Document:

Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

    

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    
    

     

    
      	 	
              

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

    

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    

    Second
Excess Reinstatement Premium Protection Reinsurance

    

    
      
        
          	
                  Reinsurers

                	 	
                  Participations

                	 
	 
      	 	 	 
	
                  ACE
      Tempest Reinsurance Ltd.

                	 	 	4.0	%
	
                  Actua
      Re Ltd.

                	 	 	37.0	 
	
                  Ariel
      Reinsurance Company Limited

                	 	 	12.0	 
	
                  DaVinci
      Reinsurance Ltd.

                	 	 	9.0	 
	
                  Hiscox
      Insurance Company (Bermuda) Limited

                	 	 	8.0	 
	
                  Renaissance
      Reinsurance, Ltd.

                	 	 	26.0	 
	
                  Torus
      Insurance (Bermuda) Limited

                	 	 	4.0	 
	 
      	 	 	 	 
	
                  Total

                	 	 	100.0	%

        

      

    

     

    
      	Page 1 of
2	
              

            

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Third
Excess Reinstatement Premium Protection Reinsurance

    

    
      
        
          	
                  Reinsurers

                	 	
                  Participations

                	 
	 
      	 	 	 
	
                  ACE
      Tempest Reinsurance Ltd.

                	 	 	4.0	%
	
                  Actua
      Re Ltd.

                	 	 	10.0	 
	
                  Allianz
      Risk Transfer AG (Bermuda Branch)

                	 	 	30.0	 
	
                  Ariel
      Reinsurance Company Limited

                	 	 	12.0	 
	
                  Hiscox
      Insurance Company (Bermuda) Limited

                	 	 	8.0	 
	
                  Platinum
      Underwriters Bermuda, Ltd.

                	 	 	22.0	 
	
                  Torus
      Insurance (Bermuda) Limited

                	 	 	4.0	 
	 
      	 	 	 	 
	
                  Through
      Aon Limited trading as Aon Benfield

                	 	 	 	 
	
                  Lloyd’s
      Underwriters Per Signing Page(s)

                	 	 	10.0	 
	 
      	 	 	 	 
	
                  Total

                	 	 	100.0	%

        

      

    

    

    Fourth Excess Reinstatement Premium Protection Reinsurance

    

    
      
        
          	
                  Reinsurers

                	 	
                  Participations

                	 
	 
      	 	 	 
	
                  Allianz
      Risk Transfer AG (Bermuda Branch)

                	 	 	100.0	%
	 
      	 	 	 	 
	
                  Total

                	 	 	100.0	%

        

      

    

    

    Fifth
Excess Reinstatement Premium Protection Reinsurance

    

    
      
        
          	
                  Reinsurers

                	 	
                  Participations

                	 
	 
      	 	 	 
	
                  Allianz
      Risk Transfer AG (Bermuda Branch)

                	 	 	100.0	%
	 
      	 	 	 	 
	
                  Total

                	 	 	100.0	%

        

      

    

     

    
      	Page 2 of
      2	
              

            

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    Table
of Contents

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Article

                                    	
                                      Page

                                    
	 
      	 
      	 
	
                                      I

                                    	
                                      Coverage

                                    	
                                      1

                                    	 
	 
      	 
      	 
      	 
	
                                      II

                                    	
                                      Commencement
      and Termination

                                    	
                                      1

                                    	 
	 
      	 
      	 
      	 
	
                                      III

                                    	
                                      Concurrency
      of Conditions

                                    	
                                      2

                                    	 
	 
      	 
      	 
      	 
	
                                      IV

                                    	
                                      Premium

                                    	
                                      3

                                    	 
	 
      	 
      	 
      	 
	
                                      V

                                    	
                                      Loss
      Notices and Settlements

                                    	
                                      3

                                    	 
	 
      	 
      	 
      	 
	
                                      VI

                                    	
                                      Late
      Payments

                                    	
                                      4

                                    	 
	 
      	 
      	
                                       
      

                                    	 
	
                                      VII

                                    	
                                      Offset
      (BRMA 36C)

                                    	
                                      5

                                    	 
	 
      	 
      	 
      	 
	
                                      VIII

                                    	
                                      Access
      to Records (BRMA 1D)

                                    	
                                      5

                                    	 
	 
      	 
      	 
      	 
	
                                      IX

                                    	
                                      Errors
      and Omissions (BRMA 14F)

                                    	
                                      5

                                    	 
	 
      	 
      	 
      	 
	
                                      X

                                    	
                                      Currency
      (BRMA 12A)

                                    	
                                      5

                                    	 
	 
      	 
      	 
      	 
	
                                      XI

                                    	
                                      Taxes
      (BRMA 50B)

                                    	
                                      5

                                    	 
	 
      	 
      	 
      	 
	
                                      XII

                                    	
                                      Federal
      Excise Tax (BRMA 17D)

                                    	
                                      6

                                    	 
	 
      	 
      	 
      	 
	
                                      XIII

                                    	
                                      Reserves

                                    	
                                      6

                                    	 
	 
      	 
      	 
      	 
	
                                      XIV

                                    	
                                      Insolvency

                                    	
                                      7

                                    	 
	 
      	 
      	 
      	 
	
                                      XV

                                    	
                                      Arbitration
      (BRMA 6J)

                                    	
                                      8

                                    	 
	 
      	 
      	 
      	 
	
                                      XVI

                                    	
                                      Service
      of Suit (BRMA 49C)

                                    	
                                      9

                                    	 
	 
      	 
      	 
      	 
	
                                      XVII

                                    	
                                      Governing
      Law (BRMA 71B)

                                    	
                                      9

                                    	 
	 
      	 
      	 
      	 
	
                                      XVIII

                                    	
                                      Notices
      and Contract Execution

                                    	
                                      9

                                    	 
	 
      	 
      	 
      	 
	
                                      XIX

                                    	
                                      Intermediary

                                    	
                                      10

                                    	 
	 
      	 
      	 
      	 
	 
      	
                                      Schedule
      A

                                    	 
      	 
	 
      	 
      	 
      	 
	 
      	
                                      Schedule
      B

                                    	 
      	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        	 	
                

              

      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    (hereinafter referred to as the
“Company”)

     

    by

     

    The
Subscribing Reinsurer(s) Executing the

    Interests
and Liabilities Agreement(s)

    Attached
Hereto

    (hereinafter referred to as the
“Reinsurer”)

    

    Article
I - Coverage

     

    By this
Contract the Reinsurer agrees to indemnify the Company for 100% of
any  reinstatement premium which the Company pays or becomes liable to
pay as a result of loss occurrences commencing during the term of this Contract
under the Second, Third, Fourth and Fifth Excess Layers of the Company’s Excess
Catastrophe Reinsurance Contract, effective July 1, 2009 (hereinafter referred
to as the “Original Contract” and described in Schedule A attached hereto),
subject to the terms, conditions and limitations set forth herein and in
Schedules A and B attached to and forming part of this Contract.

     

    Article
II - Commencement and Termination

     

    
      	
              A.

            	
              This
      Contract shall become effective at 12:01 a.m., Eastern Standard Time, July
      1, 2009, with respect to reinstatement premium payable by the Company
      under the Second, Third, Fourth and Fifth Excess Layers of the Original
      Contract as a result of losses arising out of loss occurrences commencing
      at or after that time and date, and shall remain in force until 12:01
      a.m., Eastern Standard Time, July 1,
2010.

            

    

     

    
      	
              B.

            	
              Notwithstanding
      the provisions of paragraph A above, the Company may terminate a
      Subscribing Reinsurer’s percentage share in this Contract at any time by
      giving written notice to the Subscribing Reinsurer in the event any of the
      following circumstances occur:

            

    

     

    
      	
               
      

            	
              1.

            	
              The
      Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under
      the Subscribing Reinsurer’s accounting system) at the inception of this
      Contract has been reduced by more than 20.0% of the amount of surplus (or
      the applicable equivalent) 12 months prior to that date;
  or

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      Subscribing Reinsurer’s policyholders’ surplus (or its equivalent under
      the Subscribing Reinsurer’s accounting system) at any time during the term
      of this Contract has been reduced by more than 20.0% of the amount of
      surplus (or the applicable equivalent) at the date of the Subscribing
      Reinsurer’s most recent financial statement filed with regulatory
      authorities and available to the public as of the inception of this
      Contract; or

            

    

    
       

      
        	Page 1	
                

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              3.

            	
              The
      Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
      below A- and/or Standard & Poor’s rating has been assigned or
      downgraded below BBB+; or

            

    

     

    
      	
               
      

            	
              4.

            	
              The
      Subscribing Reinsurer has become merged with, acquired by or controlled by
      any other entity or individual(s) not controlling the Subscribing
      Reinsurer’s operations previously;
or

            

    

     

    
      	
               
      

            	
              5.

            	
              A
      State Insurance Department or other legal authority has ordered the
      Subscribing Reinsurer to cease writing business;
  or

            

    

     

    
      	
               
      

            	
              6.

            	
              The
      Subscribing Reinsurer has become insolvent or has been placed into
      liquidation, receivership, supervision, administration, winding-up or
      under a scheme of arrangement, or similar proceedings (whether voluntary
      or involuntary) or proceedings have been instituted against the
      Subscribing Reinsurer for the appointment of a receiver, liquidator,
      rehabilitator, supervisor, administrator, conservator or trustee in
      bankruptcy, or other agent known by whatever name, to take possession of
      its assets or control of its operations;
or

            

    

     

    
      	
               
      

            	
              7.

            	
              The
      Subscribing Reinsurer has reinsured its entire liability under this
      Contract without the Company’s prior written consent;
  or

            

    

     

    
      	
               
      

            	
              8.

            	
              The
      Subscribing Reinsurer has ceased assuming new or renewal property or
      casualty treaty reinsurance business;
or

            

    

     

    
      	
               
      

            	
              9.

            	
              The
      Subscribing Reinsurer has hired an unaffiliated runoff claims manager that
      is compensated on a contingent basis or is otherwise provided with
      financial incentives based on the quantum of claims
  paid.

            

    

     

    
      	
              C.

            	
              If
      this Contract is terminated or expires while a loss occurrence covered
      hereunder is in progress, the Reinsurer’s liability hereunder shall,
      subject to the other terms and conditions of this Contract, be determined
      as if the entire loss occurrence had occurred prior to the termination or
      expiration of this Contract, provided that no part of such loss occurrence
      is claimed against any renewal or replacement of this
      Contract.

            

    

     

    Article
III - Concurrency of Conditions

     

    
      	
              A.

            	
              It
      is agreed that this Contract will follow the terms, conditions,
      exclusions, definitions, warranties and settlements of the Company under
      the Original Contract, which are not inconsistent with the provisions of
      this Contract.

            

    

     

    
      	
              B.

            	
              The
      Company shall advise the Reinsurer of any material changes in the Original
      Contract which may affect the liability of the Reinsurer under this
      Contract.

            

    

    
       

      
        	Page 2	
                

              

      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Article
IV - Premium

     

    
      	
              A.

            	
              As
      premium for the reinsurance coverage provided hereunder for each excess
      layer for the term of this Contract, the Company shall pay the Reinsurer
      the product of the following:

            

    

     

    
      	
               
      

            	
              1.

            	
              The
      amount, shown as “Reinstatement Factor” for that excess layer in Schedule
      B attached hereto; times

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      Final Adjusted Rate on Line for the corresponding excess layer of the
      Original Contract; times

            

    

     

    
      
        	
                 
      

              	
                3.

              	
                
                  An
      amount equal to 100% reinsurance placement percentage under the Second,
      Third, Fourth and Fifth Excess Layers of the Original Contract of the
      final adjusted premium paid by the Company for the corresponding excess
      layer of the Original
Contract.

                

              

      

    

     

    
      
        
          “Final
Adjusted Rate on Line” as used herein shall mean an amount equal to a 100%
reinsurance placement percentage under the Second, Third, Fourth and Fifth
Excess Layers of the Original Contract of the final adjusted premium paid by the
Company for the corresponding excess layer of the Original Contract divided by
the amount, shown as the “Reinsurer’s Per Occurrence Limit” for that excess
layer under the Original Contract in Schedule A attached
hereto

        

      

    

     

    
      	
              B.

            	
              The
      Company shall pay the Reinsurer a deposit premium for each excess layer of
      the amount, shown as “Annual Deposit Premium” for that excess layer in
      Schedule B attached hereto, in four equal installments of the amount,
      shown as “Deposit Premium Installment” for that excess layer in Schedule B
      attached hereto, on July 1 and October 1 of 2009, and January 1 and April
      1 of 2010.  However, in the event this Contract is terminated,
      there shall be no deposit premium installments due after the effective
      date of termination.

            

    

     

    
      	
              C.

            	
              On
      or before June 30, 2010, the Company shall provide a report to the
      Reinsurer setting forth the premium due hereunder for each excess layer
      for the term of this Contract, computed in accordance with paragraph A,
      and any additional premium due the Reinsurer or return premium due the
      Company for each such excess layer shall be remitted
    promptly.

            

    

     

    Article
V - Loss Notices and Settlements

     

    
      	
              A.

            	
              Whenever
      reinstatement premium settlements made by the Company under the Second,
      Third, Fourth and Fifth Excess Layers of the Original Contract appear
      likely to result in a claim hereunder, the Company shall notify the
      Reinsurer.  The Company will advise the Reinsurer of all
      subsequent developments relating to such claims that, in the opinion of
      the Company, may materially affect the position of the
      Reinsurer.

            

    

     

    
      	
              B.

            	
              All
      reinstatement premium settlements made by the Company under the Second,
      Third, Fourth and Fifth Excess Layers of the Original Contract, provided
      they are within the terms of the Original Contract and within the terms of
      this Contract, shall be binding upon the Reinsurer, and the Reinsurer
      agrees to pay all amounts for which it may be liable within 10 days of
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

            

    

     

    
      
        	Page 3	
                

              

      

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Article
VI - Late Payments

     

    
      	
              A.

            	
              The
      provisions of this Article shall not be implemented unless specifically
      invoked, in writing, by one of the parties to this
    Contract.

            

    

     

    
      	
              B.

            	
              In
      the event any premium, loss or other payment due either party is not
      received by the intermediary named in the Intermediary Article
      (hereinafter referred to as the “Intermediary”) by the payment due date,
      the party to whom payment is due may, by notifying the Intermediary in
      writing, require the debtor party to pay, and the debtor party agrees to
      pay, an interest penalty on the amount past due calculated for each such
      payment on the last business day of each month as
  follows:

            

    

     

    
      	
               
      

            	
              1.

            	
              The
      number of full days which have expired since the due date or the last
      monthly calculation, whichever the lesser;
times

            

    

     

    
      	
               
      

            	
              2.

            	
              1/365ths
      of the six-month United States Treasury Bill rate as quoted in
      The Wall Street
      Journal on the first business day of the month for which the
      calculation is made; times

            

    

     

    
      	
               
      

            	
              3.

            	
              The
      amount past due, including accrued
interest.

            

    

     

    It is
agreed that interest shall accumulate until payment of the original amount due
plus interest penalties have been received by the Intermediary.

     

    
      	
              C.

            	
              The
      establishment of the due date shall, for purposes of this Article, be
      determined as follows:

            

    

     

    
      	
               
      

            	
              1.

            	
              As
      respects the payment of routine deposits and premiums due the Reinsurer,
      the due date shall be as provided for in the applicable section of this
      Contract.  In the event a due date is not specifically stated
      for a given payment, it shall be deemed due 30 days after the date of
      transmittal by the Intermediary of the initial billing for each such
      payment.

            

    

     

    
      	
               
      

            	
              2.

            	
              Any
      claim or loss payment due the Company hereunder shall be deemed due 10
      days after the proof of loss or demand for payment is transmitted to the
      Reinsurer.  If such loss or claim payment is not received within
      the 10 days, interest will accrue on the payment or amount overdue in
      accordance with paragraph B above, from the date the proof of loss or
      demand for payment was transmitted to the
  Reinsurer.

            

    

     

    
      	
               
      

            	
              3.

            	
              As
      respects any payment, adjustment or return due either party not otherwise
      provided for in subparagraphs 1 and 2 of this paragraph C, the due date
      shall be as provided for in the applicable section of this
      Contract.  In the event a due date is not specifically stated
      for a given payment, it shall be deemed due 10 days following transmittal
      of written notification that the provisions of this Article have been
      invoked.

            

    

     

    For
purposes of interest calculations only, amounts due hereunder shall be deemed
paid upon receipt by the Intermediary.

     

    
      	
              D.

            	
              Nothing
      herein shall be construed as limiting or prohibiting a Subscribing
      Reinsurer from contesting the validity of any claim, or from participating
      in the defense of any claim or suit, or prohibiting either party from
      contesting the validity of any payment or from initiating any arbitration
      or other proceeding in accordance with the provisions of this
      Contract.  If the debtor party prevails in an arbitration or
      other proceeding, then any interest penalties due hereunder on the amount
      in dispute shall be null and void.  If the debtor party loses in
      such proceeding, then the interest penalty on the amount determined to be
      due hereunder shall be calculated in accordance with the provisions set
      forth above unless otherwise determined by such proceedings.  If
      a debtor party advances payment of any amount it is contesting, and proves
      to be correct in its contestation, either in whole or in part, the other
      party shall reimburse the debtor party for any such excess payment made
      plus interest on the excess amount calculated in accordance with this
      Article.

            

    

     

    
      
        	Page 4	
                

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              E.

            	
              Interest
      penalties arising out of the application of this Article that are $1,000
      or less from any party shall be waived unless there is a pattern of late
      payments consisting of three or more items over the course of any 12-month
      period.

            

    

     

    Article
VII - Offset (BRMA 36C)

     

    The
Company and the Reinsurer shall have the right to offset any balance or amounts
due from one party to the other under the terms of this Contract.  The
party asserting the right of offset may exercise such right any time whether the
balances due are on account of premiums or losses or otherwise.

     

    Article
VIII - Access to Records (BRMA 1D)

     

    The
Reinsurer or its designated representatives shall have access at any reasonable
time to all records of the Company which pertain in any way to this
reinsurance.

     

    Article
IX - Errors and Omissions (BRMA 14F)

     

    Inadvertent
delays, errors or omissions made in connection with this Contract or any
transaction hereunder shall not relieve either party from any liability which
would have attached had such delay, error or omission not occurred, provided
always that such error or omission is rectified as soon as possible after
discovery.

     

    Article
X - Currency (BRMA 12A)

     

    
      	
              A.

            	
              Whenever
      the word “Dollars” or the “$” sign appears in this Contract, they shall be
      construed to mean United States Dollars and all transactions under this
      Contract shall be in United States
Dollars.

            

    

     

    
      	
              B.

            	
              Amounts
      paid or received by the Company in any other currency shall be converted
      to United States Dollars at the rate of exchange at the date such
      transaction is entered on the books of the
  Company.

            

    

     

    Article
XI - Taxes (BRMA 50B)

     

    In
consideration of the terms under which this Contract is issued, the Company will
not claim a deduction in respect of the premium hereon when making tax returns,
other than income or profits tax returns, to any state or territory of the
United States of America or the District of Columbia.

     

    
      
        	Page 5	
                

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Article
XII - Federal Excise Tax (BRMA 17D)

     

    
      	
              A.

            	
              The
      Reinsurer has agreed to allow for the purpose of paying the Federal Excise
      Tax the applicable percentage of the premium payable hereon (as imposed
      under Section 4371 of the Internal Revenue Code) to the extent such
      premium is subject to the Federal Excise
Tax.

            

    

     

    
      	
              B.

            	
              In
      the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

            

    

     

    Article
XIII - Reserves

     

    
      	
              A.

            	
              The
      Reinsurer agrees to fund its share of amounts, including but not limited
      to, the Company’s ceded unearned premium and outstanding loss reserves
      (being the sum of all reinstatement premiums paid by the Company under the
      Second, Third, Fourth and Fifth Excess Layers of the Original Contract but
      not yet recovered from the Reinsurer, plus the Company’s reserves for
      reinstatement premium due under the Second, Third, Fourth and Fifth Excess
      Layers of the Original Contract, if any)
by:

            

    

     

    
      	
               
      

            	
              1.

            	
              Clean,
      irrevocable and unconditional letters of credit issued and confirmed, if
      confirmation is required by the insurance regulatory authorities involved,
      by a bank or banks meeting the NAIC Securities Valuation Office credit
      standards for issuers of letters of credit and acceptable to said
      insurance regulatory authorities;
and/or

            

    

     

    
      	
               
      

            	
              2.

            	
              Escrow
      accounts for the benefit of the Company;
and/or

            

    

     

    
      	
               
      

            	
              3.

            	
              Cash
      advances;

            

    

     

    if the
Reinsurer:

     

    
      	
               
      

            	
              1.

            	
              Is
      unauthorized in any state of the United States of America or the District
      of Columbia having jurisdiction over the Company and if, without such
      funding, a penalty would accrue to the Company on any financial statement
      it is required to file with the insurance regulatory authorities involved;
      or

            

    

     

    
      	
               
      

            	
              2.

            	
              Has
      an A.M. Best Company’s rating equal to or below B++ at the inception of
      this Contract.

            

    

     

    The
Reinsurer, at its sole option, may fund in other than cash if its method and
form of funding are acceptable to the insurance regulatory authorities
involved.

     

    
      	
              B.

            	
              With
      regard to funding in whole or in part by letters of credit, it is agreed
      that each letter of credit will be in a form acceptable to insurance
      regulatory authorities involved, will be issued for a term of at least one
      year and will include an “evergreen clause,” which automatically extends
      the term for at least one additional year at each expiration date unless
      written notice of non-renewal is given to the Company not less than 30
      days prior to said expiration date.  The Company and the
      Reinsurer further agree, notwithstanding anything to the contrary in this
      Contract, that said letters of credit may be drawn upon by the Company
      or  its successors in interest at any time, without diminution
      because of the insolvency of the Company or the Reinsurer, but only for
      one or more of the following
purposes:

            

    

    
       

      
        
          	Page 6	
                  

                

        

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              1.

            	
              To
      reimburse itself for the Reinsurer’s share of unearned premiums returned
      to insureds on account of policy cancellations, unless paid in cash by the
      Reinsurer;

            

    

     

    
      	
               
      

            	
              2.

            	
              To
      reimburse itself for the Reinsurer’s share of reinstatement premiums paid
      by the Company under the terms of the Original Contract, unless paid in
      cash by the Reinsurer;

            

    

     

    
      	
               
      

            	
              3.

            	
              To
      reimburse itself for the Reinsurer’s share of any other amounts claimed to
      be due hereunder, unless paid in cash by the
  Reinsurer;

            

    

     

    
      	
               
      

            	
              4.

            	
              To
      fund a cash account in an amount equal to the Reinsurer’s share of
      amounts, including, but not limited to, any ceded unearned premium and/or
      outstanding loss reserves (being the sum of all reinstatement premiums
      paid by the Company under the Second, Third, Fourth and Fifth Excess
      Layers of the Original Contract but not yet recovered from the Reinsurer,
      plus the Company’s reserves for reinstatement premiums due under the
      Second, Third, Fourth and Fifth Excess Layers of the Original Contract, if
      any) funded by means of a letter of credit which is under non-renewal
      notice, if said letter of credit has not been renewed or replaced by the
      Reinsurer 10 days prior to its expiration
date;

            

    

     

    
      	
               
      

            	
              5.

            	
              To
      refund to the Reinsurer any sum in excess of the actual amount required to
      fund the Reinsurer’s share of amounts, including but not limited to, the
      Company’s ceded unearned premium and/or outstanding loss reserves (being
      the sum of all reinstatement premiums paid by the Company under the
      Second, Third, Fourth and Fifth Excess Layers of the Original Contract but
      not yet recovered from the Reinsurer, plus the Company’s reserves for
      reinstatement premiums due under the Second, Third, Fourth and Fifth
      Excess Layers of the Original Contract, if any), if so requested by the
      Reinsurer.

            

    

     

    In the
event the amount drawn by the Company on any letter of credit is in excess of
the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the
actual amount determined to be due, the Company shall promptly return to the
Reinsurer the excess amount so drawn.

     

    Article
XIV - Insolvency

     

    
      	
              A.

            	
              In
      the event of the insolvency of the Company, this reinsurance shall be
      payable directly to the Company or to its liquidator, receiver,
      conservator or statutory successor on the basis of the liability of the
      Company without diminution because of the insolvency of the Company or
      because the liquidator, receiver, conservator or statutory successor of
      the Company has failed to pay all or a portion of any claim.  It
      is agreed, however, that the liquidator, receiver, conservator or
      statutory successor of the Company shall give written notice to the
      Reinsurer of the pendency of a claim against the Company indicating the
      policy or bond reinsured which claim would involve a possible liability on
      the part of the Reinsurer within a reasonable time after such claim is
      filed in the conservation or liquidation proceeding or in the
      receivership, and that during the pendency of such claim, the Reinsurer
      may investigate such claim and interpose, at its own expense, in the
      proceeding where such claim is to be adjudicated, any defense or defenses
      that it may deem available to the Company or its  liquidator,
      receiver, conservator or statutory successor.  The expense thus
      incurred by the Reinsurer shall be chargeable, subject to the approval of
      the Court, against the Company as part of the expense of conservation or
      liquidation to the extent of a pro rata share of the benefit which may
      accrue to the Company solely as a result of the defense undertaken by the
      Reinsurer.

            

    

    
       

      
        
          	Page 7	
                  

                

        

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              B.

            	
              Where
      two or more reinsurers are involved in the same claim and a majority in
      interest elect to interpose defense to such claim, the expense shall be
      apportioned in accordance with the terms of this Contract as though such
      expense had been incurred by the
Company.

            

    

     

    
      	
              C.

            	
              It
      is further understood and agreed that, in the event of the insolvency of
      the Company, the reinsurance under this Contract shall be payable directly
      by the Reinsurer to the Company or to its liquidator, receiver or
      statutory successor, except as provided by Section 4118(a) of the New York
      Insurance Law or except (1) where this Contract specifically provides
      another payee of such reinsurance in the event of the insolvency of the
      Company or (2) where the Reinsurer with the consent of the direct insured
      or insureds has assumed such policy obligations of the Company as direct
      obligations of the Reinsurer to the payees under such policies and in
      substitution for the obligations of the Company to such
      payees.

            

    

     

    Article
XV - Arbitration (BRMA 6J)

     

    
      	
              A.

            	
              As
      a condition precedent to any right of action hereunder, in the event of
      any dispute or difference of opinion hereafter arising with respect to
      this Contract, it is hereby mutually agreed that such dispute or
      difference of opinion shall be submitted to arbitration.  One
      Arbiter shall be chosen by the Company, the other by the Reinsurer, and an
      Umpire shall be chosen by the two Arbiters before they enter upon
      arbitration, all of whom shall be active or retired disinterested
      executive officers of insurance or reinsurance companies or Lloyd’s London
      Underwriters.  In the event that either party should fail to
      choose an Arbiter within 30 days following a written request by the other
      party to do so, the requesting party may choose two Arbiters who shall in
      turn choose an Umpire before entering upon arbitration.  If the
      two Arbiters fail to agree upon the selection of an Umpire within 30 days
      following their appointment, each Arbiter shall nominate three candidates
      within 10 days thereafter, two of whom the other shall decline, and the
      decision shall be made by drawing
lots.

            

    

     

    
      	
              B.

            	
              Each
      party shall present its case to the Arbiters within 30 days following the
      date of appointment of the Umpire.  The Arbiters shall consider
      this Contract as an honorable engagement rather than merely as a legal
      obligation and they are relieved of all judicial formalities and may
      abstain from following the strict rules of law.  The decision of
      the Arbiters shall be final and binding on both parties; but failing to
      agree, they shall call in the Umpire and the decision of the majority
      shall be final and binding upon both parties.  Judgment upon the
      final decision of the Arbiters may be entered in any court of competent
      jurisdiction.

            

    

     

    
      	
              C.

            	
              If
      more than one reinsurer is involved in the same dispute, all such
      reinsurers shall constitute and act as one party for purposes of this
      Article and communications shall be made by the Company to each of the
      reinsurers constituting one party, provided, however, that nothing herein
      shall impair the rights of such reinsurers to assert several, rather than
      joint, defenses or claims, nor be construed as changing the liability of
      the reinsurers participating under the terms of this Contract from several
      to joint.

            

    

     

    
      
        
          	Page 8	
                  

                

        

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              D.

            	
              Each
      party shall bear the expense of its own Arbiter, and shall jointly and
      equally bear with the other the expense of the Umpire and of the
      arbitration.  In the event that the two Arbiters are chosen by
      one party, as above provided, the expense of the Arbiters, the Umpire and
      the arbitration shall be equally divided between the two
      parties.

            

    

     

    
      	
              E.

            	
              Any
      arbitration proceedings shall take place at a location mutually agreed
      upon by the parties to this Contract, but notwithstanding the location of
      the arbitration, all proceedings pursuant hereto shall be governed by the
      law of the state in which the Company has its principal
      office.

            

    

     

    Article
XVI - Service of Suit (BRMA 49C)

     

    (Applicable
if the Reinsurer is not domiciled in the United States of America, and/or is not
authorized in any State, Territory or District of the United States where
authorization is required by insurance regulatory authorities)

     

    
      	
              A.

            	
              It
      is agreed that in the event the Reinsurer fails to pay any amount claimed
      to be due hereunder, the Reinsurer, at the request of the Company, will
      submit to the jurisdiction of a court of competent jurisdiction within the
      United States.  Nothing in this Article constitutes or should be
      understood to constitute a waiver of the Reinsurer’s rights to commence an
      action in any court of competent jurisdiction in the United States, to
      remove an action to a United States District Court, or to seek a transfer
      of a case to another court as permitted by the laws of the United States
      or of any state in the United
States.

            

    

     

    
      	
              B.

            	
              Further,
      pursuant to any statute of any state, territory or district of the United
      States which makes provision therefor, the Reinsurer hereby designates the
      party named in its Interests and Liabilities Agreement, or if no party is
      named therein, the Superintendent, Commissioner or Director of Insurance
      or other officer specified for that purpose in the statute, or his
      successor or successors in office, as its true and lawful attorney upon
      whom may be served any lawful process in any action, suit or proceeding
      instituted by or on behalf of the Company or any beneficiary hereunder
      arising out of this Contract.

            

    

     

    Article
XVII - Governing Law (BRMA 71B)

     

    This
Contract shall be governed by and construed in accordance with the laws of the
State of Florida.

     

    Article
XVIII - Notices and Contract Execution

     

    
      	
              A.

            	
              Whenever
      a notice, statement, report or any other written communication is required
      by this Contract, unless otherwise specified, such notice, statement,
      report or other written communication may be transmitted by certified or
      registered mail, nationally or internationally recognized express delivery
      service, personal delivery, electronic mail, or facsimile.  With
      the exception of notices of termination, first class mail is also
      acceptable.

            

    

     

    
      	
              B.

            	
              The
      use of any of the following shall constitute a valid execution of this
      Contract or any amendments thereto:

            

    

     

    
      	
               
      

            	
              1.

            	
              
                Paper
      documents with an original ink
signature;

              

            

    

     

    
      
        
          	Page 9	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

     

    
      	
               
      

            	
              2.

            	
              Facsimile
      or electronic copies of paper documents showing an original ink
      signature; and/or

            

    

    

    
      	
               
      

            	
              3.

            	
              Electronic
      records with an electronic signature made via an electronic agent. For the
      purposes of this Contract, the terms “electronic record,” “electronic
      signature” and “electronic agent” shall have the meanings set forth in the
      Electronic Signatures in Global and National Commerce Act of 2000 or any
      amendments thereto.

            

    

    

    
      	
              C.

            	
              This
      Contract may be executed in one or more counterparts, each of which, when
      duly executed, shall be deemed an
original.

            

    

    

    Article
XIX - Intermediary

    

    Aon
Benfield Inc., or one of its affiliated corporations duly licensed as a
reinsurance intermediary, is hereby recognized as the Intermediary negotiating
this Contract for all business hereunder.  All communications (including
but not limited to notices, statements, premiums, return premiums, commissions,
taxes, losses, loss adjustment expense, salvages and loss settlements) relating
to this Contract will be transmitted to the Company or the Reinsurer through the
Intermediary.  Payments by the Company to the Intermediary will be deemed
payment to the Reinsurer.  Payment by the Reinsurer to the Intermediary
will be deemed payment to the Company only to the extent that such payments are
actually received by the Company.

    

    In Witness Whereof, the
Company by its duly authorized representative has executed this Contract as of
the date undermentioned at:

    

    Lauderdale
Lakes, Florida, this 30 day of July in the year 2009.

    

    
      
        
          
            
              
                	
                        

                      
	
                        Federated
      National Insurance
Company

                      

              

            

          

        

      

    

     

    
       

      
        
          	Page 10	
                  

                

        

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Schedule
A

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    

    
      
        
          	 
      	 	
                  Original

                	 	 	
                  Original

                	 	 	
                  Original

                	 	 	
                  Original

                	 	 	
                  Original

                	 
	 
      	 	
                  Contract

                	 	 	
                  Contract

                	 	 	
                  Contract

                	 	 	
                  Contract

                	 	 	
                  Contract

                	 
	 
      	 	
                  First

                	 	 	
                  Second

                	 	 	
                  Third

                	 	 	
                  Fourth

                	 	 	
                  Fifth

                	 
	 
      	 	
                  Excess

                	 	 	
                  Excess

                	 	 	
                  Excess

                	 	 	
                  Excess

                	 	 	
                  Excess

                	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Company’s
      Retention

                	 	$	5,000,000	 	 	$	19,447,762	 	 	$	58,916,306	 	 	$	83,573,570	 	 	$	103,573,570	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Reinsurer’s Per
      Occurrence Limit

                	 	$	4,447,762	 	 	$	39,468,544	 	 	$	24,657,264	 	 	$	20,000,000	 	 	$	8,000,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Reinsurer’s Term
      Limit

                	 	$	8,895,524	 	 	$	78,937,088	 	 	$	49,314,528	 	 	$	40,000,000	 	 	$	16,000,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Original
      PML

                	 	$	9,447,762	 	 	$	58,916,306	 	 	$	305,488,950	 	 	$	325,488,950	 	 	$	333,488,950	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Return
      Time

                	 	
                  3.90-year

                	 	 	
                  12.66-year

                	 	 	
                  82.64-year

                	 	 	
                  90.91-year

                	 	 	
                  95.24
      year

                	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Minimum Premium

                	 	$	2,668,657	 	 	$	11,998,437	 	 	$	3,945,162	 	 	$	1,920,000	 	 	$	672,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Annual
      Deposit Premium

                	 	$	3,335,824	 	 	$	14,998,048	 	 	$	4,931,452	 	 	$	2,400,000	 	 	$	840,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Deposit
      Premium Installments

                	 	$	833,956	 	 	$	3,749,512	 	 	$	1,232,863	 	 	$	600,000	 	 	$	210,000	 

        

      

    

     

    
      
        
          	Schedule A	
                  

                

        

         

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
B

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    

    
      
        
          
            	 
      	 	
                    Second

                  	 	 	
                    Third

                  	 	 	
                    Fourth

                  	 	 	
                    Fifth

                  	 
	 
      	 	
                    Excess

                  	 	 	
                    Excess

                  	 	 	
                    Excess

                  	 	 	
                    Excess

                  	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Reinstatement
      Factor

                  	 	 	1.175	 	 	 	1.150	 	 	 	1.150	 	 	 	1.100	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Annual
      Deposit Premium

                  	 	$	6,696,628	 	 	$	1,134,236	 	 	$	331,200	 	 	$	97,020	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Deposit
      Premium Installment

                  	 	$	1,674,157	 	 	$	283,559	 	 	$	82,800	 	 	$	24,255	 

          

        

      

    

    

    The
figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.

     

    
      
        
          	Schedule B	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    Interests
and Liabilities Agreement

     

    of

     

    ACE
Tempest Reinsurance Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July 1,
2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                4.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                4.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of _________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    ACE
      Tempest Reinsurance
Ltd.

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    Interests
and Liabilities Agreement

     

    of

     

    Actua Re
Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    It Is Hereby Agreed that the
Subscribing Reinsurer
hereby accepts the following percentage share(s) in the interests and
liabilities of the “Reinsurer” as set forth in the attached Contract captioned
above:

     

    
      
        	
                37.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                10.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    It Is Further Agreed that this
Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, July 1, 2009, and shall remain in force until 12:01 a.m., Eastern Standard
Time, July 1, 2010, unless earlier terminated in accordance with the provisions
of the attached Contract.

     

    It Is Also Agreed that the
following shall apply to the Subscribing Reinsurer’s share
in the attached Contract:

     

    
      	
              1.

            	
              Schedule
      B attached to and forming part of this Contract shall be deleted and
      replaced by the Schedule B (Actua Re Ltd.) attached to and forming part of
      this Interests and Liabilities
Agreement.

            

    

     

    
      	
              2.

            	
              The
      following Articles shall be added to and made part of this
      Contract:

            

    

     

    “Article XX -
Obligations

     

    
      	
            	
              A.

            	
              The
      Reinsurer will establish a Trust Fund or provide a Letter of Credit (LOC)
      issued by a bank and containing provisions acceptable to the insurance
      regulatory authorities having jurisdiction over the Company as security
      for the Reinsurer’s Obligations:

            

    

     

    
      
        
          	Page 1 of
4	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      	
            	
              B.

            	
              The
      term ‘Obligations’ shall mean:

            

    

     

    
      	
               
      

            	
              1.

            	
              During
      the term of this Contract, the balance of (a) the Reinsurer’s share of all
      reinstatement premiums for which the Company may be liable under the
      Second, Third, Fourth and Fifth Excess Layers of the Original Contract,
      less (b) any unpaid reinsurance premium (net of brokerage and Federal
      Excise Tax payable) under the Second, Third, Fourth and Fifth Excess
      Layers of this Contract, and less (c) reinstatement premiums recovered
      from the Reinsurer;

            

    

     

    
      	
               
      

            	
              2.

            	
              On
      the expiration of this Contract, if this Contract is renewed, the
      Reinsurer’s ‘Obligations’ shall be determined as the aggregate of the
      Reinsurer’s share of the following:

            

    

     

    
      	
               
      

            	
              a.

            	
              Reinstatement
      premiums paid by the Company under the Second, Third, Fourth and Fifth
      Excess Layers of the Original Contract, but not recovered from the
      Reinsurer; plus

            

    

     

    
      	
               
      

            	
              b.

            	
              Accrued
      reinstatement premiums payable by the Company associated with reserves for
      losses reported and outstanding under the Second, Third, Fourth and Fifth
      Excess Layers of the Original Contract;
plus

            

    

     

    
      	
               
      

            	
              c.

            	
              Accrued
      reinstatement premiums payable by the Company associated with reserves for
      losses incurred but not reported under the Second, Third, Fourth and Fifth
      Excess Layers of the Original Contract;
plus

            

    

     

    
      	
               
      

            	
              d.

            	
              Accrued
      reinstatement premiums payable by the Company associated with reserves for
      loss adjustment expense under the Second, Third, Fourth and Fifth Excess
      Layers of the Original Contract.

            

    

    
       

      
        	
                 
      

              	
                 

              	
                The
      amount so determined shall be recalculated at each month end until all
      liability has been
extinguished.

              

      

    

     

    
      	
            	
              C.

            	
              On
      December 15, 2009, collateral will be released consistent with the
      provisions of the Collateral Release
Article.

            

    

     

    
      	
            	
              D.

            	
              The
      Company and the Reinsurer further agree, notwithstanding anything to the
      contrary in this Contract, that said Trust Fund or LOC may be drawn upon
      by the Company or its successors in interest at any time, without
      diminution because of the insolvency of the Company or the Reinsurer, but
      only for one or more of the following
purposes:

            

    

     

    
      	
               
      

            	
              1.

            	
              To
      reimburse itself for the Reinsurer’s share of unearned premiums on the
      account of cancellation or adjustment premiums, unless paid in cash by the
      Reinsurer;

            

    

     

    
      	
               
      

            	
              2.

            	
              To
      reimburse itself for the Reinsurer’s share of reinstatement premiums paid
      by the Company under the terms of the Second, Third, Fourth and Fifth
      Excess Layers of the Original Contract, unless paid in cash by the
      Reinsurer;

            

    

     

    
      
        
          	Page 2 of
      4	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    
      	
               
      

            	
              3.

            	
              To
      fund a cash account in the amount equal to the Reinsurer’s Obligations, if
      said Trust Fund or LOC has not been renewed or replaced by the Reinsurer
      10 days prior to its expiration date;
and/or

            

    

     

    
      	
               
      

            	
              4.

            	
              To
      refund to the Reinsurer any sum in excess of the actual amount required to
      fund the Reinsurer’s Obligations, if so requested by the
      Reinsurer.

            

    

     

    In the
event the amount drawn by the Company on any Trust Fund or LOC is in excess of
the actual amount required, the Company shall return to the Reinsurer the excess
amount so drawn within 10 days of receiving notice of the amount
due.

     

    Article
XXI - Collateral Release

     

    
      	
            	
              A.

            	
              As
      of December 15, 2009 or 31 days from the date of the loss occurrence under
      the Second, Third, Fourth or Fifth Excess Layers of the Original Contract
      for which reinstatement premium is due from the Company, whichever is
      later, the parties shall determine how much collateral will be required to
      be maintained within the Trust Fund.  This calculation will be
      performed on a monthly basis until all liability has been
      extinguished.

            

    

     

    
      	
            	
              B.

            	
              For
      the purposes of this Article, ‘Loss Amount’ shall be defined as the sum
      of:

            

    

     

    
      	
               
      

            	
              1.

            	
              Losses
      and loss adjustment expense paid by the Company under the Second, Third,
      Fourth or Fifth Excess Layer of the Original Contract;
  plus

            

    

     

    
      	
               
      

            	
              2.

            	
              Reserves
      for losses reported and outstanding under the Second, Third, Fourth or
      Fifth Excess Layer of the Original Contract;
  plus

            

    

     

    
      	
               
      

            	
              3.

            	
              Reserves
      for loss adjustment expense reported and outstanding under the Second,
      Third, Fourth or Fifth Excess Layer of the Original Contract;
      plus

            

    

     

    
      	
               
      

            	
              4.

            	
              Reserves
      for losses incurred but not reported under the Second, Third, Fourth or
      Fifth Excess Layer of the Original
Contract.

            

    

     

    
      	
            	
              C.

            	
              For
      each loss occurrence potentially generating reinstatement premium
      hereunder, the Company shall multiply the Loss Amount by the appropriate
      Buffer Loss Multiplier from the table below, based on the number of days
      which have elapsed since the loss occurrence.  The product of
      this calculation shall be defined as the Buffered Loss Amount
      (‘BLA’).

            

    

     

    
      
        
          
            
              
                
                  
                    	
                            Buffer Loss Multiplier table

                          	 
	
                            Number of

                          	 	 	 	 	 	 	 	 	 
	
                            days since

                          	 	 	 	 	 	 	 	 	 
	
                            loss occurrence

                          	 	
                            Windstorm

                          	 	 	
                            Earthquake

                          	 	 	
                            Other event

                          	 
	
                            0 to 90

                          	 	 	180	%	 	 	250	%	 	 	200	%
	
                            91 to 180

                          	 	 	145	%	 	 	200	%	 	 	165	%
	
                            181 to 270

                          	 	 	125	%	 	 	175	%	 	 	140	%
	
                            271 to 365

                          	 	 	110	%	 	 	150	%	 	 	115	%
	
                            366 to 455

                          	 	 	100	%	 	 	125	%	 	 	100	%
	
                            456 to 545

                          	 	 	100	%	 	 	110	%	 	 	100	%
	
                            Thereafter

                          	 	 	100	%	 	 	100	%	 	 	100	%

                  

                

              

            

          

        

      

    

     

    
      
        
          	Page 3 of
      4	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    
      	
            	
              D.

            	
              With
      respect to each loss occurrence for which the BLA would result in
      reinstatement premium covered under the Second, Third, Fourth or Fifth
      Excess Layer of the Original Contract, an amount equal to the Reinsurer’s
      share of the reinstatement premium associated with such BLA for that
      excess layer shall be deemed to equal the event specific collateral amount
      at the calculation date (the ‘Event Collateral Amount’ or the
      ‘ECA’).

            

    

     

    
      	
            	
              E.

            	
              In
      respect of all events for which an ECA exceeds $0, the aggregate amount of
      the required collateral to be held in the Trust Fund shall be equal to the
      amount by which the lesser of (1) the sum of the ECAs, or (2) the
      Reinsurer’s share of an amount equal to the annual deposit premium due
      under the Original Contract for that excess layer (i.e., the aggregate
      limit hereunder), exceeds the amounts paid to date by the Reinsurer. Such
      aggregate amount shall be deemed to be the ‘Aggregate Collateral
      Obligation’ or the ‘ACO.’

            

    

     

    
      	
            	
              F.

            	
              At
      any month-end at which there is any security on deposit in the Trust Fund,
      the Company shall perform this calculation within 10 days after the end of
      such month and report to the Reinsurer and Trustee named in the Trust
      Agreement information supporting any BLA, ECA and ACO amounts greater than
      $0. The Assets in the Trust Fund will be adjusted monthly based on this
      calculation. In the event the balance of the Trust Fund is greater than
      the amount required to fully fund the Obligations, as defined by the ACO,
      the Company shall promptly, within 10 days, authorize a return of such
      excess amount to the Reinsurer. Similarly, in the event the balance of the
      Trust Fund falls below the amount required to fully fund the Obligations,
      the Reinsurer shall promptly, within 10 days, add assets to the Trust Fund
      to eliminate such shortfall.”

            

    

     

    It Is Also Agreed that the
Subscribing Reinsurer’s share in the
attached Contract shall be separate and apart from the shares of the other
reinsurers, and shall not be joint with the shares of the other reinsurers, it
being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities
of the other reinsurers.

    

    In Witness Whereof, the
parties hereto by their respective duly authorized representatives have executed
this Agreement as of the dates undermentioned at:

    

    Lauderdale
Lakes, Florida, this 30 day of July in the year 2009.

    

    
      
        
          
            	
                    

                  
	
                    Federated
      National Insurance
Company

                  

          

        

      

    

    

    Hamilton,
Bermuda, this _______ day of ___________________________ in the year
________.

    

    
      
        
          
            	 
      
	
                    Actua
      Re Ltd.

                  

          

        

      

    

    
       

      
        
          
            	Page 4 of
      4	
                    

                  

          

           

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (Actua Re Ltd.)

     

    Schedule
B

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued
to

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

    

    
      
        
          
            	 
      	 	
                    Second

                  	 	 	
                    Third

                  	 	 	
                    Fourth

                  	 	 	
                    Fifth

                  	 
	 
      	 	
                    Excess

                  	 	 	
                    Excess

                  	 	 	
                    Excess

                  	 	 	
                    Excess

                  	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Reinstatement
      Factor

                  	 	 	1.105	 	 	 	1.150	 	 	 	1.150	 	 	 	1.100	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Annual
      Deposit Premium

                  	 	$	6,299,180	 	 	$	1,134,236	 	 	$	331,200	 	 	$	97,020	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Deposit
      Premium Installment

                  	 	$	1,574,795	 	 	$	283,559	 	 	$	82,800	 	 	$	24,255	 

          

        

      

    

    

    The
figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.

     

    
      
        	 	
                

              

      

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Interests
and Liabilities Agreement

    

     

    of

     

    Allianz
Risk Transfer AG (Bermuda Branch)

    Pembroke,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                30.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                100.0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                100.0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In any
action, suit or proceeding to enforce the Subscribing Reinsurer’s obligations
under the attached Contract, service of process may be made upon Corporation
Service Company, 1133 Avenue of the Americas, Suite 3100, New York, NY
10036.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Pembroke,
Bermuda, this _______ day of _________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    Allianz
      Risk Transfer AG (Bermuda
Branch)

                  

          

        

      

    

     

    
      
        	 	
                

              

      

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Interests
and Liabilities Agreement

    

     

    of

     

    Ariel
Reinsurance Company Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                12.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                12.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            
              	 
      
	
                      Ariel
      Reinsurance Company
Ltd.

                    

            

          

        

      

    

     

    
      
        	 	
                

              

      

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      Interests
and Liabilities Agreement

    

     

    of

     

    DaVinci
Reinsurance Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                9.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    DaVinci
      Reinsurance Ltd.

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    Interests
and Liabilities Agreement

     

    of

     

    Hiscox
Insurance Company (Bermuda) Limited

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                8.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                8.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    Hiscox
      Insurance Company (Bermuda)
Limited

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    Interests
and Liabilities Agreement

     

    of

     

    Platinum
Underwriters Bermuda, Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                22.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    Platinum
      Underwriters Bermuda,
Ltd.

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    Interests
and Liabilities Agreement

     

    of

     

    Renaissance
Reinsurance, Ltd.

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                26.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    Renaissance
      Reinsurance, Ltd.

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    Interests
and Liabilities Agreement

     

    of

     

    Torus
Insurance (Bermuda) Limited

    Hamilton,
Bermuda

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                4.0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                4.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In Witness Whereof, the Subscribing Reinsurer by its
duly authorized representative has executed this Agreement as of the date
undermentioned at:

     

    Hamilton,
Bermuda, this _______ day of __________________________ in the year
________.

     

    
      
        
          
            	 
      
	
                    Torus
      Insurance (Bermuda)
Limited

                  

          

        

      

    

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

    

    

    Interests
and Liabilities Agreement

     

    of

     

    Certain
Underwriting Members of Lloyd’s

    shown in
the Signing Page(s) attached hereto

    (hereinafter referred to as the
“Subscribing Reinsurer”)

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    Lauderdale
Lakes, Florida

     

    The Subscribing Reinsurer hereby
accepts the following percentage shares in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above:

     

    
      
        	
                0%

              	 
      	
                of
      the Second Excess Reinstatement Premium Protection
    Reinsurance

              
	
                10.0%

              	 
      	
                of
      the Third Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fourth Excess Reinstatement Premium Protection
    Reinsurance

              
	
                0%

              	 
      	
                of
      the Fifth Excess Reinstatement Premium Protection
    Reinsurance

              

      

    

    

    This
Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1,
2009, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1,
2010, unless earlier terminated in accordance with the provisions of the
attached Contract.

     

    The Subscribing Reinsurer’s share
in the attached Contract shall be separate and apart from the shares of the
other reinsurers, and shall not be joint with the shares of the other
reinsurers, it being understood that the Subscribing Reinsurer shall
in no event participate in the interests and liabilities of the other
reinsurers.

     

    In any
action, suit or proceeding to enforce the Subscribing Reinsurer’s
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

     

    Signed
for and on behalf of the Subscribing Reinsurer in the
Signing Page(s) attached hereto.

     

    
      
        
          	 	
                  

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

    

    Signing
Page

     

    attaching
to and forming part of the

     

    Interests
and Liabilities Agreement

     

    of

     

    Certain
Underwriting Members of Lloyd’s

     

    with
respect to the

     

    Reinstatement
Premium Protection

    Reinsurance
Contract

    Effective:  July
1, 2009

     

    issued to
and duly executed by

     

    Federated
National Insurance Company

    as
defined in the above captioned Contract

     

    (Re)Insurer’s
Liability Clause - LMA3333

     

    (Re)insurer’s liability several not
joint

     

    The
liability of a (re)insurer under this contract is several and not joint with
other (re)insurers party to this contract.  A (re)insurer is liable
only for the proportion of liability it has underwritten.  A
(re)insurer is not jointly liable for the proportion of liability underwritten
by any other (re)insurer.  Nor is a (re)insurer otherwise responsible
for any liability of any other (re)insurer that may underwrite this
contract.

     

    The
proportion of liability under this contract underwritten by a (re)insurer (or,
in the case of a Lloyd’s syndicate, the total of the proportions underwritten by
all the members of the syndicate taken together) is shown next to its
stamp.  This is subject always to the provision concerning “signing”
below.

     

    In the
case of a Lloyd’s syndicate, each member of the syndicate (rather than the
syndicate itself) is a (re)insurer.  Each member has underwritten a
proportion of the total shown for the syndicate (that total itself being the
total of the proportions underwritten by all the members of the syndicate taken
together).  The liability of each member of the syndicate is several
and not joint with other members.  A member is liable only for that
member’s proportion.  A member is not jointly liable for any other
member’s proportion.  Nor is any member otherwise responsible for any
liability of any other (re)insurer that may underwrite this
contract.  The business address of each member is Lloyd’s, One Lime
Street, London EC3M 7HA.  The identity of each member of a Lloyd’s
syndicate and their respective proportion may be obtained by writing to Market
Services, Lloyd’s, at the above address.

     

    Proportion
of liability

     

    Unless
there is “signing” (see below), the proportion of liability under this contract
underwritten by each (re)insurer (or, in the case of a Lloyd’s syndicate, the
total of the proportions underwritten by all the members of the syndicate taken
together) is shown next to its stamp and is referred to as its “written
line”.

     

    Where
this contract permits, written lines, or certain written lines, may be adjusted
(“signed”).  In that case a schedule is to be appended to this
contract to show the definitive proportion of liability under this contract
underwritten by each (re)insurer (or, in the case of a Lloyd’s syndicate, the
total of the proportions underwritten by all the members of the syndicate taken
together).  A definitive proportion (or, in the case of a Lloyd’s
syndicate, the total of the proportions underwritten by all the members of a
Lloyd’s syndicate taken together) is referred to as a “signed
line”.  The signed lines shown in the schedule will prevail over the
written lines unless a proven error in calculation has occurred.

     

    Although
reference is made at various points in this clause to “this contract” in the
singular, where the circumstances so require this should be read as a reference
to contracts in the plural.Unassociated Document

    Exhibit 10.1

     

    PLAN SUPPORT
AGREEMENT

    

    This Plan
Support Agreement (the “Agreement”) is made
and executed as of November  8, 2009 among TETON ENERGY CORPORATION, a
Delaware corporation (“TEC”), TETON NORTH
AMERICA LLC, a Colorado limited liability company (“TNA”), TETON PICEANCE
LLC, a Colorado limited liability company (“TP”), TETON DJ LLC, a
Colorado limited liability company (“DJ”), TETON WILLISTON
LLC, a Colorado limited liability company (“TW”), TETON BIG HORN
LLC, a Colorado limited liability company (“TBH”), TETON ORRI
LLC, a Colorado limited liability company (“TORRI”), TETON DJCO
LLC, a Colorado limited liability company (“Teton DJ”), JPMORGAN
CHASE BANK, N.A., a national banking association, as administrative agent (in
such capacity, the “Administrative
Agent”) and each Lender under the Credit Agreement (as defined below)
(TEC, TNA, TP, DF, TW, TBH, TORRI, Teton DJ, the Administrative Agent, and the
Lenders are referred herein individually as a “Party” and referred
to herein collectively as the “Parties”).

     

    RECITALS

    

    A.           TEC
owns certain interests in oil and gas properties both in its individual capacity
and through its subsidiaries TNA, TP, DF, TW, TBH, TORRI, and Teton DJ
(collectively, the “Subsidiaries”,
together with TEC, the “Debtors”).

     

    B.           Pursuant
to that certain Second Amended and Restated Credit Agreement dated April 2, 2008
(as modified, amended, or supplemented from time to time, the “Credit Agreement”),
executed by TEC, the
Administrative Agent, certain banks and other financial institutions (together
with their successors and assigns, “Lenders”) and the
Subsidiaries, as guarantors, the Debtors are indebted to the Lenders in the
outstanding principal amount of $22,484,296.00, plus accrued but unpaid interest
and fees and expenses (the “Indebtedness”).  Repayment
of the Indebtedness is secured by, among other things, a first priority and
paramount lien on and security interest in the Debtors’ oil and gas assets (the
“Collateral”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    C.           The
Parties have determined that it is in their respective best interests that the
Debtors seek a transfer of the ownership interests of TEC, as reorganized, (the
“Assets”) free
and clear of claims, liens, encumbrances and interests pursuant to a plan of
reorganization (the “Plan”) through
Chapter 11 bankruptcy cases (the “Bankruptcy
Cases”).  The Plan will provide that all assets of each of the
Debtors, including all avoidance actions under Chapter 5 of the Bankruptcy Code,
shall re-vest in each respective prepetition owner, as
reorganized,  free and clear of all preconfirmation liens, claims,
encumbrances and interests.  Copies of the Plan and proposed
disclosure statement are attached hereto as Exhibit
A.

     

    D.           Each
of the Parties has been provided a copy of and has reviewed the Plan and
disclosure statement.  The Parties desire to memorialize their
respective undertakings in regard to the Bankruptcy Cases and the
Plan.

     

    NOW, THEREFORE, in consideration of the
foregoing, the Parties agree as follows:

    

    1.           So
long as no Termination Event (defined below) has occurred, Administrative Agent,
each Lender signatory hereto each agrees: (i) to vote its claims in the
Bankruptcy Cases to accept the Plan upon the Bankruptcy Court’s approval of the
disclosure statement pursuant to section 1125 of the Bankruptcy Code; (ii) not
to object to or otherwise commence any proceeding to oppose confirmation of the
Plan; (iii) not to support or vote to accept any other plan; (iv) to cooperate
with the Debtors in connection with, and take any reasonable actions requested
by the Debtors to facilitate, the taking of any actions on their part in
connection with the Plan described in Section 2; (v) not to seek modification or
termination of the automatic stay; and (vi) concurrently with the transfer of
the Assets in accordance with the Plan and receipt of no less than $18 million
as provided for under the Plan, plus such additional amounts necessary to
satisfy and repay in full any amounts outstanding, if any, under the DIP Loan
(as hereinafter defined), authorize and, as requested by the Debtors, execute
and deliver to the Debtors a complete and unconditional release of liens and
deed of trust, together with any appropriate Uniform Commercial Code termination
statements, terminating all liens, security interests and deeds of trust in
favor of the Parties in respect of the Collateral.  In addition, each
Lender signatory hereto agrees that, so long as no Termination Event has
occurred, it will not sell or transfer any claims held by it to any person or
entity, unless such person or entity executes and delivers a written instrument,
in form and substance satisfactory to the Debtors, pursuant to such person or
entity agreeing to be subject to all of the terms and provisions of this
Agreement applicable to such Lender.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.           The
Debtors covenant and agree that, in each case except as otherwise approved by
Administrative Agent and the Lenders and subject to the exercise by Debtors and
their Boards of Directors of their respective fiduciary duties (i) they will use
their commercially reasonable efforts to (x) promptly but no later than November 9, 2009 file the
Bankruptcy Cases in the United States Bankruptcy Court for the District of
Delaware (the “Court”) and (y) file
and seek confirmation only of the Plan substantially in the form and content of
the Plan attached hereto as Exhibit A; (ii) they
will use commercially reasonable efforts promptly to prosecute confirmation of
the Plan; (iii) they will not seek confirmation of and will oppose any plan
other than the Plan; (iv) they will not seek to amend or modify the Plan in any
respect without the prior written consent of the Lenders, and will oppose any
effort by any person to seek modification or amendment of the Plan in any such
respect; and (v) they will take all actions and file all motions and seek the
entry of all appropriate orders that in their reasonable judgment are incident
to carrying out the purposes and intent of this Agreement and the
Plan.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.           Immediately
prior to the Chapter 11 filing, the Debtors and the Lenders will agree upon
terms of a debtor-in-possession working capital line of credit in the sum of
$750,000 (the “DIP
Loan”), which line of credit will mature and become due and payable no
later than January 31,
2010 (the “Termination
Date”).  The DIP Loan shall have usual and customary terms,
conditions, defaults, and remedies.  Repayment of the DIP Loan shall
be secured by a first lien on the Debtors’ assets.  The DIP Loan will
mature and become immediately due and payable on the Termination
Date.  The Debtors will seek expeditious approval of the DIP Loan by
the Bankruptcy Court.

     

    4.           The
obligations of the Parties as set forth in Section 1 above shall
cease immediately upon the occurrence of a Termination Event.  A
“Termination
Event” shall occur if any one or more of the following events shall have
occurred:

     

    
      	
               
      

            	
              (i)

            	
              The
      Debtors shall have breached, or failed to diligently perform, any of their
      obligations as set forth in Section 2
above;

            

    

    
      	 	 	 
	
               
      

            	
              (ii)

            	
              the
      Court shall not confirm the Plan, and it shall not have been implemented
      and consummated prior to or on January 31, 2010,
      including wire transfer of proceeds of the auction, which includes
      amounts, if any, necessary for repayment of the DIP Loan in
      full;

            

    

    
      	 	 	 
	
               
      

            	
              (iii)

            	
              the
      Plan shall be modified or amended in any respect without prior written
      consent of Lenders;

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    
      	
               
      

            	
              (iv)

            	
              a
      trustee or examiner is appointed in the Bankruptcy Cases, the Bankruptcy
      Cases are converted to a Chapter 7 Case or the Bankruptcy Cases are
      dismissed;

            

    

    
      	 	 	 
	
               
      

            	
              (v)

            	
              the
      Court shall have entered an order that the proceeds resulting from the
      Court approved auction process for the transfer of the Assets or the
      Collateral be paid to or reserved for potential payment to any person
      other than Administrative Agent and Lenders (unless and until
      Administrative Agent and Lenders have been indefeasibly paid in
      full);

            

    

    
      	 	 	 
	
               
      

            	
              (vi)

            	
              the
      Bidding Procedures Order attached hereto as Exhibit B is
      not entered prior to or on November 23,
      2009;

            

    

    
      	 	 	 
	
               
      

            	
              (vii)

            	
              the
      DIP Loan and any of the commitments made thereunder are terminated;
      and

            

    

    
      
        	 	 	 
	
              	
                (viii)

              	
                a
      breach or termination of the Plan Support Agreement for the Noteholders or
      the Plan Sponsorship Agreement
occurs.

              

      

    

    
      	 	 	 
	
               
      

            	
              (ix)

            	
              An
      Event of Default shall occur under and as defined in the Interim Agreed
      Order Authorizing Limited Use of Cash Collateral and Granting Adequate
      Protection to Existing Lienholders or any final order authorizing use of
      cash collateral order or the Financing Order (as such term is defined in
      the Credit Agreement).

            

    

     

    Anything herein to the contrary
notwithstanding, neither the Debtors nor the Lenders shall be responsible for
any delays hereunder caused by any third parties or by circumstances that are
not within the control of the Debtors or the Lenders, as the case may
be.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.           This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to its conflict of law
provisions.

     

    6.           No
modification or amendment to the terms of this Agreement shall be valid unless
such modification or amendment is in writing and has been signed by each of the
Parties hereto.

     

    7.           This
Agreement may be executed by facsimile signature transmission in one or more
counterparts, any one of which need not contain the signature of more than one
Party, and all of which taken together shall constitute one and the same
Agreement.

     

    8.           This
Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators, and
representatives.

     

    9.           Nothing
in this Agreement shall be construed to prohibit the Administrative Agent or the
Lenders from appearing as a party-in-interest in any matter to be adjudicated in
the Bankruptcy Cases so long as such appearance and the positions advocated in
connection therewith are not materially inconsistent with this Agreement and are
not for the purpose of hindering or delaying (or reasonably likely to hinder or
delay) implementation of the transactions and other matters contemplated by this
Agreement.  In no event shall any provision of this Agreement prohibit
or prevent the Administrative Agent or any Lender from taking any action, or
require it to take any action, or to perform any obligation or refrain from
exercising any right or remedy in respect of the DIP Loan and no default of any
of its obligations hereunder shall exist by virtue or any such action taken or
omitted in such capacity.

     

    [Remainder
of page intentionally left blank.  Signature pages
follow.]

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    DATED as
of the date first above stated.

     

     

    TETON ENERGY
CORPORATION,

     

    a
Delaware Corporation

    
      	 	 	 	 	 
	
              By: 

              
                
      

               

              Name:

              
                
      

              
                 

                Title:

                
                  
      

                
                

              

            	 	 	
               

            	 

    

     

    TETON NORTH AMERICA
LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    TETON
PICEANCE LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    TETON
DJ LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    TETON
WILLISTON LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    TETON
BIG HORN LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    TETON
DJCO LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    TETON
ORRI LLC,

     

    a
Colorado limited liability company

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    JPMORGAN
CHASE BANK, N.A.,

     

    Administrative
Agent and Lender

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    ROYAL BANK OF CANADA,
Lender

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    GUARANTY BANK AND TRUST COMPANY,
Lender

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    US BANK NATIONAL ASSOCIATION,
Lender

    
      
        	 	 	 	 	 
	
                By: 

                
                  
      

                 

                Name:

                
                  
      

                
                   

                  Title:

                  
                    
      

                  
                  

                

              	 	 	
                 

              	 

      

       

    

    
      
        
           

        

        
          10

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