Document:

Exhibit 10.50

 

 

	
   

  	
   

  	
  AmCOMP
  Incorporated

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Reinsurance
  Placement

  	
   

  
	
   

  	
  Effective:
  January 1, 2006

  	
   

  
	
   

  	
  Confirmation Contract Wording

  	
   

  
	
   

  	
   

  	
   

  

 

Attached is the following Confirmation contract wording for your
review.

 

Catastrophe Workers’ Compensation Contract

 

Brokerage

 

10% of gross reinsurance premium to Benfield Inc; additional 5% of
gross reinsurance premium to Benfield UK as respects shares placed by Benfield
UK in London-based Lloyds’ Syndicates or Other London Companies.   5% on reinstatement premium to Benfield Inc;
nil on reinstatement as respects shares placed by Benfield UK in London-based
Lloyds’ Syndicates or Other London Companies.

 

Allocation of Final Shares

 

The Company shall have the right to review all the authorizations and
the full authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a “propositional
signdown” of authorizations. As respects signdowns within the London
marketplace, the final allocation of shares to individual companies or
syndicates may not be proportionate to the original authorizations.

 

 

 

Catastrophe
Workers’ Compensation

Reinsurance
Contract

Effective:  January 1, 2006

 

issued to

 

AmCOMP Preferred Insurance Company

North Palm Beach, Florida

AmCOMP Assurance Corporation

North Palm Beach, Florida

and

any and all insurance companies which are now or

hereafter come under the same ownership or management as the

AmCOMP Group

North Palm Beach, Florida

 

 

Table of Contents

 

	
  Article

  	
   

  	
   

  	
  Page

  
	
  I

  	
   

  	
  Classes of Business Reinsured

  	
  1

  
	
  II

  	
   

  	
  Term

  	
  1

  
	
  III

  	
   

  	
  Special Termination

  	
  2

  
	
  IV

  	
   

  	
  Territory (BRMA 51A)

  	
  3

  
	
  V

  	
   

  	
  Exclusions

  	
  3

  
	
  VI

  	
   

  	
  Retention and Limit

  	
  6

  
	
  VII

  	
   

  	
  Reinstatement

  	
  6

  
	
  VIII

  	
   

  	
  Definitions

  	
  7

  
	
  IX

  	
   

  	
  Other Reinsurance

  	
  10

  
	
  X

  	
   

  	
  Federal Terrorism Recovery

  	
  10

  
	
  XI

  	
   

  	
  Annuities at Company’s Option

  	
  10

  
	
  XII

  	
   

  	
  Claims

  	
  11

  
	
  XIII

  	
   

  	
  Commutation

  	
  11

  
	
  XIV

  	
   

  	
  Special Commutation

  	
  12

  
	
  XV

  	
   

  	
  Salvage and Subrogation

  	
  14

  
	
  XVI

  	
   

  	
  Premium

  	
  14

  
	
  XVII

  	
   

  	
  Late Payments

  	
  15

  
	
  XVIII

  	
   

  	
  Offset

  	
  16

  
	
  XIX

  	
   

  	
  Access to Records (BRMA 1D)

  	
  16

  
	
  XX

  	
   

  	
  Liability of the Reinsurer

  	
  16

  
	
  XXI

  	
   

  	
  Net Retained Lines (BRMA 32E)

  	
  17

  
	
  XXII

  	
   

  	
  Errors and Omissions

  	
  17

  
	
  XXIII

  	
   

  	
  Currency (BRMA 12A)

  	
  17

  
	
  XXIV

  	
   

  	
  Taxes (BRMA 50B)

  	
  17

  
	
  XXV

  	
   

  	
  Federal Excise Tax

  	
  17

  
	
  XXVI

  	
   

  	
  Reserves

  	
  18

  
	
  XXVII

  	
   

  	
  Insolvency

  	
  19

  
	
  XXVIII

  	
   

  	
  Arbitration

  	
  20

  
	
  XXIX

  	
   

  	
  Service of Suit (BRMA 49C)

  	
  21

  
	
  XXX

  	
   

  	
  Agency Agreement

  	
  21

  
	
  XXXI

  	
   

  	
  Governing Law (BRMA 71B)

  	
  22

  
	
  XXXII

  	
   

  	
  Intermediary (BRMA 23A)

  	
  22

  
	
   

  	
   

  	
  Schedule A

  	
   

  

 

 

Catastrophe
Workers’ Compensation

Reinsurance
Contract

Effective:  January 1, 2006

 

issued to

 

AmCOMP Preferred Insurance Company

North Palm Beach, Florida

AmCOMP Assurance Corporation

North Palm Beach, Florida

and

any and all insurance companies which are now or

hereafter come under the same ownership or management as the

AmCOMP Group

North Palm Beach, Florida

(hereinafter
referred to collectively 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 - Classes of
Business Reinsured

 

By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts and binders of
insurance or reinsurance (hereinafter called “policies”) in force at the
effective date hereof or issued or renewed on or after that date, and classified
by the Company as Workers’ Compensation and Employers Liability business,
subject to the terms, conditions and limitations set forth herein and in
Schedule A attached to and forming part of this Contract.

 

Article II - Term

 

A.           This Contract shall
become effective on January 1, 2006, with respect to losses arising out of
occurrences commencing on or after that date, and shall remain in force until
December 31, 2006, both days inclusive.

 

B.             Unless otherwise
mutually agreed, the Reinsurer shall have no liability for losses arising out
of occurrences commencing after the effective date of termination or expiration.

 

C.             Notwithstanding the
provisions above, in the event that any policy subject to this Contract is
required by statute, regulation or by order of an insurance department to be
continued in force, the Reinsurer agrees to extend reinsurance coverage
hereunder following the termination or expiration of this Contract with respect
to such policy until the first date that 

 

1

 

the Company may lawfully
non-renew, cancel or terminate such policy, whether or not the Company actually
does non-renew, cancel or terminate such policy.  However, under no circumstances shall runoff
coverage under this paragraph exceed 23 months.

 

D.            Seven years after the termination
or expiration of this Contract, the Company shall advise the Reinsurer of any
outstanding claims and/or occurrences (each hereinafter referred to as a “claim”)
arising during the term hereof, which have not been finally settled and which
may cause a recovery under this Contract, and no liability shall attach
hereunder for any claim not reported to the Reinsurer within this seven year
period.

 

Article III - Special
Termination

 

Notwithstanding the provisions of paragraph A of the Term Article, the
Company may terminate a Subscribing Reinsurer’s percentage share in this
Contract if any of the following circumstances occur, such termination to be
effective at any point in time of the Company’s choosing, including
retroactive, but not prior to the beginning of the calendar quarter in which
the triggering circumstance occurs as respects subparagraphs 1 through 6 or
from discovery as respects subparagraph 7:

 

1.               The Subscribing
Reinsurer’s policyholders’ surplus at the inception of this Contract has been
reduced by more than 20.0% of the amount of surplus 12 months prior to
that date; or

 

2.               The Subscribing
Reinsurer’s policyholders’ surplus at any time during the term of this Contract
has been reduced by more than 20.0% of the amount of surplus 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

 

3.               The Subscribing
Reinsurer’s A.M. Best’s rating has been assigned or downgraded below A- (including
any “Not Rated” rating) 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
company, corporation or individual(s) not controlling the Subscribing Reinsurer’s
operations previously; however, this subparagraph shall not apply to the sale
of stock to a non-acquiring entity; 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 or
receivership (whether voluntary or involuntary) or proceedings have been
instituted against the Subscribing Reinsurer for the appointment of a receiver,
liquidator, rehabilitator, 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 ceased assuming new and renewal property and casualty treaty
reinsurance business.

 

2

 

Article IV - Territory (BRMA
51A)

 

The territorial limits of this Contract shall be identical with those
of the Company’s policies.

 

Article V - Exclusions

 

A.           This Contract does not
apply to and specifically excludes the following:

 

1.               Reinsurance assumed
by the Company, except:

 

a.               Agency reinsurance
where the policies involved are to be reunderwritten in accordance with the
underwriting standards of the Company and reissued as Company policies at the
next anniversary or expiration date;

 

b.              Intercompany
reinsurance between any of the reinsured companies under this Contract.

 

2.               Ex-gratia payments.

 

3.               Risks subject to a
deductible in excess of $25,000, or a self-insured retention excess of $25,000,
unless such deductible or self-insured retention is otherwise mandated by
statute or regulatory authority.

 

4.               Nuclear risks as
defined in the “Nuclear Incident Exclusion Clause - Liability -
Reinsurance (U.S.A.)” and loss or liability defined in the “Nuclear Incident
Exclusion Clause - Reinsurance - No. 4” attached to and forming part of
this Contract.

 

5.               Pollution liability
coverages excluded under the provisions of the “Pollution Exclusion Clause -
General Liability - Reinsurance (BRMA 39C)” attached to and forming part
of this Contract.

 

6.               Liability as a
member, subscriber or reinsurer of any Pool, Syndicate or Association, but this
exclusion shall not apply to Assigned Risk Plans or similar state-mandated
plans.

 

7.               All liability of
the Company arising by contract, operation of law, or otherwise, from its
participation or membership, whether voluntary or involuntary, in any
insolvency fund.  “Insolvency fund”
includes any guaranty fund, insolvency fund, plan, pool, association, fund or
other arrangement, however denominated, established or governed, which provides
for any assessment of or payment or assumption by the Company of part or all of
any claim, debt, charge, fee or other obligation of an insurer, or its
successors or assigns, which has been declared by any competent authority to be
insolvent, or which is otherwise deemed unable to meet any claim, debt, charge,
fee or other obligation in whole or in part.

 

8.               Loss or liability
as excluded in the “War Risk Exclusion Clause (Reinsurance)” attached to and
forming part of this Contract.

 

3

 

9.               Operation under the
jurisdiction of the United States Longshore and Harbor Workers’ Compensation
Act or the Jones Act, except for incidental exposures (i.e., 10.0% or less of
the insured’s estimated payroll when the account is quoted).

 

10.         Operations employing the
process of nuclear fission or fusion or handling of radioactive material, which
operations include but are not limited to:

 

a.               The use of nuclear
reactors such as atomic piles, particle accelerators or generators; or

 

b.              The use, handling or
transportation of radioactive materials, or the use, handling or transportation
of any weapon of war or explosive device employing nuclear fission or fusion.

 

However, subparagraphs a
and b above shall not apply to:

 

i.                  The exclusive
use of particle accelerators incidental to ordinary industrial or education
research pursuits, or

 

ii.               The exclusive use,
handling or transportation of radioisotopes for medical or industrial use, or
to radium or radium compounds.

 

11.         Operation of docks or
wharves as related to port authorities.

 

12.         The manufacturing,
mining, refining, processing, distribution, installation, removal or
encapsulment of asbestos.

 

13.         Risks involving known
exposure to the following substances:

 

a.               Dioxin;

 

b.              Polychlorinated
biphenols;

 

c.               Asbestos.

 

14.         All railway operations
except sidetrack agreements.

 

15.         Amusement parks, carnivals
or circuses.  This exclusion shall not
apply to miniature golf courses or driving range operations.

 

16.         Subaquaeous operations.

 

17.         Underground mining;
however, this exclusion shall not be construed to apply to open pit-quarrying
or “surface mining” operations.

 

18.         Blasting operations,
except for incidental exposures (i.e., 10.0% or less of the insured’s estimated
payroll when the account is quoted).

 

19.         Demolition of buildings
or structures in excess of five stories.

 

20.         Shoring, underpinning or
moving of buildings or structures.

 

4

 

21.         Erection or repair of
scaffolds if 10.0% or more of the insured’s annual remuneration is attributed
to NCCI Class Code 9529.

 

22.         Construction of tunnels
or dams.

 

23.         Fireworks, fuses, or any
explosive substance (as defined below) as follows:

 

a.               Manufacturers or
importers of such items;

 

b.              Loading of such
items into containers for use as explosive objects, propellant charges or
detonation devices and the storage thereof (except as previously provided for,
on an incidental basis, in exclusion 18);

 

c.               Manufacturers or
importers of any product in which such items are an ingredient;

 

d.              Handling, storage,
transportation or use of such items (except as previously provided for, on an
incidental basis, in exclusion 18).

 

“Explosive substance” is
defined as any substance manufactured for the express purpose of exploding as
differentiated from commodities used industrially and which are only
incidentally explosive.

 

24.         Onshore and offshore gas
and oil drilling operations.

 

25.         Operations where
principal business includes the use of any owned or unowned aircraft, or any
device or machine intended for and/or aiding in the achievement of atmospheric
flight, projection or orbit, for flight, and/or the ownership or operation of
any airport.  This exclusion shall not
apply where exposure is incidental (i.e., constitutes 10.0% or less of the
insured’s payroll) to the principal business operations and the aircraft
contains eight seats or fewer.

 

26.         Municipal law enforcement
organizations and municipal fire fighting organizations, whether professional
or voluntary.

 

27.         Logging or forestry
operations.

 

28.         Professional employment
organizations (PEO’s).

 

29.         Professional sports teams.

 

30.         Operations where the
principal business of the risk is manufacturing, production, distribution,
refining or storage of natural or artificial fuel, gas, butane, propane,
liquefied petroleum gases or gasoline. 
This exclusion shall not apply to any risk whose principal business
operations are any of the following:

 

a.               Retail gasoline service station, either full or
self service;

 

b.              Convenience store with gasoline sales with its
petroleum gas and/or storage tanks located below ground.

 

5

 

31.         Loss, damage, liability,
cost or expense of whatsoever nature directly caused by, contributed to by,
resulting from or arising out of or in connection with any act of terrorism
and/or threat thereof, involving the use of any biological, chemical or nuclear
agent, material, device or weapon.

 

B.             In the event the
Company is inadvertently bound on any risk which is excluded under subparagraph
9, subparagraphs 14 through 27, or subparagraph 30 of paragraph A above,
the reinsurance provided under this Contract shall apply on such risk until
discovery by the Company of the existence of such risk and for 30 days
thereafter or for a period of time specific to the applicable state
cancellation requirements, not to exceed 120 days.  This limitation shall not apply as respects
Arizona.  Coverage shall cease after such
time or at policy anniversary as respects Arizona policies, unless the Company
has received from the Reinsurer written notice of its approval of such risk
within 30 days.

 

C.             Notwithstanding the
foregoing, any reinsurance falling within the scope of one or more of the
exclusions set forth above that is specially accepted by the Reinsurer from the
Company shall be covered under this Contract and subject to all of the terms
and conditions hereof, except as such terms are modified by the special
acceptance.  In the event a reinsurer
becomes a party to this Contract subsequent to one or more special acceptances
hereunder, the new reinsurer shall automatically accept such special
acceptance(s) as being covered hereunder.

 

Article VI - Retention and
Limit

 

A.           As respects each excess
layer of reinsurance coverage provided by this Contract, the Company shall
retain and be liable for the first amount of ultimate net loss (regardless of
the combination of classes of business, number of policies or number of
interests involved), shown as “Company’s Retention” for that excess layer in
Schedule A attached hereto, arising out of each occurrence. The Reinsurer shall
then be liable for the amount by which such ultimate net loss exceeds the
Company’s applicable retention, but the liability of the Reinsurer shall not
exceed the amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess
layer in Schedule A attached hereto, as respects any one occurrence.

 

B.             The Company’s
ultimate net loss, for the purpose of this Contract, shall be deemed to be a
maximum of $5,000,000 any one life from the ground up.

 

C.             The Company deems
that the maximum Employers Liability policy limits subject hereto shall not
exceed $2,000,000.  Policy limits in
excess of $2,000,000 may be submitted by special acceptance to the Reinsurer
for coverage hereunder, subject to the provisions of paragraph C of the
Exclusions Article.

 

Article VII - Reinstatement

 

A.           In the event all or any
portion of the reinsurance hereunder is exhausted by loss, the amount so
exhausted shall be reinstated immediately from the time the occurrence
commences hereon.  For each amount so
reinstated the Company agrees to pay additional premium equal to the product of
the following:

 

6

 

1.               The percentage of
the occurrence limit for the excess layer reinstated (based on the loss paid by
the Reinsurer under that excess layer); times

 

2.               The earned
reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

 

B.             Whenever the Company
requests payment by the Reinsurer of any loss under any excess layer hereunder,
the Company shall submit a statement to the Reinsurer of reinstatement premium
due the Reinsurer for that excess layer. 
If the earned reinsurance premium for any excess layer for the term of
this Contract has not been finally determined as of the date of any such
statement, the calculation of reinstatement premium due for that excess layer shall
be based on the annual deposit premium for that excess layer and shall be
readjusted when the earned reinsurance premium for that excess layer for the
term of this Contract has been finally determined.  Any reinstatement premium shown to be due the
Reinsurer for any excess layer as reflected by any such statement (less prior
payments, if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer.  Any return reinstatement
premium shown to be due the Company shall be remitted by the Reinsurer as
promptly as possible after receipt and verification of the Company’s statement.

 

C.             Notwithstanding
anything stated herein, the liability of the Reinsurer hereunder shall not
exceed the amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess
layer in Schedule A attached hereto, as respects loss or losses arising out of
any one occurrence, nor shall it exceed the amount, shown as “Reinsurer’s Term
Limit” for that excess layer in Schedule A attached hereto, in all during the
term of this Contract.

 

Article VIII - Definitions

 

A.           “Ultimate net loss” as
used herein is defined as the sum or sums (including loss in excess of policy
limits, extra contractual obligations and any loss adjustment expense, as
hereinafter defined) paid or payable by the Company in settlement of claims and
in satisfaction of judgments rendered on account of such claims, after
deduction of all recoveries from subrogation, all recoveries and all claims on
inuring insurance or reinsurance, whether collectible or not.  Nothing herein shall be construed to mean
that losses under this Contract are not recoverable until the Company’s
ultimate net loss has been ascertained.

 

B.             “Loss in excess of
policy limits” and “extra contractual obligations” as used herein shall be
defined as follows:

 

1.               “Loss in excess of
policy limits” shall mean 90.0% of any amount paid or payable by the Company in
excess of its policy limits, but otherwise within the terms of its policy, such
loss in excess of the Company’s policy limits having been incurred because of,
but not limited to, failure by the Company to settle within the policy limits
or by reason of the Company’s alleged or actual negligence or bad faith in
rejecting an offer of settlement or in the preparation of the defense or in the
trial of an action against its insured or reinsured or in the preparation or
prosecution of an appeal consequent upon such an action.

 

7

 

2.               “Extra contractual
obligations” shall mean 90.0% of any punitive, exemplary, compensatory or
consequential damages paid or payable by the Company, not covered by any other
provision of this Contract and which arise from the handling of any claim on
business subject to this Contract, such liabilities arising because of, but not
limited to, failure by the Company to settle within the policy limits or by
reason of the Company’s alleged or actual negligence or bad faith in rejecting
an offer of settlement or in the preparation of the defense or in the trial of
an action against its insured or reinsured or in the preparation or prosecution
of an appeal consequent upon such an action. 
An extra contractual obligation shall be deemed, in all circumstances,
to have occurred on the same date as the loss covered or alleged to be covered
under the policy.

 

Notwithstanding anything
stated herein, this Contract shall not apply to any loss in excess of policy limits
or any extra contractual obligation incurred by the Company as a result of any
fraudulent and/or criminal act by any officer or director of the Company acting
individually or collectively or in collusion with any individual or corporation
or any other organization or party involved in the presentation, defense or
settlement of any claim covered hereunder.

 

If
any provision of this paragraph B shall be rendered illegal or unenforceable by
the laws, regulations or public policy of any state, such provision shall be
considered void in such state, but this shall not affect the validity or
enforceability of any other provision of this Contract or the enforceability of
such provision in any other jurisdiction.

 

C.             “Occurrence” as used
herein is defined as an accident or occurrence or a series of accidents or
occurrences arising out of or caused by one event, whether involving one or
more of the Company’s policies, except that:

 

1.               As respects Workers’
Compensation policies, each occupational or industrial disease or cumulative
injury case contracted by an employee of an insured shall be deemed to have
been caused by a separate occurrence commencing on:

 

a.               The date of
disability for which compensation is payable if the case is compensable under
the Workers’ Compensation Law;

 

b.              The date disability
due to the disease actually began if the case is not compensable under the
Workers’ Compensation Law; or

 

c.               The date of
cessation of employment if claim is made after employment has ceased.

 

2.               Notwithstanding the
provisions of subparagraph 1 above, as respects losses resulting from
occupational or industrial disease and cumulative injury suffered by employees
of an insured for which the employer is liable as a result of a sudden and
accidental event not exceeding 72 hours in duration, all such losses shall be
considered one occurrence and may be combined with losses not classified as
occupational or industrial disease or cumulative injury which arise out of the
same event and the combination of such losses shall be considered as one
occurrence within the meaning hereof.

 

8

 

3.               Notwithstanding the
foregoing, the following shall apply to occurrences involving natural
disasters:

 

a.               An occurrence shall
be limited to damage, injury or loss arising out of a natural disaster during
any continuous 168 hour period.

 

b.              The Company may
choose the date and time when such 168 hour period commences and if the
occurrence is of greater duration than 168 hours, the Company may divide such
occurrence into two or more occurrences, provided no two periods overlap and
provided no period commences earlier than the date and time of the first loss
to the Company in such occurrence.

 

c.               “Natural disaster”
shall mean loss caused by the perils of tornado, cyclone, windstorm, hurricane
and hail arising from the same atmospheric disturbance; earthquake, including
ensuing fire, landslide, mudslide, flood, tidal wave; volcanic eruptions;
flood; tides; tidal wave; landslide/mudslide; and meteors.

 

D.            “Occupational or
industrial disease” shall mean any abnormal condition that fulfills all of the
following conditions:

 

1.               It is not traceable
to a definite compensable accident occurring during the employee’s present or
past employment; and

 

2.               It has been caused
by exposure to a disease producing agent or agents present in the workers’
occupational environment; and

 

3.               It has resulted in
a disability or death.

 

E.              “Cumulative injury”
is any injury that fulfills all of the following conditions:

 

1.               It is not traceable
to a definite compensable accident occurring during the employee’s present or
past employment; and

 

2.               It has occurred
from, and has been aggravated by, a repetitive employment-related activity; and

 

3.               It has resulted in
a disability or death.

 

F.              “Loss adjustment
expense” as used herein shall mean expenses assignable to the investigation,
appraisal, adjustment, settlement, litigation, defense and/or appeal of
specific claims, regardless of how such expenses are classified for statutory
reporting purposes.  Loss adjustment expense shall include, but not be
limited to, interest on judgments, expenses of outside adjusters and
claims-specific declaratory judgment expenses or other legal expenses and costs
incurred in connection with coverage questions and legal actions connected
thereto, but shall not include office expenses or salaries of the
Company’s regular employees other than medical management personnel whose cost
the Company will bill to specific cases on a time and expense basis.

 

G.             “Act of terrorism” as
used herein shall mean either:

 

9

 

1.               Any act of any
person or persons either acting on behalf of or in connection with any
organization or group with activities directed towards overthrowing, intimidating,
coercing or influencing any government de jure or de facto or its populace or its economic, political or
social systems, by force, violence, weapons of mass destruction, disruption or
subversion of communication and information system infrastructures and/or its
content thereof, or sabotage and/or threat therefrom; or

 

2.               An act of terrorism
that is certified by the Secretary of Treasury, in concurrence with the
Secretary of State and the Attorney General of the United States.

 

Notwithstanding the
above, in the event of an occurrence which arises out of an act of workplace
violence and is not consistent with the provisions of subparagraphs 1 and 2 of
this paragraph G, such loss shall be covered hereunder, subject to the
provisions of the Retention and Limit Article and all other provisions of this
Contract and shall not be considered an act of terrorism.  Further, any occurrence which is not or
cannot be determined, classified or certified in accordance with the provisions
of subparagraphs 1 and 2 of this paragraph G shall be covered hereunder
and not considered an act of terrorism.

 

Article IX - Other
Reinsurance

 

A.           The Company shall be
permitted to carry facultative reinsurance, recoveries under which shall inure
to the benefit of this Contract.

 

B.             The Company shall be
permitted to carry underlying excess of loss reinsurance and quota share
reinsurance, recoveries under which shall inure solely to the benefit of the
Company and be entirely disregarded in applying all of the provisions of this
Contract.

 

Article X - Federal
Terrorism Recovery

 

A.           Any loss reimbursement
the Company receives from the United States Government under the Terrorism Risk
Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 (together the “Terrorism Act”) as a result of occurrences commencing
during each contract year shall inure to the benefit of this Contract in the
proportion that the Company’s insured losses (as defined in the Terrorism Act)
in that occurrence under policies reinsured under this Contract bear to the
Company’s total insured losses in that occurrence.

 

B.             If a loss
reimbursement received by the Company under the Terrorism Act is based on the
Company’s insured losses in more than one occurrence and the United States
Government does not designate the amount allocable to each occurrence, the
reimbursement shall be prorated in the proportion that the Company’s insured
losses in each occurrence bear to the Company’s total insured losses arising
out of all occurrences to which the recovery applies.

 

Article XI - Annuities at
Company’s Option

 

A.           Whenever the Company is
required, or elects, to purchase an annuity or to negotiate a structured
settlement in excess of the retention of this Contract, either in satisfaction
of a 

 

10

 

judgment or in an
out-of-court settlement or otherwise, the cost of the annuity or the structured
settlement, as the case may be, shall be deemed part of the Company’s ultimate
net loss, provided such annuity or structured settlement terms grant the
Company full and final release as respects the indemnity portion of the
settlement.  Additionally, it is the
Company’s intent to place all annuities or structured settlements with a
carrier whose A.M. Best’s rating is “A” or better.

 

B.             The terms “annuity”
or “structured settlement” shall be understood to mean any insurance policy,
lump sum payment, agreement or device of whatever nature resulting in the
payment of a lump sum by the Company in settlement of any or all future
liabilities which may attach to it as a result of an occurrence.

 

C.             In the event the
Company purchases an annuity which inures in whole or in part to the benefit of
the Reinsurer, it is understood that the liability of the Reinsurer is not
released thereby. In the event the Company is required to provide benefits not
provided by the annuity for whatever reason, the Reinsurer shall pay its share
of any loss.

 

Article XII - Claims

 

A.           Whenever a claim or
settlement by the Company appears likely, in the sole judgment of the Company,
to result in a claim under this Contract, the Company shall notify the
Reinsurer.  Further, the Company shall
notify the Reinsurer whenever a claim involves a fatality, amputation, spinal
cord damage, brain damage, blindness or extensive burns, regardless of
liability, including all subsequent developments.  The Reinsurer shall have the right to
participate, at its own expense, in the defense of any claim or suit or
proceeding involving this reinsurance.

 

B.             All claim settlements
made by the Company, provided such settlements are 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 upon receipt of reasonable evidence of
the amount paid by the Company.

 

Article XIII - Commutation

 

A.           Either the Company or
the Reinsurer may request commutation of that portion of any excess loss
hereunder represented by any outstanding claim or claims after seven years from
the date of an occurrence.  If both
parties desire to commute a claim or claims, then within 60 days after
such agreement, the Company shall submit a statement of valuation of the
outstanding claim or claims showing the elements considered reasonable to
establish the ultimate net loss and the Reinsurer shall pay the amount
requested.  Commutation of loss will be
calculated on the present value of the loss within the layer of coverage.

 

B.             If agreement, as
outlined in the paragraph above, cannot be reached, the effort can be abandoned
or, alternately, the Company and the Reinsurer may mutually appoint an actuary
or appraiser to investigate, determine and capitalize such claim or
claims.  If both parties then agree, the
Reinsurer shall pay its proportion of the amount so determined to be the
capitalized value of such claim or claims.

 

11

 

C.             If the parties, as
outlined in the paragraphs above, fail to agree, they may abandon the effort or
they may agree to settle any difference using a panel of three actuaries, one
to be chosen by each party and the third by the two so chosen.  If either party refuses or neglects to
appoint an actuary within 60 days, the other party may appoint two actuaries.  If the two actuaries fail to agree on the
selection of a third actuary within 60 days of their appointment, each of them
shall name two, of whom the other shall decline one and the decision shall be
made by drawing lots.  All the actuaries
shall be regularly engaged in the valuation of Workers’ Compensation claims and
shall be Fellows of the Casualty Actuarial Society or Members of the American
Academy of Actuaries.  None of the
actuaries shall be under the control of either party to this Contract.

 

D.            Each party shall
submit its case to its actuary within 60 days of the appointment of the third
actuary.  The decision in writing of any
two actuaries, when filed with the parties hereto, shall be final and binding
on both parties.  The expense of the
actuaries and of the commutation shall be equally divided between the two
parties.  Said commutation shall take
place in North Palm Beach, Florida, unless some other place is mutually agreed
upon by the Company and the Reinsurer.

 

Article XIV - Special
Commutation

 

A.           In the event a Subscribing Reinsurer meets one or more of the following
conditions, the Company may require a commutation of that portion of any excess
loss hereunder represented by any outstanding claim or claims, including any related
loss adjustment expense:

 

1.               The Subscribing
Reinsurer’s A.M. Best’s rating has been assigned or downgraded below A-
(including any “Not Rated” rating) and/or Standard & Poor’s rating has been
assigned or downgraded below BBB+; or

 

2.               The Subscribing
Reinsurer has ceased assuming new or renewal property and casualty treaty
reinsurance business.

 

“Outstanding
claim or claims” shall be defined as known or unknown claims, including any
billed yet unpaid claims.  However,
unless otherwise mutually agreed, this paragraph A shall not apply unless
the outstanding claim or claims is for an amount not less than $5,000.

 

B.             If the Company elects to require commutation
as provided in paragraph A above, the Company shall submit a Statement of
Valuation of the outstanding claim or claims as of the last day of the month
immediately preceding the month in which the Company elects to require
commutation, as determined by the Company. 
Such Statement of Valuation shall include the elements considered
reasonable to establish the excess loss and shall set forth or attach the
information relied upon by the Company and the methodology employed to
calculate the excess loss.  The
Subscribing Reinsurer shall then pay the amount requested within 30 calendar
days of receipt of such Statement of Valuation, unless the Subscribing
Reinsurer needs additional information from the Company to assess the Company’s
Statement of Valuation or contests such amount.

 

C.             If the Subscribing Reinsurer needs additional
information from the Company to assess the Company’s Statement of Valuation or
contests the amount requested, the Subscribing Reinsurer shall so notify the
Company within 15 calendar days of receipt of the Company’s 

 

12

 

Statement
of Valuation.  The Company shall supply
any reasonably requested information to the Subscribing Reinsurer within 15
calendar days of receipt of the notification. 
Within 30 calendar days of the date of the notification or of the
receipt of the information, whichever is later, the Subscribing Reinsurer shall
provide the Company with its Statement of Valuation of the outstanding claim or
claims as of the last day of the month immediately preceding the month in which
the Company elects to require commutation, as determined by the Subscribing
Reinsurer.  Such Statement of Valuation
shall include the elements considered reasonable to establish the excess loss
and shall set forth or attach the information relied upon by the Subscribing
Reinsurer and the methodology employed to calculate the excess loss.

 

D.            In the event the Subscribing Reinsurer’s
Statement of Valuation of the outstanding claim or claims is viewed as
unacceptable to the Company, the Company may either abandon the commutation
effort, or may seek to settle any difference by using an independent actuary
agreed to by the parties.

 

E.              If the parties cannot agree on an acceptable
independent actuary within 15 calendar days of the date of the Subscribing
Reinsurer’s Statement of Valuation, then each party shall appoint an actuary as
party arbitrators for the limited and sole purpose of selecting an independent
actuary.  If the actuaries cannot agree
on an acceptable independent actuary within 15 calendar days of the date of the
Subscribing Reinsurer’s Statement of Valuation, the Company shall supply the
Subscribing Reinsurer with a list of at least three proposed independent
actuaries, and the Subscribing Reinsurer shall select the independent actuary
from that list.

 

F.              Upon selection of the independent actuary,
both parties shall present their respective written submissions to the independent
actuary.  The independent actuary may, at
his or her discretion, request additional information.  The independent actuary shall issue his or
her decision within 45 calendar days after the written submissions have been
filed and any additional information has been provided.

 

G.             The decision of the independent actuary shall
be final and binding.  The expense of the
independent actuary shall be equally divided between the two parties.  For the purposes of this Article, unless
mutually agreed otherwise, an “independent actuary” shall be an actuary who
satisfies each of the following criteria:

 

1.               Is regularly
engaged in the valuation of claims resulting from lines of business subject to
this Contract; and

 

2.               Is either a Fellow
of the Casualty Actuarial Society or of the American Academy of Actuaries; and

 

3.               Is disinterested
and impartial regarding this commutation.

 

H.            Notwithstanding
paragraphs A, B and C above, in the event that the Subscribing Reinsurer no
longer meets any of the conditions specified in subparagraph 1 or 2 in
paragraph A above, this commutation may continue on a mutually agreed basis.

 

I.                 Payment by the
Subscribing Reinsurer of the amount requested in accordance with paragraph B, C
or F above, shall release the Subscribing Reinsurer from all further liability
for outstanding claim or claims, known or unknown, under this Contract and
shall release 

 

13

 

the Company from all
further liability for payments of salvage or subrogation amounts, known or
unknown, to the Subscribing Reinsurer under this Contract.

 

J.                In the event of
any conflict between this Article and any other article of this Contract, the
terms of this Article shall control.

 

K.            This Article shall
survive the expiration or termination of this Contract.

 

Article XV - Salvage and Subrogation

 

The Reinsurer shall be credited with recoveries from salvage (i.e.,
reimbursement obtained or recovery made by the Company, less the actual cost,
excluding salaries of officials and employees of the Company and sums paid to
attorneys as retainer, of obtaining such reimbursement or making such recovery)
on account of claims and settlements involving reinsurance hereunder.  Recoveries therefrom shall always be used to
reimburse the excess carriers in the reverse order of their priority according
to their participation before being used in any way to reimburse the Company
for its primary loss.  The Company hereby
agrees to enforce its rights to salvage or subrogation relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.

 

Article XVI - Premium

 

A.           As premium for each
excess layer of reinsurance coverage provided by this Contract, the Company
shall pay the Reinsurer the greater of the following:

 

1.               The amount, shown
as “Annual Minimum Premium” for that excess layer in Schedule A attached
hereto (or a pro rata portion thereof if this Contract is terminated prior to
December 31, 2006); or

 

2.               The percentage,
shown as “Premium Rate” for that excess layer in Schedule A attached
hereto, of the Company’s net earned premium for the term of this Contract.

 

B.             The Company shall pay
the Reinsurer an annual deposit premium for each excess layer of the amount,
shown as “Annual Deposit Premium” for that excess layer in Schedule A
attached hereto, in four equal installments of the amount, shown as “Quarterly
Deposit Premium” for that excess layer in Schedule A attached hereto, on
January 1, April 1, July 1 and October 1 of 2006.  However, no deposit premium installments
shall be due after the effective date of termination.

 

C.             Within 60 days
following the termination or expiration of this Contract and within
60 days following the 12-month period thereafter, 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 for each such
excess layer shall be remitted by the Company with its report.  If the premium so computed is less than the
previously paid, but more than the minimum premium for that excess layer, the
balance shall be refunded by the Reinsurer to the Company within 30 days of the
report.

 

14

 

D.            “Net earned premium”
as used herein is defined as the Company’s gross earned premium for the classes
of business subject to this Contract, adjusted for experience modification,
discounts, credits, surcharges, expense constants and deductible credits, plus
or minus the Reinsurer’s pro rata share of any premium arising from audit
adjustments, minus premiums paid for facultative reinsurance which inures to
the benefit of this Contract.

 

Article XVII - 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 (BRMA 23A) (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 30 business days
after the proof of loss and demand for payment is transmitted to the
Reinsurer.  If such loss or claim payment
is not received within the 30 days, interest will accrue on the payment or
amount overdue in accordance with paragraph B above, from the date the
proof of loss and 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 above, 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 business days following transmittal of written
notification that the provisions of this Article have been invoked.

 

15

 

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.

 

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 XVIII - Offset

 

Each party hereto has the right, which may be exercised at any time, to
offset any amounts, whether on account of premiums or losses or otherwise, due
from such party to another party under this Contract or any other reinsurance
contract heretofore or hereafter entered into between them, against any
amounts, whether on account of premiums or losses or otherwise due from the
latter party to the former party.  The
party asserting the right of offset may exercise this right, whether as
assuming or ceding insurer or in both roles in the relevant agreement or
agreements.

 

Article XIX - 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 XX - Liability of
the Reinsurer

 

A.           The liability of the
Reinsurer shall follow that of the Company in every case and be subject in all
respects to all the general and specific stipulations, clauses, waivers and
modifications of the Company’s policies and any endorsements thereon.  However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth in
this Contract.

 

B.             Nothing herein shall
in any manner create any obligations or establish any rights against the
Reinsurer in favor of any third party or any persons not parties to this
Contract.

 

16

 

Article XXI - Net Retained
Lines (BRMA 32E)

 

A.           This Contract applies
only to that portion of any policy which the Company retains net for its own
account (prior to deduction of any underlying reinsurance specifically
permitted in this Contract), and in calculating the amount of any loss
hereunder and also in computing the amount or amounts in excess of which this
Contract attaches, only loss or losses in respect of that portion of any policy
which the Company retains net for its own account shall be included.

 

B.             The amount of the
Reinsurer’s liability hereunder in respect of any loss or losses shall not be
increased by reason of the inability of the Company to collect from any other
reinsurer(s), whether specific or general, any amounts which may have become
due from such reinsurer(s), whether such inability arises from the insolvency
of such other reinsurer(s) or otherwise.

 

Article XXII - Errors and
Omissions

 

Except as provided in paragraph D of the Term Article, 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 XXIII - 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 XXIV - 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.

 

Article XXV - Federal Excise
Tax

 

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.

 

17

 

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 XXVI - Reserves

 

(Applies only to a reinsurer which (1) does not qualify for full credit
with any insurance regulatory authority having jurisdiction over the Company’s
reserves, or (2) which is or becomes rated “B++” or lower or holds a “Not Rated”
rating by A.M. Best or is or becomes rated BBB+ or lower by Standard & Poor’s,
unless the Reinsurer has an A.M. Best’s rating of “A” or Standard & Poor’s
rating of “A” and group policyholders’ surplus equal to or above $2,000,000,000
at the beginning of this Contract)

 

A.           As regards policies or
bonds issued by the Company coming within the scope of this Contract, the
Company agrees that when it shall file with the insurance regulatory authority
or set up on its books reserves for losses covered hereunder which it shall be
required by law to set up, it will forward to the Reinsurer a statement showing
the proportion of such reserves which is applicable to the Reinsurer.  The Reinsurer hereby agrees to fund such
reserves in respect of known outstanding losses that have been reported to the
Reinsurer and allocated loss adjustment expense relating thereto, losses and
allocated loss adjustment expense paid by the Company but not recovered from
the Reinsurer, plus reserves for losses and allocated loss adjustment expense
incurred but not reported, as shown in the statement prepared by the Company
(hereinafter referred to as “Reinsurer’s Obligations”) by Regulation 114
trust accounts, funds withheld, cash advances or a Letter of Credit, or
combination thereof.  For purposes of
this Contract, the Lloyd’s United States Credit for Reinsurance Trust Fund
shall be considered an acceptable funding instrument.  The Reinsurer shall have the option of
determining the method of funding provided it is acceptable to the insurance
regulatory authorities having jurisdiction over the Company’s reserves.

 

B.             When funding by a
Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery
to the Company of a clean, irrevocable and unconditional Letter of Credit
issued by a bank meeting the NAIC Securities Valuation Office credit standards
for issuers of Letters of Credit and containing provisions acceptable to the
insurance regulatory authorities having jurisdiction over the Company’s
reserves in an amount equal to the Reinsurer’s proportion of said
reserves.  Such Letter of Credit shall be
issued for a period of not less than one year, and shall contain an “evergreen”
clause, which automatically extends the term for one year from its date of
expiration or any future expiration date unless 30 days (60 days
where required by insurance regulatory authorities) prior to any expiration
date the issuing bank shall notify the Company by certified or registered mail
that the issuing bank elects not to consider the Letter of Credit extended for
any additional period.

 

C.             The Reinsurer and
Company agree that the Letters of Credit provided by the Reinsurer pursuant to
the provisions of this Contract may be drawn upon at any time, notwithstanding
any other provision of this Contract, and be utilized by the Company or any
successor, by operation of law, of the Company including, without limitation,
any liquidator, rehabilitator, receiver or conservator of the Company for the
following purposes, unless otherwise provided for in a separate Trust
Agreement:

 

18

 

1.               To reimburse the
Company for the Reinsurer’s Obligations, the payment of which is due under the
terms of this Contract and which has not been otherwise paid;

 

2.               To make refund of
any sum which is in excess of the actual amount required to pay the Reinsurer’s
Obligations under this Contract, if so requested by the Reinsurer;

 

3.               To fund an account
with the Company for the Reinsurer’s Obligations.  Such cash deposit shall be held in an
interest bearing account separate from the Company’s other assets, and interest
thereon not in excess of the prime rate shall accrue to the benefit of the
Reinsurer;

 

4.               To pay the
Reinsurer’s share of any other amounts the Company claims are due under this
Contract.

 

In the event the amount
drawn by the Company on any Letter of Credit is in excess of the actual amount
required for subparagraphs 1 or 3, or in the case of subparagraph 4, the actual
amount determined to be due, the Company shall promptly return to the Reinsurer
the excess amount so drawn.  All of the
foregoing shall be applied without diminution because of insolvency on the part
of the Company or the Reinsurer.

 

D.            The issuing bank shall
have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except
to ensure that withdrawals are made only upon the order of properly authorized
representatives of the Company.

 

E.              At quarterly
intervals and on an estimated basis 45 days prior to each December 31, or more
frequently as agreed but never more frequently than quarterly, the Company
shall prepare a specific statement of the Reinsurer’s Obligations, for the sole
purpose of amending the Letter of Credit, in the following manner:

 

1.               If the statement
shows that the Reinsurer’s Obligations exceed the balance of credit as of the
statement date, the Reinsurer shall, within 30 days after receipt of
notice of such excess, secure delivery to the Company of an amendment to the
Letter of Credit increasing the amount of credit by the amount of such
difference.

 

2.               If, however, the
statement shows that the Reinsurer’s Obligations are less than the balance of
credit as of the statement date, the Company shall, within 30 days after
receipt of written request from the Reinsurer, release such excess credit by
agreeing to secure an amendment to the Letter of Credit reducing the amount of
credit available by the amount of such excess credit.

 

Article XXVII - Insolvency

 

A.           In the event of the
insolvency of one or more of the reinsured companies, 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 

 

19

 

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.

 

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 one or more of
the reinsured companies, 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 XXVIII - Arbitration

 

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, the
Umpire shall be appointed in accordance with the procedures of the American
Arbitration Association.

 

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.

 

20

 

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.

 

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 XXIX - 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 XXX - Agency
Agreement

 

If more than one reinsured company is named as a party to this
Contract, the first named company shall be deemed the agent of the other
reinsured companies (subject to the provisions of the Insolvency Article) for
purposes of sending or receiving notices required by the terms and conditions
of this Contract, and for purposes of remitting or receiving any monies due any
party.

 

21

 

Article XXXI - Governing Law
(BRMA 71B)

 

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

 

Article XXXII - Intermediary
(BRMA 23A)

 

Benfield Inc. is hereby recognized as the Intermediary negotiating this
Contract for all business hereunder.  All
communications (including but not limited to notices, statements, premium,
return premium, commissions, taxes, losses, loss adjustment expense, salvages
and loss settlements) relating thereto shall be transmitted to the Company or
the Reinsurer through Benfield Inc. 
Payments by the Company to the Intermediary shall be deemed to
constitute payment to the Reinsurer. 
Payments by the Reinsurer to the Intermediary shall be deemed to
constitute 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:

 

North Palm Beach, Florida, this           
day of            in the
year           .

 

	
   

  	
   

  
	
   

  	
  AmCOMP Preferred
  Insurance Company

  
	
   

  	
  AmCOMP Assurance
  Corporation

  
	
   

  	
  any and all
  insurance companies which are now or hereafter come under the same ownership
  or management as the AmCOMP Group

  

 

22

 

Schedule A

Catastrophe
Workers’ Compensation

Reinsurance
Contract

Effective:  January 1, 2006

 

issued to

 

AmCOMP Preferred Insurance Company

North Palm Beach, Florida

AmCOMP Assurance Corporation

North Palm Beach, Florida

and

any and all insurance companies which are now or

hereafter come under the same ownership or management as the

AmCOMP Group

North Palm Beach, Florida

 

	
   

  	
   

  	
  First 

  Excess

  	
   

  	
  Second 

  Excess

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company’s Retention

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Per Occurrence Limit

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Term Limit

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Minimum Premium

  	
   

  	
  $

  	
  391,344

  	
   

  	
  $

  	
  235,648

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premium Rate

  	
   

  	
  0.186

  	
  %

  	
  0.112

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Deposit Premium

  	
   

  	
  $

  	
  489,180

  	
   

  	
  $

  	
  294,560

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly Deposit Premium

  	
   

  	
  $

  	
  122,295

  	
   

  	
  $

  	
  73,640

  	
   

  

 

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.

 

 

Nuclear
Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)

(Approved
by Lloyd’s Underwriters’ Fire and Non-Marine Association)

 

(1)          This reinsurance does not cover any loss or liability accruing to the
Reassured as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.

 

(2)          Without in any way restricting the operation of paragraph (1) of this
Clause it is understood and agreed that for all purposes of this reinsurance
all the original policies of the Reassured (new, renewal and replacement) of
the classes specified in Clause II of this paragraph (2) from the time
specified in Clause III in this paragraph (2) shall be deemed to include the
following provision (specified as the Limited Exclusion Provision):

 

Limited Exclusion Provision.*

 

I.                 It is agreed that the policy does not apply
under any liability coverage, to

(injury, sickness, disease, death or destruction

(bodily
injury or property damage

with
respect to which an insured under the policy is also an insured under a nuclear
energy liability policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance
Association of Canada, or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability.

II.             Family Automobile Policies (liability only),
Special Automobile Policies (private passenger automobiles, liability only),
Farmers Comprehensive Personal Liability Policies (liability only),
Comprehensive Personal Liability Policies (liability only) or policies of a
similar nature; and the liability portion of combination forms related to the
four classes of policies stated above, such as the Comprehensive Dwelling
Policy and the applicable types of Homeowners Policies.

III.         The inception dates and thereafter of all
original policies as described in II above, whether new, renewal or
replacement, being policies which either

(a)          become effective on or after 1st May, 1960, or

(b)         become effective before that date and contain the Limited Exclusion
Provision set out above;

provided
this paragraph (2) shall not be applicable to Family Automobile Policies,
Special Automobile Policies, or policies or combination policies of a similar
nature, issued by the Reassured on New York risks, until 90 days following
approval of the Limited Exclusion Provision by the Governmental Authority
having jurisdiction thereof.

 

(3)          Except for those classes of policies specified in Clause II of paragraph
(2) and without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that for all purposes of this reinsurance
the original liability policies of the Reassured (new, renewal and replacement)
affording the following coverages:

 

Owners,
Landlords and Tenants Liability, Contractual Liability, Elevator Liability,
Owners or Contractors (including railroad) Protective Liability, Manufacturers
and Contractors Liability, Product Liability, Professional and Malpractice
Liability, Storekeepers Liability, Garage Liability, Automobile Liability
(including Massachusetts Motor Vehicle or Garage Liability)

 

shall
be deemed to include, with respect to such coverages, from the time specified
in Clause V of this paragraph (3), the following provision (specified as the
Broad Exclusion Provision):

 

Broad Exclusion Provision.*

 

It
is agreed that the policy does not apply:

I.                 Under any Liability Coverage to

(injury, sickness, disease, death or destruction

(bodily
injury or property damage

(a)          with respect to which an insured under the policy is also an insured
under a nuclear energy liability policy issued by Nuclear Energy Liability
Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear
Insurance Association of Canada, or would be an insured under any such policy
but for its termination upon exhaustion of its limit of liability; or

(b)         resulting from the hazardous properties of nuclear material and with
respect to which (1) any person or organization is required to maintain
financial protection pursuant to the Atomic Energy Act of 1954, or any law
amendatory thereof, or (2) the insured is, or had this policy not been issued
would be, entitled to indemnity from the United States of America, or any
agency thereof, under any agreement entered into by the United States of
America, or any agency thereof, with any person or organization.

 

1

 

II.             Under any Medical Payments Coverage, or under
any Supplementary Payments Provision relating to

(immediate medical or surgical relief

(first
aid,

 to expenses incurred with respect to

(bodily injury, sickness, disease or death

(bodily
injury

 resulting from the hazardous properties of
nuclear material and arising out of the operation of a nuclear facility by any
person or organization.

III.         Under any Liability Coverage to

 (injury, sickness, disease,
death or destruction

(bodily
injury or property damage

resulting from the hazardous
properties of nuclear material, if

(a)          the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been discharged or
dispersed therefrom;

(b)         the nuclear material is contained in spent fuel or waste at any time
possessed, handled, used, processed, stored, transported or disposed of by or
on behalf of an insured; or

(c)          the

(injury,
sickness, disease, death or destruction

(bodily injury or property
damage

 arises out of the furnishing by an insured of
services, materials, parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear facility, but if
such facility is located within the United States of America, its territories,
or possessions or Canada, this exclusion (c) applies only to

(injury to or
destruction of property at such nuclear facility

(property damage to such
nuclear facility and any property thereat.

IV.         As used in this endorsement:

“hazardous
properties” include radioactive, toxic or explosive properties; “nuclear
material” means source material, special nuclear material or byproduct
material; “source material”, “special nuclear material”, and “byproduct
material” have the meanings given them in the Atomic Energy Act of 1954 or in
any law amendatory thereof; “spent fuel” means any fuel element or fuel
component, solid or liquid, which has been used or exposed to radiation in a
nuclear reactor; “waste” means any waste material (1) containing byproduct
material and (2) resulting from the operation by any person or
organization of any nuclear facility included within the definition of nuclear
facility under paragraph (a) or (b) thereof; “nuclear facility” means

(a)          any nuclear reactor,

(b)         any equipment or device designed or used for (1) separating the isotopes
of uranium or plutonium, (2) processing or utilizing spent fuel, or (3)
handling processing or packaging waste,

(c)          any equipment or device used for the processing, fabricating or alloying
of special nuclear material if at any time the total amount of such material in
the custody of the insured at the premises where such equipment or device is
located consists of or contains more than 25 grams of plutonium or uranium 233
or any combination thereof, or more than 250 grams of uranium 235,

(d)         any structure, basin, excavation, premises or place prepared or used for
the storage or disposal of waste, and includes the site on which any of the
foregoing is located, all operations conducted on such site and all premises
used for such operations; “nuclear reactor” means any apparatus designed or
used to sustain nuclear fission in a self-supporting chain reaction or to
contain a critical mass of fissionable material;

 (With respect to injury to
or destruction of property, the word “injury” or “destruction,”

 (“property damage” includes all forms of
radioactive contamination of property,

 (includes all forms of
radioactive contamination of property.

V.             The inception dates and thereafter of all
original policies affording coverages specified in this paragraph (3), whether
new, renewal or replacement, being policies which become effective on or after
1st May, 1960, provided this paragraph (3) shall not be applicable to

(i)             Garage and Automobile Policies issued by the
Reassured on New York risks, or

(ii)          statutory liability insurance required under Chapter 90, General Laws of
Massachusetts, until 90 days following approval of the Broad Exclusion
Provision by the Governmental Authority having jurisdiction thereof.

(4)          Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the Reassured in Canada and that
with respect to such policies this Clause shall be deemed to include the
Nuclear Energy Liability Exclusion Provisions adopted by the Canadian
Underwriters’ Association or the Independent Insurance Conference of Canada.

 

*NOTE.     The words printed in italics in the Limited Exclusion Provision and in
the Broad Exclusion Provision shall apply only in relation to original
liability policies which include a Limited Exclusion Provision or a Broad
Exclusion Provision containing those words.

 

21/9/67

N.M.A. 1590

 

2

 

Nuclear
Incident Exclusion Clause Reinsurance - No. 4

 

(1)          This reinsurance does
not cover any loss or liability accruing to the Reassured as a member of, or
subscriber to, any association of insurers formed for the purpose of covering
nuclear energy risks or as a direct or indirect reinsurer of any such member,
subscriber or association.

 

(2)          Without in any way
restricting the operations of Nuclear Incident Exclusion Clause No. 1B -
Liability, No. 2 - Physical Damage, No. 3 - Boiler and Machinery and paragraph (1)
of this clause, it is understood and agreed that for all purposes as respects
the reinsurance assumed by the Reinsurer from the Reassured, all original
insurance policies or contracts of the Reassured (new, renewal and replacement)
shall be deemed to include the applicable existing Nuclear Clause and/or
Nuclear Exclusion Clause(s) in effect at the time and any subsequent revisions
thereto as agreed upon and approved by the Insurance Industry and/or a
qualified Advisory or Rating Bureau.

 

 

Pollution
Exclusion Clause - General Liability - Reinsurance

 

A.           This reinsurance
excludes all loss and/or liability accruing to the reinsured company as a
result of:

 

1.               bodily injury or
property damage arising out of the actual, alleged or threatened discharge,
dispersal, release or escape of pollutants:

 

a.               at or from premises
owned, rented or occupied by a named insured;

 

b.              at or from any site
or location used by or for a named insured or others for the handling, storage,
disposal, processing or treatment of waste;

 

c.               which are at any
time transported, handled, stored, treated, disposed of, or processed as waste
by or for a named insured or any person or organization for whom a named
insured may be legally responsible; or

 

d.              at or from any site
or location on which a named insured or any contractors or subcontractors
working directly or indirectly on behalf of a named insured are performing
operations:

 

(i)             if the pollutants are
brought on or to the site or location in connection with such operations; or

 

(ii)          if the operations are to
test for, monitor, clean up, remove, contain, treat, detoxify or neutralize the
pollutants;

 

2.               any governmental
direction or request that a named insured test for, monitor, clean up, remove,
contain, treat, detoxify or neutralize pollutants.

 

B.             Subparagraphs A(1)(a)
and A(1)(d)(i) above do not apply to bodily injury or property damage caused by
heat, smoke or fumes from a hostile fire.

 

C.             “Hostile fire” means
a fire which becomes uncontrollable or breaks out from where it was intended to
be.

 

D.            “Pollutants” means any
solid, liquid, gaseous or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals and waste.  Waste includes material to be recycled,
reconditioned or reclaimed.

 

BRMA 39C

 

 

War
Risk Exclusion Clause (Reinsurance)

 

As regards interests which at time of loss or damage are on shore, no
liability shall attach hereto in respect of any loss or damage which is
occasioned by war, invasion, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority.

 

Nevertheless, this clause shall not be construed to apply to loss or
damage occasioned by riots, strikes, civil commotion, vandalism or malicious
damage.<PAGE>

                                                                 Exhibit 4.5

                             WAIVER AND CONSENT
                             ------------------

                  This WAIVER AND CONSENT (this "Waiver") is executed as of
this 3rd day of February 2006, by and among ZOLTEK COMPANIES, INC., a
Missouri corporation (the "Company"), and each of OMICRON MASTER TRUST
("Omicron"), SMITHFIELD FIDUCIARY LLC ("Smithfield"), IROQUOIS CAPITAL, L.P.
("Iroquois"), CRANSHIRE CAPITAL, L.P. ("Cranshire"), and MIDSUMMER
INVESTMENT LTD. ("Midsummer," and, collectively with Omicron, Smithfield,
Iroquois and Cranshire, the "Investors"). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Loan
and Warrant Agreement referenced below.

                            W I T N E S S E T H:
                            - - - - - - - - - -

                  WHEREAS, the Company and the Investors are parties to that
certain Loan and Warrant Agreement, dated as of September 29, 2005 (the
"Purchase Agreement"), which contemplates that the Company will issue and
sell to the Investors, and the Investors would purchase from the from the
Company, up to $50 million aggregate principal amount of Senior Convertible
Notes (the "Notes"), along with Warrants to purchase Common Stock of the
Company, the in four separate closings, of which the parties have completed
the First Closing and the Second Closing; and

                  WHEREAS, Section 2.3 of the Purchase Agreement
contemplates that the issuance and sale by the Company of $20 million
aggregate principal amount of Notes and accompanying Warrants pursuant to a
Third Closing would occur the option of the Company at any time after the
later to occur of (i) the day following the date the Registration
Statement(s) covering the resale of the Underlying Shares issued in the
First Closing and the Second Closing become effective, and (ii) the 120th
day following the First Closing Date (the "Third Closing Conditions"); and

                  WHEREAS, the Investors have agreed to waive the Third
Closing Conditions as of the date hereof as to the purchase by the Investors
of $10 million aggregate principal amount of Notes and accompanying Warrants
to be issued at the Third Closing and that the Company would have the option
to cause the Investors to purchase the remaining $10 million of Notes
contemplated by the Third Closing at such time as the Third Closing
Conditions have been satisfied.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                  1. Waiver of Third Closing Conditions as to $10 Million
                     ----------------------------------------------------
Principal Amount of Notes. Notwithstanding any provision of Section 2.3 of
-------------------------
the Purchase Agreement to the contrary, subject to the terms and conditions
hereof the Investors hereby waive the Third Closing Conditions, and hereby
agree to purchase from the Company $10 million aggregate principal amount of
Notes and accompanying Warrants in the amounts and designations set forth on
Exhibit A hereto (the "Subject Notes"). The provisions of the Purchase
---------
Agreement relating to the

<PAGE>
<PAGE>

remaining $10 million aggregate principal amount of Notes contemplated to be
issued in the Third Closing pursuant to Section 2.3 of the Agreement shall
remain in full force and effect.

                  2. Conversion Price and Closing Documents. The Conversion
                     --------------------------------------
Price for the $10 million aggregate principal amount of the Subject Notes
shall be equal to 100% of the arithmetic average of the VWAP of the
Company's Common Stock for the 10 Trading Days immediately preceding the
date hereof. The Conversion Price for the remaining $10 million aggregate
principal amount of the Notes to be issued at the Third Closing shall be
equal to 100% of the arithmetic average of the VWAP of the Company's Common
Stock for the 10 Trading Days immediately preceding the closing date of the
issuance of such additional Notes as specified in Section 2.3(c) of the
Purchase Agreement. The various documents and deliveries set forth in
Section 2.8 of the Purchase Agreement shall be delivered with respect to the
purchase and sale of the Subject Notes as soon as practicable after the date
hereof.

                  3. Use of Proceeds. The Borrower shall use at least
                     ---------------
$50,000 of net proceeds from the sale of the Subject Notes for the payment
of fees and expenses incurred by the Company for public relations, including
without limitation investor relations.

                  4. Counterparts. This Waiver may be executed in two or
                     ------------
more counterparts and all executed counterparts shall constitute one
agreement, binding on all parties hereto as of the date hereof.

                  5. Binding Effect. This Waiver shall be binding on and be
                     --------------
enforceable by and against each party hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.

                  6. Entire Agreement; Governing Law. All prior negotiations
                     -------------------------------
and agreements between the parties hereto regarding the subject matter
hereof are superseded by this Waiver. This Waiver shall be governed and
construed in accordance with the internal laws of the State of New York,
without regard to conflicts of laws principles. Except as otherwise
specifically provided herein, all rights and obligations of the parties
pursuant to and under the Purchase Agreement, the Notes and the Registration
Rights Agreement shall remain in full force and effect following the date of
this Waiver.

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

                                   - 2 -

<PAGE>
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Waiver to be duly executed as of the day and year first above written.

                                       ZOLTEK COMPANIES, INC.

                                         By /s/ Zsolt Rumy
                                            Name: Zsolt Rumy
                                            Title: Chief Executive Officer

                                   - 3 -

<PAGE>
<PAGE>

                                       OMICRON MASTER TRUST

                                       By: /s/ Bruce Bernstein
                                           Name: Bruce Bernstein
                                           Title: Managing Partner

                                   - 4 -

<PAGE>
<PAGE>

                                       SMITHFIELD FIDUCIARY LLC

                                       By: /s/ Adam J. Chill
                                           Name: Adam J. Chill
                                           Title: Authorized Signatory

                                   - 5 -

<PAGE>
<PAGE>

                                       IROQUOIS CAPITAL, L.P.

                                       By: /s/ Joshua Silverman
                                           Name: Joshua Silverman
                                           Title: Partner

                                   - 6 -

<PAGE>
<PAGE>

                             CRANSHIRE CAPITAL, L.P.

                               By: Downsview Capital, its General Partner

                               By: /s/ Mitchell P. Kopin
                                   Name: Mitchell P. Kopin
                                   Title: President, Downsview Capital, Inc.

                                   - 7 -

<PAGE>
<PAGE>

                          MIDSUMMER INVESTMENT LTD.

                          By: /s/ Scott D. Kaufman
                              Name: Scott D. Kaufman
                              Title: Managing Director of Midsummer Capital,
                                     LLC, acting as investment advisor of
                                     Midsummer Investment Ltd.

                                   - 8 -

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