherance of the foregoing, each Ceding Company shall
execute and deliver such appointments, powers of attorney and related instruments as may be reasonably requested by the Reinsurer for
purposes of performing services under this Article V.

 

Section 5.03           Reports.
Within thirty (30) days following the end of each month, the Reinsurer shall provide to the Ceding Company Representative such financial
reports as are mutually agreed by the parties no later than thirty (30) days after the date of this Agreement. The Reinsurer shall also,
upon reasonable prior written request, provide to the Ceding Company Representative such other financial and accounting reports and information
(including annual actuarial opinions and work papers) necessary for the Ceding Companies to prepare required reports and filings with
Governmental Bodies with respect to the Reinsured Policies, including Tax Returns and other Tax filings and financial statements. All
such reports shall be in a form and format to be mutually agreed upon by the parties.

 

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Section 5.04          Standards.

 

(a)            The
Reinsurer shall cause the Administrative Services to be provided in accordance with (a) the Reinsurer’s servicing standards
as these exist prior to the Effective Time, subject to any changes to such standards required by applicable Law or effectuated by the
Reinsurer with respect to the servicing of its other comparable businesses, (b) applicable Law, (c) the terms and conditions
of the Reinsured Policies, and (d) the care, skill, prudence and diligence of a person experienced in the administration of business
of a similar type to the Reinsured Policies.

 

(b)            From
and after the date hereof, the Ceding Companies shall provide, or cause to be provided, the Retained Administrative Services. Each of
the Ceding Companies shall cause the Retained Administrative Services to be provided in accordance with (a) such Ceding Company’s
servicing standards as these exist prior to the Effective Time, subject to any changes to such standards required by applicable Law or
effectuated by such Ceding Company with respect to the servicing of its other comparable businesses, (b) applicable Law, (c) the
terms and conditions of the Reinsured Policies, and (d) the care, skill, prudence and diligence of a person experienced in the administration
of business of a similar type to the Reinsured Policies.

 

Section 5.05           Ultimate
Authority. Notwithstanding any other provision contained in this Agreement to the contrary, the Ceding Companies shall (a) retain
the ultimate authority to make all final decisions with respect to the administration of the Reinsured Policies, and (b) have the
right to direct the Reinsurer in its capacity as Administrator to perform any action necessary for the Reinsured Policies to comply with
applicable Law, or to cease performing any action that constitutes a violation of applicable Law.

 

Section 5.06          Compensation.
The Reinsurer’s sole compensation for the reinsurance and the Administrative Services provided by the Reinsurer to the Ceding Companies
hereunder shall be the consideration described in Article III.

 

Section 5.07          Claims
Litigation. If any of the Ceding Companies or the Reinsurer receives notice of, or otherwise becomes aware of, the following relating
to the Reinsured Policies, such party shall promptly notify the other party thereof: any action in which the amount in controversy exceeds
fifty thousand dollars ($50,000) that has been instituted with respect to: (a) any denied claim or any claim-handling under a Reinsured
Policy, regardless of whether such claim was paid or denied; or (b) any other matter relating to a Reinsured Policy or the Reinsurer’s
administration of any of the foregoing. From and after the date hereof, the Reinsurer shall sue or defend, at its own expense and in
the name of the Ceding Companies (as applicable), any litigation brought in respect of a Reinsured Liability. Each Ceding Company shall
have the right, at its own expense, to engage its own separate legal representation in any litigation in which such Ceding Company is
a named party; provided, however, that the Reinsurer shall exercise control and direction over litigation defended pursuant
to this Section 5.07 and shall have the authority to settle or consent to judgment in any such litigation; provided,
further, that the Reinsurer shall not compromise or settle any such litigation without the Ceding Company Representative’s
prior written consent (which consent shall not be unreasonably withheld, conditioned, delayed or denied), unless: (i) the settlement
or judgment does not impose any equitable remedies or any restriction or condition on the Ceding Companies which could reasonably be
expected to have an adverse effect on the Ceding Companies or their respective Affiliates or on any business of the Ceding Companies
or their respective Affiliates (other than as reinsured hereunder); and (ii) the Reinsurer obtains a complete release of the Ceding
Companies (as applicable) with respect to such litigation.

 

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Section 5.08           Legally
Required Actions. The Reinsurer shall give the Ceding Company Representative timely notice of any actions with respect to the Administrative
Services that any Ceding Company is required by applicable Law or Governmental Bodies to discharge directly without the Reinsurer acting
on its behalf (“Legally Required Actions”), including providing the Ceding Company Representative with information
that is reasonably required from the Reinsurer for the Ceding Companies (as applicable) to perform such Legally Required Actions (including
the preparation of applicable regulatory filings).

 

Section 5.09           Regulatory
Matters. If any of the Ceding Companies or the Reinsurer receives notice of, or otherwise becomes aware of any inquiry, investigation,
examination, complaint, audit or proceeding by Governmental Bodies relating to the Reinsured Policies, such party shall promptly notify
the other thereof. The parties shall cooperate in good faith with respect to resolving or responding to such matter. If requested by
the Ceding Company Representative, the Reinsurer shall defend any such inquiry, investigation, examination, complaint, audit or proceeding
by Governmental Bodies relating to the Reinsured Policies. However, the Ceding Company Representative shall retain the final authority
with respect to the resolution of any such inquiry, investigation, examination, complaint, audit or proceeding. The costs and expenses
of any such defense shall be shared equally between the Ceding Companies, on the one hand, and the Reinsurer, on the other hand.

 

Section 5.10           Bank
Accounts. During the period that the Reinsurer is performing Administrative Services pursuant to this Agreement, the Reinsurer may
establish and maintain accounts with banking institutions to provide the Administrative Services (“Bank Accounts”).
To the extent such Bank Accounts are established, the Reinsurer shall have exclusive authority over such Bank Accounts, including the
exclusive authority to: (a) open Bank Accounts in the name of any Ceding Company; (b) designate the authorized signatories
on the Bank Accounts; (c) issue drafts on and make deposits in the Bank Accounts in the name of any Ceding Company; and (d) make
withdrawals from the Bank Accounts, in each case, to the extent necessary to provide the Administrative Services. Each Ceding Company
shall do all things reasonably necessary to enable the Reinsurer to open and maintain the Bank Accounts, including executing and delivering
such depository resolutions and other documents as may be requested from time-to-time by the banking institutions.

 

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Section 5.11           Capacity;
Disaster Recovery; Data Privacy.

 

(a)            The
Reinsurer shall, at all times during the period that the Reinsurer is performing the Administrative Services pursuant to this Agreement,
(i) keep, maintain or subcontract for a commercially reasonable number of appropriately trained personnel (or equivalents) and (ii) obtain
and maintain all Permits under applicable Laws (including, if required, an independent adjuster license or third-party administrator
license) to perform the Administrative Services.

 

(b)            For
all computer programs, data, computer equipment, communications equipment and other similar items used by the Reinsurer to provide the
Administrative Services, the Reinsurer shall provide disaster recovery services and backup and archival services that are substantially
similar to the disaster recovery services and backup and archival services, respectively, that the Reinsurer uses for its own computer
programs, data, computer equipment, communications equipment and other similar items.

 

(c)            In
providing the Administrative Services under this Agreement, and in connection with maintaining, administering, handling and transferring
the data of the insureds and beneficiaries under the Reinsured Policies, the Reinsurer shall, shall cause its Affiliates to, and shall
require its subcontractors to, comply with (i) Data Protection Laws applicable to the Administrative Services, (ii) the terms
of the applicable Reinsured Policies and (iii) applicable provisions of the Reinsurer’s then-current information security
procedures applicable to the Reinsured Policies. At all times during the term of this Agreement, such privacy and security procedures
shall be substantively consistent with, or superior to, industry standards and no less protective to the insureds and beneficiaries under
the Reinsured Policies than the privacy and security procedures applicable to other comparable insurance businesses administered by the
Reinsurer for its own account. Except to the extent prohibited by Law, the Reinsurer shall, as promptly as reasonably practicable, notify
the Ceding Company in writing of any unauthorized disclosure to or access by a third party of personal data or Confidential Information
held by the Reinsurer on behalf of the Ceding Company.

 

Section 5.12           Subcontracting.
The Reinsurer may subcontract for the performance of any Administrative Services. In the case of subcontracting for the performance of
any Administrative Services, the Reinsurer shall remain fully responsible for the performance of all Administrative Services and shall
be responsible for compliance by any subcontractor with the terms of this Agreement. Without limitation of the foregoing, the personnel
and facilities of any subcontractor shall be considered personnel and facilities of the Reinsurer for purposes of this Agreement.

 

Section 5.13           Independent
Contractor. The Ceding Companies acknowledge and agree that the Reinsurer and its applicable Affiliates, in performing their responsibilities
pursuant to this Agreement, are in the position of independent contractors. This Agreement is not intended to create, nor does it create
and shall not be construed to create, a relationship of partners or joint venturers, fiduciaries or any association for profit between
and among the parties or any of their respective Affiliates.

 

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Section 5.14          Termination
of Administrative Services. In the event that the Reinsurer fails to perform all or a substantial portion of the Administrative Services
contemplated by this Article V in accordance with the terms hereof (a “Service Shortfall”) and the Reinsurer
fails to cure such Service Shortfall within sixty (60) days of being notified thereof by the Ceding Company Representative, the Ceding
Companies shall have the right to require the Reinsurer to appoint (on terms reasonably acceptable to the Ceding Companies and the Reinsurer)
a third-party administrator selected by the Ceding Company Representative and reasonably acceptable to the Reinsurer to perform any services
that were the subject of such Service Shortfall. The Reinsurer shall cooperate fully in the transition of administrative services to
such third-party administrator.

 

Section 5.15           Access
to Books and Records. Following the Closing Date, the Reinsurer shall: (i) allow the Ceding Company Representative and its Representatives
and regulators, upon reasonable prior notice and during normal business hours and subject to the rules applicable to visitors at
the Reinsurer’s offices generally, the right to examine and make copies, at the Ceding Company Representative’s expense,
of any books and records or other information related to the Reinsured Liabilities, Administrative Services or Reinsured Policies in
the possession or control of the Reinsurer or its Affiliates or their respective Representatives (the “Reinsurer’s Books
and Records”); (ii) allow the Ceding Company Representative and its Representatives and regulators to interview certain
of the Reinsurer’s and its Affiliates’ Representatives with knowledge of the Reinsured Liabilities for any reasonable purpose
relating to the Reinsured Liabilities, Administrative Services or Reinsured Policies, including in connection with the Ceding Companies’
preparation or examination of regulatory and statutory filings and financial statements or the Ceding Companies’ review of the
Quarterly Financial Reports; and (iii) maintain such Reinsurer’s Books and Records for the Ceding Company Representative’s
examination and copying in accordance with the record retention requirements utilized by the Reinsurer in connection with its other business
or longer if legally required to do so, after which the Reinsurer may destroy such Reinsurer’s Books and Records and other information
in its discretion. Access to such Representatives and the Reinsurer’s Books and Records shall be at the Ceding Company Representative’s
expense and shall not unreasonably interfere with the business operations of the Reinsurer or its Affiliates. The Reinsurer may destroy
or otherwise dispose of any Reinsurer’s Books and Records in accordance with this Section 5.15; provided that prior
to such destruction or disposal, the Reinsurer, as agent of the Ceding Companies, provides the Ceding Companies with the option to take
possession of such Reinsurer’s Books and Records.

 

ARTICLE VI

 

ERRORS
AND OMISSIONS

 

Section 6.01            Errors
and Omissions. Inadvertent delays, errors or omissions made after the Effective Date in connection with this Agreement or any transaction
hereunder shall not relieve any party from liability which would have attached had such delay, error or omission not occurred; provided
that such error or omission is sought to be rectified as soon as possible after discovery; and provided further that the party making
such error or omission or responsible for such delay shall be responsible for any additional liability that attaches as a result.

 

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ARTICLE VII

 

REINSURANCE
ALLOCATION

 

Section 7.01           Maximum
Recoverables Under Third Party Reinsurance Agreements. From and after the Closing, recoverables under Third Party Reinsurance Agreements
that exhaust or substantially impair the maximum remaining amount recoverable under a Shared Third Party Reinsurance Agreement shall
be allocated between recoverables in respect of Reinsured Liabilities and recoverables in respect of Retained Liabilities based on the
pro rata share of aggregate premiums under such Shared Third Party Reinsurance Agreement paid in respect of the Reinsured Liabilities
and Reinsured Policies, on the one hand, and Retained Liabilities, on the other hand, or such other allocation methodology agreed upon
by the Parties in writing (the “Methodology”). For purposes of this Section 7.01, the maximum remaining
amount recoverable under a Shared Third Party Reinsurance Agreement shall be deemed “substantially impaired” to the extent
that the Reinsurer or the applicable Ceding Company, as applicable, has paid a loss that entitles such Ceding Company to present a claim
for recovery under such Shared Third Party Reinsurance Agreement in an amount equal to thirty-three percent (33%) or more of the maximum
remaining amount recoverable under such Shared Third Party Reinsurance Agreement. Each of the Reinsurer and the Ceding Company Representative,
on behalf of the Ceding Companies, shall provide written notice to the other Party once it reasonably expects to pay a loss that would
substantially impair the maximum remaining recoverable amount under a Shared Third Party Reinsurance Agreement. In the event that the
maximum amount recoverable under a Shared Third Party Reinsurance Agreement has been paid in a manner that is not consistent with the
Methodology and that results in the Reinsurer being liable for amounts it would not have been had Shared Third Party Reinsurance Agreement
coverage been available taking into account the Methodology, then the Ceding Companies shall take such actions necessary, including making
equalization payments among themselves and to the Reinsurer, to properly reflect the intent of the allocation of recoverables under Shared
Third Party Reinsurance Agreements described in this Section 7.01(a).

 

Section 7.02          Commutation
of Shared Third Party Reinsurance Agreements. From and after the Effective Time, if the Parties mutually agree to recapture, commute,
terminate or reduce any reinsurance under a Shared Third Party Reinsurance Agreement (which mutual agreement shall be deemed to have
been reached in the case of any recapture, commutation, termination or reduction mandated under the terms of a Shared Third Party Reinsurance
Agreement), then the recoverables in respect of such recapture, commutation, termination or reduction the Parties shall be allocated
between recoverables in respect of Reinsured Liabilities and recoverables in respect of Retained Liabilities based on the Methodology.

 

Section 7.03          Changes
to Third Party Reinsurance Agreements. The Ceding Companies shall not, and shall cause their Affiliates not to, make any change,
amendment, modification or supplement to, or waive any term or condition of, any Third Party Reinsurance Agreement (with respect to any
Reinsured Liabilities), nor take any action under any Third Party Reinsurance Agreement (with respect to any Reinsured Liabilities),
other than such actions as are wholly ministerial or administrative or such changes, amendments, modifications, supplements, waivers
or actions as are required to be taken thereunder or by applicable Law, without the prior written consent of the Reinsurer, in each case,
to the extent that any of the foregoing could reasonably be expected to modify or increase Reinsured Liabilities ceded hereunder. The
Ceding Companies shall not, and shall cause their Affiliates not to, terminate or commute any Third Party Reinsurance Agreement (with
respect to any Reinsured Liabilities), without the prior written consent of the Reinsurer.

 

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ARTICLE VIII

 

DURATION
AND TERMINATION

 

Section 8.01          Term
and Termination. The term (“Term”) of this Agreement shall be from the Effective Time until the later of the following
dates (such date, the “Termination Date”): (a) the date on which the Ceding Companies have no further Reinsured
Liabilities or other obligations in respect of the Reinsured Policies and (b) the date on which the Reinsurer has fully discharged
all Reinsured Liabilities hereunder.

 

Section 8.02           Survival.
This Article VIII, Article XI and Article I (to the extent relating to the foregoing) shall remain
in full force and effect following the termination of this Agreement.

 

Section 8.03           No
Avoidance. The Reinsurer agrees that it shall have no right to avoid, reduce, rescind, repudiate, treat as discharged, cancel or
terminate this Agreement or any liability hereunder, unless specifically provided for in this Agreement.

 

ARTICLE IX

 

REINSURANCE
CREDIT

 

Section 9.01           Reinsurance
Credit. The parties intend that each Ceding Company be able to obtain full statutory financial statement credit for the reinsurance
provided by this Agreement in its current jurisdiction of domicile throughout the entire term of this Agreement. Upon the occurrence
of any event that, if continuing as of the end of any financial statement period, would be reasonably likely to result in a Ceding Company
being unable to take full statutory financial statement credit for the reinsurance provided by this Agreement in its current state of
domicile, the Reinsurer, at its own expense, shall, within thirty (30) days following the occurrence of such event or, if earlier, prior
to the end of the calendar quarter during which such event occurs, take all steps necessary to comply with all applicable Laws so as
to permit such Ceding Company to obtain full credit for the reinsurance provided by this Agreement in its current state of domicile throughout
the entire term of this Agreement to the extent credit is not otherwise available under applicable Law. It is understood and agreed that
any term or condition required by such applicable Law to be included in this Agreement for each Ceding Company to receive full statutory
financial statement credit for the reinsurance provided by this Agreement shall be deemed to be incorporated in this Agreement by reference.
Furthermore, the Reinsurer and the Ceding Companies agree to amend this Agreement, or enter into other agreements or execute additional
documents, in each case, as needed to comply with the credit for reinsurance laws and regulations and the requirements of the applicable
Governmental Bodies in the current states of domicile of the Ceding Companies. Notwithstanding the foregoing, the Reinsurer shall have
the option of determining the method of funding provided it is acceptable to the applicable Governmental Bodies. Notwithstanding the
foregoing, the Reinsurer shall not be required to take any such actions pursuant to this Section 9.01 if after taking such
actions, the applicable Ceding Company would nevertheless be unable to obtain statutory financial statement credit in respect thereof;
provided, further, that nothing in this Section 9.01 shall be construed to require the Reinsurer to consent
to or accept any expansion in the scope of the Reinsured Liabilities assumed by the Reinsurer under this Agreement.

 

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ARTICLE X

 

INSOLVENCY

 

Section 10.01         Insolvency
of the Ceding Companies.

 

(a)            In
the event of the insolvency of a Ceding Company, all reinsurance made, ceded, renewed or otherwise becoming effective under this Agreement
will be payable by the Reinsurer directly to such Ceding Company or to its receiver, rehabilitator, conservator, liquidator or statutory
successor (hereinafter referred to as the “Authorized Representative”) on the basis of the liability of such Ceding
Company under the Reinsured Policies or, in the case of HSIC, on the basis of reported claims allowed by the Authorized Representative,
in each case, without diminution because of the insolvency of such Ceding Company or, alternatively, at the option of the Reinsurer,
directly to the insureds or other beneficiaries entitled to receive payment under the Reinsured Policies (a “Payee”)
on the basis of the liability of such Ceding Company under the Reinsured Policies or, in the case of HSIC, on the basis of reported claims
allowed by the Authorized Representative, in each case, without diminution because of such insolvency of such Ceding Company. Without
limitation of Section 11.09, nothing in this Section 10.01(a) shall (or is intended to) grant any rights
to any Payee or any other Person (other than the parties or any Authorized Representative) to enforce the terms of this Section 10.01(a).

 

(b)            Each
Ceding Company or its Authorized Representative shall give written notice to the Reinsurer of all pending claims against such Ceding
Company on any policies reinsured or retroceded within a reasonable time after such claims are filed in the insolvency proceedings. While
a claim is pending, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceedings where the claim is
to be adjudicated, any defense or defenses that it may deem available to such Ceding Company or its Authorized Representative.

 

(c)            The
expense thus incurred by the Reinsurer will be chargeable, subject to court approval, against each Ceding Company as part of the expense
of conservation or liquidation to the extent of a proportionate share of the benefit that may accrue to such Ceding Company as a result
of the defense undertaken by the Reinsurer. Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose a defense to such claim, the expense will be apportioned in accordance with the terms of the Agreement as though such expense
had been incurred by such Ceding Company.

 

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(d)            Any
payment by the Reinsurer directly to a Payee pursuant to this Section 10.01 shall be, to the extent of the payment, in substitution,
satisfaction and discharge of the Reinsurer’s obligations to the applicable Ceding Company, or to its liquidator, rehabilitator,
receiver, conservator or statutory successor, under this Agreement. Neither this Article X, nor any other provision of this
Agreement, shall be construed in a manner which would subject the Reinsurer to liability for duplicative payments of the Reinsured Liabilities
reinsured under this Agreement.

 

ARTICLE XI

 

GENERAL
PROVISIONS

 

Section 11.01         Notices.
All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally
by hand (with written confirmation of receipt by other than automatic means, whether electronic or otherwise), (b) when sent by
email (with confirmation of transmission) or (c) one (1) Business Day following the day sent by an internationally recognized
overnight courier (with written confirmation of receipt), in each case, at the following addresses and email addresses (or to such other
address, facsimile number or email address as a party may have specified by notice given to the other party pursuant to this provision):

 

to
any Ceding Company:

 

Hallmark
Specialty Insurance Company (as Ceding Company Representative)

Two Lincoln Centre

5420 Lyndon B Johnson Freeway, Suite 1100 

Dallas,
Texas 75240

Attention:         Chris Kenney

Email:                ckenney@hallmarkgrp.com

 

with
a copy (which shall not constitute notice to the Ceding Company for the purposes of this Section 11.01) to:

 

Olshan
Frome Wolosky LLP

1325 Avenue of the Americas

New York, New York 10019

Attention:         Steve Wolosky 

  Michael
R. Neidell 

Email:                SWolosky@olshanlaw.com 

  MNeidell@olshanlaw.com

 

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to
the Reinsurer:

 

StarStone
National Insurance Company

412 Mt. Kemble Avenue

Morristown, New Jersey 07960

Attention:         Legal Department 

Email:                Legalnotices@corespecialty.com

 

with
a copy (which shall not constitute notice to the Reinsurer for the purposes of this Section 11.01) to:

 

Skadden,
Arps, Slate, Meagher & Flom LLP

One Manhattan West

New York, New York 10001

Attention:         Todd E. Freed 

   Jon
A. Hlafter 

   Patrick
J. Lewis 

Email:                todd.freed@skadden.com 

   jon.hlafter@skadden.com 

   patrick.lewis@skadden.com

 

Section 11.02         Entire
Agreement. This Agreement, the Master Transaction Agreement and the Ancillary Agreements constitute the entire agreement between
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, except for the Confidentiality Agreement which will remain in full force and effect as specified in the
Master Transaction Agreement.

 

Section 11.03         Governing
Law, etc.

 

(a)            This
Agreement, and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arising out of or relating
to this Agreement or the negotiation, execution and delivery or performance of this Agreement shall be governed by and construed in accordance
with the Laws of the State of Delaware, without respect to its applicable principles of conflicts of laws that might require the application
of the laws of another jurisdiction.

 

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(b)            EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY BE BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY FOR ANY DISPUTE BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH, TERMINATION
OR VALIDITY THEREOF OR ANY TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NEITHER THE
OTHER PARTY NOR ITS REPRESENTATIVES, AGENTS OR ATTORNEYS HAVE REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS OF THIS SECTION 11.03. ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

 

Section 11.04         Successors
and Assigns. Neither this Agreement nor any of the rights, interests or obligations under it may be directly or indirectly assigned,
delegated, sublicensed or transferred by either of the parties, in whole or in part, to any other Person (including any bankruptcy trustee)
by operation of law or otherwise, whether voluntarily or involuntarily, without the prior written consent of the other party, and any
attempted or purported assignment in violation of this Section 11.04 will be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties and their respective heirs, executors,
administrators, successors, legal representatives and permitted assigns. Notwithstanding this Section 11.04, the Reinsurer
may subcontract for the performance of Administrative Services in accordance with Section 5.12.

 

Section 11.05         Dispute
Resolution.

 

(a)            Other
than any dispute involving both the Master Transaction Agreement and this Agreement, which shall be resolved in accordance with Section 2.11
or Article IX of the Master Transaction Agreement, as applicable, any and all disputes between the parties arising hereunder
shall be submitted for final and binding arbitration conducted by an arbitration panel (the “Panel”). The Panel shall
consist of an umpire and two (2) arbitrators. Any such arbitration shall be submitted and governed by the Procedures for the Resolution
of U.S. Insurance and Reinsurance Disputes, Neutral Panel Version, dated April 2004 (the “Procedures”), developed
by the Insurance and Reinsurance Dispute Resolution Task Force, subject to the following modifications:

 

(i)            Qualifications
of the arbitrators and umpires shall be in accordance with Alternative Section 6.3 of the Procedures, except that other professionals
who have worked for at least ten (10) years for an insurer or reinsurer shall also be qualified to serve as an arbitrator or umpire.

 

(ii)            The
parties hereby designate the arbitration list maintained by ARIAS (U.S.) as the list to be used in Section 6.4(a) of the Procedures.

 

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(iii)            Unless
otherwise mutually agreed, the members of the Panel shall be impartial and disinterested. The members of the Panel may not be: (A) in
the control of any party or any of its Affiliates; (B) a former director or officer of any party or any of its Affiliates; or (C) a
likely witness in the arbitration. The requirement of impartiality includes a requirement that all members of the Panel shall have the
same obligation to approach the Panel’s duties and decisions with fairness and without consideration for the fact that Panel members
may have been appointed by one of the parties. The requirement of impartiality does not mean that any arbitrator can have no previous
knowledge of or experience with respect to issues involved in the dispute.

 

(iv)            The
first sentence of Section 10.3 of the Procedures shall be replaced by the following sentence: “The Panel shall require that
each party submit concise written statements of position, including summaries of the facts and evidence a party intends to present, discussion
of the applicable law and the basis for the requested award or denial of relief sought.”

 

(v)             Section 11.2
of the Procedures shall be replaced by the following provision: “Within such time periods and through a procedure determined by
the Panel, the Parties may propound discovery seeking disclosure of such information or documents relevant to the dispute or necessary
for the proper resolution of the dispute.”

 

(vi)            Position
statements may be amended at any reasonable time, but not later than the close of discovery, without a showing to the Panel that the
amending party could not reasonably have raised the new claim or issue at an earlier time.

 

(vii)           The
Panel shall hold an evidentiary hearing, if it deems that one is necessary, within one (1) year of the arbitration demand, unless
the parties jointly otherwise agree or the Panel determines that more time is needed to hold an evidentiary hearing; provided that the
failure of the Panel to meet this deadline shall not constitute a defense or objection to the enforcement of its award. Should a party
seek a reasonable extension to this time frame for good cause shown, the other party’s agreement shall not be unreasonably withheld.

 

(viii)          To
the extent permitted by Law, the Panel shall have the authority to issue subpoenas and other orders to enforce its decisions.

 

(ix)            The
Panel may award reasonable attorneys’ fees and arbitration costs to the prevailing party, as determined by the Panel.

 

(x)              Section 14.3
of the Procedures shall be replaced by the following provision: “The Panel shall make a decision and issue an award with regard
to the terms expressed in this Agreement and the custom and practice of the property and casualty insurance and reinsurance industry.
The Panel shall not be obligated to follow the strict rules of law and evidence.”

 

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(b)            Seat
of Arbitration. The arbitration shall be held, and the award shall be rendered, in New York, New York, unless the parties mutually
agree in writing to a different location.

 

(c)            Confirmation.
Either party may apply to a court of competent jurisdiction, and any court where a party or its assets are located (to whose jurisdiction
the parties consent for the purposes of enforcing and executing upon the award, and which shall include the New York Courts as defined
in Section 11.05(d)) for an order confirming any award of the Panel, or executing upon any such award. If the application
for confirmation or execution is contested and a judgment is issued confirming or executing upon the award, then the party against whom
confirmation or execution is sought shall pay the attorneys’ fees incurred by the party who applied for the confirmation or execution
and all court costs of any such proceeding.

 

(d)            Other
Relief from a Court of Law. Nothing herein shall be construed to prevent any participating party from applying to a court of competent
jurisdiction to (x) aid in compelling arbitration or (y) issue a temporary restraining order or other interim equitable relief
to maintain the “status quo” of the parties participating in the arbitration pending the decision and award by the Panel.
In any such action, (i) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and
venue of the Federal Courts of the United States and State Courts of the Southern District of New York (the “New York Courts”);
(ii) each party irrevocably waives, to the fullest extent it may effectively do so, any objection, including any objection to the
laying of venue or based on the grounds of forum non conveniens or any right of objection to jurisdiction on account of its place
of incorporation or domicile, which it may now or hereafter have to the bringing of any such action or proceeding in any New York Court;
(iii) each of the parties irrevocably consents to service of process in the manner provided for notices in Section 11.01,
or in any other manner permitted by applicable Law; and (iv) EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY.

 

(e)            Consolidated
Proceedings. The parties consent that any pending or contemplated arbitration hereunder may be consolidated with any prior arbitration
arising under this Section 11.05 for the purposes of efficiency and to avoid the possibility of inconsistent awards. An application
for such consolidation may be made by either party to this Agreement to the Panel for the prior arbitration. The Panel to the prior arbitration
shall, after providing all interested parties the opportunity to comment on such application, order that any such pending or contemplated
arbitration be consolidated into a prior arbitration if it determines that: (i) the issues in the arbitrations involve common questions
of law or fact; (ii) no party to either arbitration shall be prejudiced, whether by delay or otherwise, by the consolidation; (iii) any
party to the pending or contemplated arbitration that did not join an application for consolidation, or does not consent to such an application,
is sufficiently related to the parties in the prior arbitration that their interests were sufficiently represented in the appointment
of the tribunal for the prior arbitral tribunal; and (iv) consolidation would be more efficient than separate arbitral proceedings.

 

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Section 11.06         Specific
Performance. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at law
in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached
or threatened to be breached and that money damages or other legal remedies would not be an adequate remedy for any such failure to perform
or breach. It is accordingly agreed that, without posting bond or other undertaking, the parties shall be entitled to injunctive or other
equitable relief to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of
this Agreement in any court of competent jurisdiction, this being in addition to any other remedy to which they are entitled at law or
in equity. In the event that any such action is brought in equity to enforce the provisions of this Agreement, no party will allege,
and each party hereby waives the defense or counterclaim, that there is an adequate remedy at law. The parties further agree that (a) by
seeking any remedy provided for in this Section 11.06, a party shall not in any respect waive its right to seek any other
form of relief that may be available to such party under this Agreement and (b) nothing contained in this Section 11.06
shall require any party to institute any action for (or limit such party’s right to institute any action for) specific performance
under this Section 11.06 before exercising any other right under this Agreement.

 

Section 11.07          Severability;
Amendment; Modification; Waiver.

 

(a)            The
provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any
circumstance, is found by a court or other Governmental Body of competent jurisdiction to be invalid or unenforceable, the remainder
of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as would be enforceable.

 

(b)            Any
provision of this Agreement may be amended, modified or waived if, and only if, such amendment, modification or waiver is in writing
and signed, in the case of an amendment or modification, by the parties, or in the case of a waiver, by the party against whom the waiver
is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.

 

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Section 11.08        Counterparts.
This Agreement may be executed in one or more counterparts, each of which will be deemed to constitute an original, but all of which
shall constitute one and the same agreement, and may be delivered by scanned image or other electronic means, including files in .pdf
or .jpeg, intended to preserve the original graphic or pictorial appearance of a document. A signature delivered by facsimile or other
electronic transmission (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com)
will be considered an original signature of such party for all purposes.

 

Section 11.09         No
Third Party Beneficiaries. Nothing expressed or implied in this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities upon any Person other than the parties and their respective heirs, executors, administrators, successors, legal representatives
and permitted assigns.

 

Section 11.10         Incontestability.
In consideration of the mutual covenants and agreements contained herein, each party does hereby agree that this Agreement, and each
and every provision hereof, is and shall be enforceable by and between them according to its terms, and each party does hereby agree
that it shall not, directly or indirectly, contest the validity or enforceability hereof.

 

[The
remainder of this page is intentionally left blank.]

 

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IN
WITNESS WHEREOF, each of the Ceding Companies and the Reinsurer have caused this Agreement to be signed by their respective duly authorized
officers, all as of the date first written above.

 

	 	HALLMARK
    SPECIALTY INSURANCE COMPANY
	 	 	 
	 	By:	/s/
    Christopher J. Kenney
	 	 	Name:	Christopher
    J. Kenney
	 	 	Title:	Chief
    Financial Officer
	 	 	 
	 	AMERICAN
    HALLMARK INSURANCE COMPANY OF TEXAS
	 	 	 
	 	By:	/s/
    Christopher J. Kenney
	 	 	Name:	Christopher
    J. Kenney
	 	 	Title:	Chief
    Financial Officer
	 	 	 
	 	HALLMARK
    INSURANCE COMPANY
	 	 	 
	 	By:	/s/
    Christopher J. Kenney
	 	 	Name:	Christopher
    J. Kenney
	 	 	Title:	Chief
    Financial Officer
	 	 	 
	 	HALLMARK
    NATIONAL INSURANCE COMPANY
	 	 	 
	 	By:	/s/
    Christopher J. Kenney
	 	 	Name:	Christopher
    J. Kenney
	 	 	Title:	Chief
    Financial Officer
	 	 	 
	 	STARSTONE
    NATIONAL INSURANCE COMPANY
	 	 	 
	 	By:	/s/
    Robert Kuzloski
	 	 	Name:	Robert
    Kuzloski
	 	 	Title:	Secretary

 

[Signature
Page to Unearned Premium and Prospective Quota Share Reinsurance Agreement]EX-10.1

 Exhibit 10.1 

AGIOS PHARMACEUTICALS, INC. 

Amended and Restated Severance Benefits Plan 

Effective October 6, 2022 

1. Establishment of Plan. Agios Pharmaceuticals, Inc., a Delaware corporation (the “Company”), originally established this
plan effective April 22, 2016, and has amended and restated this plan effective as of the date set forth above, as an unfunded severance benefits plan (the “Plan”) that is intended to be a welfare benefit plan within the meaning of
Section 3(1) of ERISA. The Plan is in effect for Covered Employees who experience a Covered Termination occurring after the Effective Date and before the termination of this Plan. 

2. Purpose. The purpose of the Plan is to establish the conditions under which Covered Employees will receive the severance benefits
described herein if employment with the Company (or its successor in a Change of Control (as defined below)) terminates under the circumstances specified herein. The severance benefits paid under the Plan are intended to assist employees in making a
transition to new employment and are not intended to be a reward for prior service with the Company. 
 3. Definitions. For purposes
of this Plan, 
 (a) “Base Salary” shall mean, for any Covered Employee, such Covered Employee’s base
rate of pay as in effect immediately before a Covered Termination (or prior to the Change of Control, if greater) and exclusive of any bonuses, overtime pay, shift differentials, “adders,” any other form of premium pay, or other forms of
compensation. 
 (b) “Benefits Continuation” shall have the meaning set forth in Section 8 hereof. 

(c) “Board” shall mean the Board of Directors of the Company. 

(d) “Bonus” shall mean the target annual incentive bonus for the bonus year in which the termination occurs
(or for the year in which the Change of Control occurs, if greater), that the Covered Employee would have been eligible to earn for such year if the Covered Employee had remained employed with the Company. 

(e) “C-level Employees” shall mean the Company’s Chief Executive
Officer and any other Company employee with a job title above Senior Vice President. 

 (f) “Cause” for termination shall mean: (A) a finding
by the Board, in its reasonable discretion, that (i) the Covered Employee committed an intentional act or acted with gross negligence that has materially injured the business of the Company, or (ii) the Covered Employee has refused or
failed to follow lawful directions of the Board or the appropriate individual to whom the Covered Employee reports; or (iii) the Covered Employee has willfully neglected his or her duties for the Company; (B) the conviction of the Covered
Employee, or the entry of a pleading of guilty or nolo contendere by the Covered Employee to, any crime involving moral turpitude or any felony; or (C) a material breach of any agreement between the Covered Employee and the Company; provided,
however, that no event or condition described in clauses (A) or (C) shall constitute Cause unless the Board gives the Covered Employee written notice of the grounds for termination and provides the Covered Employee fifteen (15) days to
correct (if susceptible to correction, as determined in the sole discretion of the Board) such grounds, and the Covered Employee fails to make such correction. 

(g) “Change of Control” shall mean: 

(A) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, or the “Exchange Act”) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) 50% or more of either (x) the then-outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (y) the combined voting power of the
then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition directly from the Company or (2) any acquisition by any entity pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection
(C) of this definition; or 
 (B) a change in the composition of the Board that results in the Continuing Directors (as
defined below) no longer constituting a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who
was a member of the Board on the Effective Date or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to
the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose
initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other
than the Board; or 

  
 2 

 (C) the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of
the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets
either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 50% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or 

(D) the liquidation or dissolution of the Company. 

Notwithstanding the foregoing, no event shall constitute a Change of Control unless such event also constitutes a “change in control event” within
the meaning of Treasury Regulation Section 1.409A-3(i)(5)(i). 
 (h)
“Change of Control Termination” shall mean a termination of the Covered Employee’s employment by the Company without Cause or by the Covered Employee for Good Reason, in either case within the eighteen (18) months
following a Change of Control. 
 (i) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act.

 (j) “Code” shall mean the Internal Revenue Code of 1986, as amended. 

(k) “Company” shall mean Agios Pharmaceuticals, Inc. or, following a Change of Control, any successor thereto.

  
 3 

 (l) “Covered Employees” shall mean all Company employees
who are (A) C-level Employees, (B) Senior Vice Presidents or (C) otherwise designated by the Board or an authorized committee of the Board to be a Covered Employee under this Plan, in each case
which person experiences a Covered Termination and which person is not designated as ineligible to receive severance benefits under the Plan as provided in Section 5 hereof. 

(m) “Covered Termination” shall mean a (i) Non-Change of Control
Termination, (ii) Change of Control Termination or (iii) solely with respect to New Hire Equity Awards as set forth in Section 9(c), a termination of the Covered Employee’s employment due to death or Disability. 

(n) “Disability” shall have the same meaning as applies for purposes of Section 409A of the Code. 

(o) “Effective Date” shall mean October 6, 2022. 

(p) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. 

(q) “Good Reason” shall mean the occurrence of any of the following events without the Covered Employee’s
prior written consent: (A) a material diminution in the Covered Employee’s base compensation; (B) a material diminution in the Covered Employee’s authority, duties or responsibilities (this determination will include an analysis
of whether the Covered Employee maintains at least the same level, scope and type of duties and responsibilities with respect to the management, strategy, operations and business of the Company); (C) a material change in geographic location at which
the Covered Employee performs services (if the Covered Employee’s new one-way commute is more than thirty five (35) miles greater than the Covered Employee’s
one-way commute prior to the change in the Covered Employee’s principal work location, regardless of whether the Covered Employee receives an offer of relocation benefits, such change shall be deemed
material hereunder) or (D) a material breach by the Company of this Plan or of any agreement to which the Company and the Covered Employee are parties; 

provided, however, that no such event or condition shall constitute Good Reason unless (x) the Covered
Employee gives the Company a written notice of termination for Good Reason not more than 30 days after the initial existence of the condition, (y) the grounds for termination (if susceptible to correction) are not corrected by the Company
within 30 days of its receipt of such notice and (z) the Covered Employee’s termination of employment occurs within two months following the Company’s receipt of such notice. 

  
 4 

 (r) “New-Hire Equity
Award” shall mean any equity award granted after the Effective Date to the Covered Employee by the Company in connection with such Covered Employee’s commencement of employment with the Company and which equity award vests solely based
on the continued performance of services. 
 (s) “Non-Change of Control
Termination” shall mean a termination of the Covered Employee’s employment by the Company without Cause or by the Covered Employee for Good Reason prior to, or more than eighteen (18) months following, a Change of Control. 

(t) “Participants” shall mean Covered Employees. 

(u) “Plan Administrator” shall have the meaning set forth in Section 15 hereof. 

(v) “Release” shall have the meaning set forth in Section 6 hereof. 

(w) “Release Effective Date” shall have the meaning set forth in Section 13(c)(i) hereof. 

(x) “Severance Pay” shall have the meaning set forth in Section 7 hereof. 

(y) “Severance Period” shall mean the applicable severance period determined under the chart in Section 7
hereof based on the type of Covered Termination and the Title/ Role of the Covered Employee. 
 4. Coverage. A Covered Employee may
be entitled to receive severance benefits under the Plan if such employee experiences a Covered Termination. In order to receive severance benefits under the Plan, Covered Employees must meet the eligibility and other requirements provided below in
Sections 5 and 6 of the Plan. 
 5. Eligibility for Severance Benefits. The following employees will not be eligible for
severance benefits, except to the extent specifically otherwise set forth in the Plan or determined by the Plan Administrator: (a) an employee who is terminated for Cause; (b) an employee who retires; (c) except solely with respect to
New Hire Equity Awards as set forth in Section 9(c) hereof, an employee who terminates employment as a result of a Disability, or dies; (d) an employee who voluntarily terminates his or her employment, except in the case of a Covered
Termination for Good Reason; and (e) an employee who promptly becomes employed by another member of the controlled group of entities of which the Company (or its successor in the Change of Control) is a member as defined in Sections 414(b) and
(c) of Code. 

  
 5 

 6. Release; Timing of Severance Benefits. Receipt of any severance benefits under the
Plan requires that the Covered Employee: (a) comply with the provisions of any applicable non-competition, non-solicitation, or other restrictive covenant agreement
and any other obligations to the Company; and (b) execute and deliver a waiver and release, pursuant to the Company’s then-current standard form of waiver and release agreement, under which the Covered Employee releases and discharges the
Company and its affiliates from and on account of any and all claims that relate to or arise out of the employment relationship between the Company and the Covered Employee (the “Release”) which Release becomes binding within 60
days following the Covered Employee’s termination of employment (or such shorter period of time as may be provided in the Release). The Release shall not (x) require the Covered Employee to release claims or rights (I) to Severance
Pay, Benefits Continuation or other payments or benefits under this Plan, (II) under any equity award or employee benefit plan or (III) to indemnification or insurance coverage or (y) impose restrictive covenants or other obligations
on the Covered Employee broader than those set forth in the applicable non-competition, non-solicitation or other restrictive covenant agreement executed by the Covered
Employee as a condition of the Covered Employee’s employment with the Company. 
 7. Cash Severance. A Covered Employee who
experiences a Non-Change of Control Termination or a Change of Control Termination, as applicable, shall be entitled to the cash severance benefits under this Plan as set forth in the table below based on the
Covered Employee’s title/role, with (a) the Base Salary portion of the cash severance being paid in accordance with the Company’s regular payroll practices for the applicable Severance Period set forth below, commencing on the first
payroll period occurring after the Release Effective Date (with the first installment including any portion of the Base Salary accrued between the termination date and such first payroll period) and (b) the Bonus portion of the cash severance
being paid lump sum on the first payroll date after the Release Effective Date (collectively, “Severance Pay”). 
  

					
	 Title/ Role of Covered Employee
	  	 Non-Change of

Control Termination

Severance Period
	  	 Change of Control

Termination
 Severance
Period

			
	Chief Executive Officer	  	 Twelve (12) months
 Base Salary and 1x
Bonus
	  	Twenty-four (24) months Base Salary and 2x Bonus
			
	C-level Employees, other than the Chief Executive Officer	  	Twelve (12) months Base Salary and 1x Bonus	  	Twelve (12) months Base Salary and 1x Bonus
			
	Covered Employees, other than the Chief Executive Officer and C-level Employees	  	Nine (9) months Base Salary and 0.75x Bonus	  	Nine (9) months Base Salary and 0.75x Bonus

  
 6 

 For purposes of this Section 7 and Section 8 below, a Covered Employee’s title/role shall be
such employee’s title/role immediately prior to the Covered Termination or, if such employee’s title/role was changed in connection with the Change of Control, immediately prior to the Change of Control. 

8. Benefits Continuation. In addition to the Severance Pay, a Covered Employee who experiences a
Non-Change of Control Termination or a Change of Control Termination, as applicable, shall be entitled to Company contributions to the cost of COBRA coverage for health and dental insurance on behalf of the
Covered Employee and any applicable dependents for no longer than the Covered Employee’s applicable Severance Period if the Covered Employee elects COBRA coverage, and only so long as such coverage continues in force. Such costs shall be
determined on the same basis as the Company’s contribution to Company-provided health and dental insurance coverage in effect for an active employee with the same coverage elections; provided that if the Covered Employee commences new
employment and is eligible for a new group health plan, the Company’s continued contributions toward health and dental coverage shall end when the new employment begins (“Benefits Continuation”). The Company’s payment of
contributions (but not the Covered Employee’s eligibility for COBRA coverage at his or her own expense) shall cease if paying the contributions is deemed reasonably likely to result in penalties on the Company or other participants in the
health and dental plans or in taxation of any health or dental plan participant (other than taxation of the Covered Employee up to the value of the premiums paid). The Company’s payments pursuant to the Benefits Continuation shall be paid at
the same time as premium payments are made by other participants in the Company’s health and dental insurance plans with the same coverage. 

9. Equity Awards. 
 (a)
Non-Change of Control Termination. In the case of a Non-Change of Control Termination, the impact of such termination on any then outstanding and unvested equity
award granted by the Company (or any affiliate thereof) to the Covered Employee shall be dictated by the terms of the equity award agreement and the equity plan under which the award was granted; provided that, solely with respect to New-Hire Equity Awards, the terms set forth in Section 9(c) hereof shall also apply. Any unvested equity awards that do not vest pursuant to the foregoing sentence shall be forfeited immediately and
automatically to the Company without the payment of any consideration to the Covered Employee, effective upon such Non-Change of Control Termination. 

(b) Change of Control Termination. In the case of a Change of Control Termination, (A) any equity awards that vest solely based on
the continued performance of services shall vest and become exercisable and non-forfeitable upon such termination and (B) any equity awards that vest based on the achievement of one or more performance
metrics shall be treated in accordance with the terms of the applicable equity award agreement or the plan 

  
 7 

 
under which such award was granted, or otherwise as determined by the Board, provided in each case that the vesting of any awards in connection with a Change of Control Termination shall be
subject to the Covered Employee’s compliance with Section 6 hereof. Any unvested equity awards that do not vest pursuant to the foregoing sentence shall be forfeited immediately and automatically to the Company without the payment of any
consideration to the Covered Employee, effective upon the Change of Control Termination. 
 (c) Treatment of New-Hire Equity Awards. Solely with respect to any then outstanding and unvested New-Hire Equity Awards, in the case of (A) a
Non-Change of Control Termination or (B) a Covered Employee who terminates employment as a result of a Disability or death prior to a Change of Control, (i) the portion of such New-Hire Equity Awards that would have vested during the one-year period following such termination had such termination not occurred will vest and become exercisable and non-forfeitable upon such termination and (ii) the portion of any New-Hire Equity Awards in the form of stock options that are vested as of the date of termination of
employment (after taking into account the foregoing clause (i)) shall remain exercisable for a period of twelve (12) months following the termination of employment, subject in each case to the Covered Employee’s compliance with
Section 6 hereof (with the Release, in the case of a termination on account of death or Disability, to be executed by the guardian, beneficiary or estate, as applicable). Any unvested equity awards that do not vest pursuant to the foregoing
sentence shall be forfeited immediately and automatically to the Company without the payment of any consideration to the Covered Employee, effective upon such termination. 

10. Recoupment. If a Covered Employee fails to comply with the terms of the Plan, including the provisions of Section 6 above, the
Company may require payment to the Company of any payments or benefits provided in Sections 7, 8 and 9 above that the Covered Employee has already received to the extent permitted by applicable law and with the “value” determined in the
sole discretion of the Plan Administrator. Payment is due in cash or by check within 10 days after the Company provides notice to a Covered Employee that it is enforcing this provision. Any benefits described in Sections 7, 8 and 9 not yet received
by such Covered Employee will be immediately forfeited. 
 11. Death. If a Participant dies after the date of his or her Covered
Termination but before all payments or benefits to which such Participant is entitled pursuant to the Plan have been paid or provided, payments will be made to any beneficiary designated by the Participant prior to or in connection with such
Participant’s Covered Termination or, if no such beneficiary has been designated, to the Participant’s estate. For the avoidance of doubt, if a Participant dies during such Participant’s applicable Severance Period, Benefits
Continuation will continue for the Participant’s applicable dependents for the remainder of the Participant’s Severance Period. 

  
 8 

 12. Withholding. The Company may withhold from any payment or benefit under the Plan:
(a) any federal, state, or local income or payroll taxes required by law to be withheld with respect to such payment; (b) such sum as the Company may reasonably estimate is necessary to cover any taxes for which the Company may be liable
and which may be assessed with regard to such payment; and (c) such other amounts as appropriately may be withheld under the Company’s payroll policies and procedures from time to time in effect. 

13. Section 409A. It is intended that the payments and benefits provided under this Plan will be exempt from the
application of Section 409A of the Code, and the guidance issued thereunder (“Section 409A”). The Plan shall be interpreted consistent with this intent to the maximum extent permitted and generally, with the
provisions of Section 409A. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan providing for the payment of any amounts or benefits upon or following a termination of employment (which
amounts or benefits constitute nonqualified deferred compensation within the meaning of Section 409A) unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such
provision of this Plan, references to a “Covered Termination,” “termination,” “termination of employment” or like terms shall mean “separation from service”. Neither the Participant nor the Company shall have
the right to accelerate or defer the delivery of any payment or benefit except to the extent specifically permitted or required by Section 409A. 

Notwithstanding the foregoing, to the extent the severance payments or benefits under this Plan are subject to Section 409A, the
following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided to Participants under this Plan: 

(a) Each installment of the payments and benefits provided under this Plan will be treated as a separate “payment”
for purposes of Section 409A. Whenever a payment under this Plan specifies a payment period with reference to a number of days (e.g., “payment shall be made within 10 days following the date of termination”), the actual date of
payment within the specified period shall be in the Company’s sole discretion. Notwithstanding any other provision of this Plan to the contrary, in no event shall any payment under this Plan that constitutes
“non-qualified deferred compensation” for purposes of Section 409A be subject to transfer, offset, counterclaim or recoupment by any other amount unless otherwise permitted by Section 409A.

 (b) Notwithstanding any other payment provision herein to the contrary, while the Company or appropriately-related
affiliates is publicly-traded and if a Covered Employee is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B) with respect to such entity, then each of the
following shall apply: 
 (i) With regard to any payment that is considered
“non-qualified deferred compensation” under Section 409A payable on account of a “separation from service,” no payment shall be made before the date which is the earlier of
(A) the day following the expiration of the six month period measured from the 

  
 9 

 
date of such “separation from service” of the Covered Employee, and (B) the date of the Covered Employee’s death (the “Delay Period”) to the extent required
under Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this provision (whether otherwise payable in a single sum or in installments in the absence of such delay) shall be paid to or for the Covered
Employee in a lump sum, and all remaining payments due under this Plan shall be paid or provided for in accordance with the normal payment dates specified herein; and 

(ii) To the extent that any benefits to be provided during the Delay Period are considered
“non-qualified deferred compensation” under Section 409A payable on account of a “separation from service,” and such benefits are not otherwise exempt from Section 409A, the
Covered Employee shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse the Covered Employee, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would
otherwise have been provided by the Company at no cost to the Covered Employee, the Company’s share of the cost of such benefits upon expiration of the Delay Period. Any remaining benefits shall be reimbursed or provided by the Company in
accordance with the procedures specified in this Plan. 
 (c) To the extent that severance benefits pursuant to this Plan are
conditioned upon a Release, the Covered Employee shall not be entitled to such payments and benefits unless and until such release is signed and delivered (and no longer subject to revocation, if applicable) within 60 days following the date of the
termination of the Covered Employee’s employment with the Company (or such shorter period as the Company may specify at the time). If the Release is no longer subject to revocation as provided in the preceding sentence, then the following shall
apply: 
 (i) To the extent any severance benefits to be provided are not
“non-qualified deferred compensation” for purposes of Section 409A, then such benefits shall commence upon the first scheduled payment date whose cutoff date is immediately after the date the
Release is executed and no longer subject to revocation (the “Release Effective Date”). The first such cash payment shall include all amounts that otherwise would have been due prior thereto under the terms of this Plan applied as
though such payments commenced immediately upon the termination of Covered Employee’s employment with the Company, and any payments made after the Release Effective Date shall continue as provided herein. The delayed benefits shall in any event
expire at the time such benefits would have expired had such benefits commenced immediately following the termination of Covered Employee’s employment with the Company. 

  
 10 

 (ii) To the extent any such severance benefits to be provided are “non-qualified deferred compensation” for purposes of Section 409A, then the Release must become irrevocable within 60 days of the date of termination (or such shorter period as the Company may
specify at the time) and benefits shall be made or commence upon the date provided in Section 6, provided that if the 60th day following the termination of the Covered Employee’s employment with the Company falls in the calendar year
following the calendar year containing the date of termination, the benefits will be made no earlier than the first business day of that following calendar year. The first such cash payment shall include all amounts that otherwise would have been
due prior thereto under the terms of this Plan had such payments commenced immediately upon the termination of Covered Employee’s employment with the Company, and any payments made after the first such payment shall continue as provided herein.
The delayed benefits shall in any event expire at the time such benefits would have expired had such benefits commenced immediately following the termination of Covered Employee’s employment with the Company. 

(d) The Company makes no representations or warranties and shall have no liability to any Participant or any other person,
other than with respect to payments made by the Company in violation of the provisions of this Plan, if any provisions of or payments under this Plan are determined to constitute deferred compensation subject to Section 409A of the Code but not
to satisfy the conditions of that section. 
 14. Section 280G. Notwithstanding any other provision of this Plan,
except as set forth in Section 14(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply: 

(a) The Company shall not be obligated to provide to the Covered Employee any portion of any “Contingent Compensation Payments” (as
defined below) that the Covered Employee would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the Covered Employee. For purposes
of this Section 14, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation
Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated
Amount.” 
 (b) Notwithstanding the provisions of Section 14(a), no such reduction in Contingent Compensation Payments shall be
made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) 100% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Covered Employee if the 

  
 11 

 
Eliminated Payments (determined without regard to this sentence) were paid to the Covered Employee (including state and federal income taxes on the Eliminated Payments, the excise tax imposed by
Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Covered Employee’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The
override of such reduction in Contingent Compensation Payments pursuant to this Section 14(b) shall be referred to as a “Section 14(b) Override.” For purpose of this paragraph, if any federal or state income
taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law. 

(c) For purposes of this Section 14 the following terms shall have the following respective meanings: 

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company
or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code. 

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that
is made or made available (under this Agreement or otherwise) to a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a
Change in Ownership or Control of the Company. 
 (d) Any payments or other benefits otherwise due to the Covered Employee following a
Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 14(d).
Within thirty (30) days after each date on which the Covered Employee first become entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and
notify the Covered Employee (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 14(b)
Override is applicable. Within thirty (30) days after delivery of such notice to the Covered Employee, the Covered Employee shall deliver a response to the Company (the “Covered Employee Response”) stating either (A) that
the Covered Employee agrees with the Company’s determination pursuant to the preceding sentence or (B) that the Covered Employee disagrees with such determination, in which case the Covered Employee shall set forth (x) which Potential
Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 14(b) Override is applicable. In the event that the Covered Employee fails to deliver a Covered Employee
Response on or before the required date, the Company’s initial determination shall be final. If the Covered Employee states in the Covered Employee Response 

  
 12 

 
that the Covered Employee agrees with the Company’s determination, the Company shall make the Potential Payments to the Covered Employee within three (3) business days following
delivery to the Company of the Covered Employee Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Covered Employee states
in the Covered Employee Response that the Covered Employee disagree with the Company’s determination, then, for a period of sixty (60) days following delivery of the Covered Employee Response, the Covered Employee and the Company shall use
good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the
Covered Employee Response, make to the Covered Employee those Potential Payments as to which there is no dispute between the Company and the Covered Employee regarding whether they should be made (except for any such Potential Payments which are not
due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute. 

(e) The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined by the Company by determining the
“Contingent Compensation Payment Ratio” (as defined below) for each Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the Contingent Compensation Payment with the highest
Contingent Compensation Payment Ratio. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be reduced based on the time of payment of such Contingent Compensation
Payments with amounts having later payment dates being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and the same time of payment, such Contingent Compensation Payments shall be reduced on a
pro rata basis (but not below zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term “Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the
value of the applicable Contingent Compensation Payment that must be taken into account by the Covered Employee for purposes of Section 4999(a) of the Code, and the denominator of which is the actual amount to be received by the Covered
Employee in respect of the applicable Contingent Compensation Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the payment is made or the payment vests
is accelerated, the denominator shall be determined by reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of accelerated payments set forth in Treasury
Regulation Section 1.280G-1 Q/A-24(b) or (c)). 

  
 13 

 (f) The provisions of this Section 14 are intended to apply to any and all payments or
benefits available to the Covered Employee under this Plan or any other agreement or plan of the Company under which the Covered Employee receives Contingent Compensation Payments. 

15. Plan Administration. 

(a) Plan Administrator. The Plan Administrator shall be the Board or a committee thereof designated by the Board (the
“Committee”); provided, however, that the Board or such Committee may in its sole discretion appoint a new Plan Administrator to administer the Plan following a Change of Control. The Plan Administrator shall also serve as the Named
Fiduciary of the Plan under ERISA. The Plan Administrator shall be the “administrator” within the meaning of Section 3(16) of ERISA and shall have all the responsibilities and duties contained therein. 

The Plan Administrator can be contacted at the following address: 

Agios Pharmaceuticals, Inc. 

88 Sidney Street 

Cambridge, MA 02139-4169 

(b) Decisions, Powers and Duties. The general administration of the Plan and the responsibility for carrying out its
provisions shall be vested in the Plan Administrator. The Plan Administrator shall have complete discretionary authority to administer the Plan in all details and such powers and authority as are necessary to discharge such duties and
responsibilities which also include, but are not limited to, interpretation and construction of the Plan, the determination of all questions of fact, including, without limit, eligibility, participation and benefits, the resolution of any
ambiguities and all other related or incidental matters, and such duties and powers of the plan administration which are not assumed from time to time by any other appropriate entity, individual or institution. The Plan Administrator may adopt rules
and regulations of uniform applicability in its interpretation and implementation of the Plan. The Plan Administrator may delegate any of its duties hereunder to such person or persons from time to time as it may designate. 

The Plan Administrator shall discharge its duties and responsibilities and exercise its powers and authority in its sole
discretion and in accordance with the terms of the controlling legal documents and applicable law, and its actions and decisions that are not arbitrary and capricious shall be binding on any employee, and employee’s spouse or other dependent or
beneficiary and any other interested parties whether or not in being or under a disability. The Plan Administrator is empowered, on behalf of the Plan, to engage accountants, legal counsel and such other personnel as it deems necessary or advisable
to assist it in the performance of its duties under the Plan. The functions of any such persons engaged by the Plan Administrator shall be limited to the specified services and duties for which they are engaged, and such persons shall have no other
duties, obligations or responsibilities under the Plan. Such persons shall exercise no discretionary authority or discretionary control respecting the management of the Plan. 

  
 14 

 The Company shall promptly reimburse the Plan Administrator or the Committee
for any expenses incurred in good faith in the course of carrying out its obligations under this Plan, including, but not limited to, attorney’s fees, claims, fines, judgments, taxes, causes of action or liability and amounts paid in
settlement, actually and reasonably incurred by such Committee or Plan Administrator, unless such expense, claim, fine, judgment, taxes, cause of action, liability or amount arose from his or her gross negligence, willful neglect, willful misconduct
or willful breach of his or her fiduciary responsibilities under ERISA. 
 16. Claims, Inquiries and Appeals. 

(a) Applications for Benefits and Inquiries. Any application for benefits under or inquiries about the Plan or inquiries about present
or future rights under the Plan must be submitted to the Plan Administrator in writing, as follows: 
 Plan Administrator 

Agios Pharmaceuticals, Inc. 
 88
Sidney Street 
 Cambridge, MA 02139-4169 

(b) Denial of Claims. In the event that any application for benefits is denied in whole or in part, the Plan Administrator must notify
the applicant, in writing, of the denial of the application, and of the applicant’s right to review the denial. The written notice of denial will be set forth in a manner designed to be understood by the applicant, and will include specific
reasons for the denial, specific references to the Plan provision upon which the denial is based, a description of any information or material that the Plan Administrator needs to complete the review and an explanation of the Plan’s review
procedure, including a statement of the claimant’s right to bring a civil action under ERISA. 
 This written notice will be given to
the applicant within 15 days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional 15 days for processing the application. If
an extension of time for processing is required, written notice of the extension will be furnished to the applicant before the end of the initial 15-day period. 

This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render his or her decision on the application. If written notice of denial of the application for benefits is not furnished within the specified time, the application shall be deemed to be denied. The applicant will then be
permitted to appeal the denial in accordance with the review procedure described below. 
  

  
 15 

 (c) Request for a Review. Any person (or that person’s authorized
representative) for whom an application for benefits is denied, in whole or in part, may appeal the denial by submitting a request for a review to the Plan Administrator within 60 days after the application is denied (or deemed denied). The Plan
Administrator will give the applicant (or his or her representative) an opportunity to review pertinent documents, free of charge, in preparing a request for a review and submit written comments, documents, records and other information relating to
the claim. A request for a review shall be in writing and shall be addressed to: 
 Plan Administrator 

Agios Pharmaceuticals, Inc. 
 88
Sidney Street 
 Cambridge, MA 02139-4169 

A request for review must set forth all of the grounds on which it is based, all facts in support of the request and any other matters that
the applicant feels are pertinent. The Plan Administrator may require the applicant to submit additional facts, documents or other material as he or she may find necessary or appropriate in making his or her review. All comments or other documents
submitted by the claimant shall be taken into account, without regard to whether such information was submitted or considered in the initial benefit determination. 

(d) Decision on Review. The Plan Administrator will act on each request for review within 15 days after receipt of the request, unless
special circumstances require an extension of time (not to exceed an additional 15 days), for processing the request for a review. If an extension for review is required, written notice of the extension will be furnished to the applicant within the
initial 15-day period. The Plan Administrator will give prompt, written notice of his or her decision to the applicant. In the event that the Plan Administrator confirms the denial of the application for
benefits in whole or in part, the notice will outline, in a manner calculated to be understood by the applicant, the specific reason or reasons for the adverse determination, the specific Plan provisions upon which the decision is based, a statement
that the claimant is entitled to receive free of charge the documents and records relevant to the claim, and a statement of the claimant’s right to bring suit under ERISA. 

(e) Rules and Procedures. The Plan Administrator may establish rules and procedures, consistent with the Plan and with ERISA, as
necessary and appropriate in carrying out his or her responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who wishes to submit additional information in connection with an appeal from the denial (or deemed
denial) of benefits to do so at the applicant’s own expense, except to the extent required by ERISA. 

  
 16 

 (f) Exhaustion of Remedies; Statute of Limitations. No legal action for benefits
under the Plan may be brought until the claimant (i) has submitted a written application for benefits in accordance with the procedures described by Section 16(a) above, (ii) has been notified by the Plan Administrator that the
application is denied (or the application is deemed denied due to the Plan Administrator’s failure to act on it within the established time period), (iii) has filed a written request for a review of the application in accordance with the appeal
procedure described in Section 16(c) above and (iv) has been notified in writing that the Plan Administrator has denied the appeal (or the appeal is deemed to be denied due to the Plan Administrator’s failure to take any action on the
claim within the time prescribed by Section 16(d) above). Any legal action must be initiated within the earlier of (i) 180 days after a claimant’s receipt of an adverse decision on review or (ii) two years after the Participant’s
termination of employment. 
 (g) Indemnification. To the extent permitted by law, the Plan Administrator and all employees,
officers, directors, agents and representatives of the Company shall be indemnified by the Company and held harmless against any claims and all associated expenses of defending against such claims, resulting from any action or conduct relating to
the administration of the Plan, whether as a member of the Committee or otherwise, except to the extent that such claims arise from gross negligence, willful neglect, or willful misconduct. The Company shall advance all expenses for which a party is
indemnified under this Section 16 to such indemnified party or shall arrange for direct payment of any such expenses by the Company. 

17. Plan Not an Employment Contract. The Plan is not a contract between the Company and any employee, nor is it a condition of
employment of any employee. Nothing contained in the Plan gives, or is intended to give, any employee the right to be retained in the service of the Company, or to interfere with the right of the Company to discharge or terminate the employment of
any employee at any time and for any reason. No employee shall have the right or claim to benefits beyond those expressly provided in this Plan, if any. All rights and claims are limited as set forth in the Plan. 

18. Severability. In case any one or more of the provisions of this Plan (or part thereof) shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions hereof, and this Plan shall be construed as if such invalid, illegal or unenforceable provisions (or part thereof) never had been
contained herein. 
 19. Non-Assignability. No right or interest of any Covered
Employee in the Plan shall be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including, but not limited to, execution, levy, garnishment, attachment, pledge or bankruptcy. 

  
 17 

 20. Integration With Other Pay or Benefits Requirements. The severance payments and
benefits provided for in the Plan are the maximum benefits that the Company will pay to Covered Employees on a Covered Termination, except to the extent otherwise specifically provided in a separate agreement. To the extent that the Company owes any
amounts in the nature of severance benefits under any other program, policy or plan of the Company that is not otherwise superseded by this Plan, or to the extent that any federal, state or local law, including, without limitation, so-called “plant closing” laws, requires the Company to give advance notice or make a payment of any kind to an employee because of that employee’s involuntary termination due to a layoff, reduction
in force, plant or facility closing, sale of business, or similar event, the benefits provided under this Plan or the other arrangement shall either be reduced or eliminated to avoid any duplication of payment. The Company intends for the benefits
provided under this Plan to partially or fully satisfy any and all statutory obligations that may arise out of an employee’s involuntary termination for the foregoing reasons and the Company shall so construe and implement the terms of the
Plan. 
 21. Amendment or Termination. The Board may amend, modify, or terminate the Plan at any time in its sole discretion;
provided, however, that (a) any such amendment, modification or termination made prior to a Change of Control that adversely affects the rights of any Covered Employee shall be unanimously approved by the Board, (b) no such amendment,
modification or termination may affect the rights of a Covered Employee then receiving payments or benefits under the Plan without the consent of such person, and (c) no such amendment, modification or termination made after a Change of Control
shall be effective for eighteen (18) months. 
 22. Governing Law. The Plan and the rights of all persons under the Plan shall
be construed in accordance with and under applicable provisions of ERISA, and the regulations thereunder, and the laws of the Commonwealth of Massachusetts (without regard to conflict of laws provisions) to the extent not preempted by federal law.

  
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