Document:

Exhibit 10.32

 

QUOTA SHARE
REINSURANCE TREATY

 

(Hereinafter referred to as “the Agreement”)

 

 

Between

 

Mont Fort Re Limited in respect of if segregated account, designated as
HIGH LAYER

Cell

(Hereinafter referred to as “the Company”)

 

 

And

 

Flagstone Reinsurance Limited

 

(Hereinafter referred to as “the Reinsurer”)

 

DEFINITIONS

 

“Loss” shall mean actual payments on claims and all charges and loss
reserves related to claims filed as well as claims expected to be filed (IBNR),
including any extra-contractual or punitive damages.

 

“Loss Adjustment Expense” shall mean all expenses, excluding the
salaries and expenses of the company’s employees, incurred by the company associated
with handling of claims on company policies.

 

ARTICLE I

 

BUSINESS REINSURED

 

The Company
shall cede to the Reinsurer and the Reinsurer shall accept from the Company a 9%
quota share participation of the net retained insurance liability of the
Company with respect to business designated as HIGH LAYER Cell.

 

The Reinsurer’s
limit of liability to the Company under this Agreement for any and all losses
and loss adjustment expenses incurred on all policies of insurance and
reinsurance is subject to a maximum total limit not to exceed (a) $2,779,121,
plus (b) the Reinsurer’s proportionate share of net retained premium.

 

ARTICLE II

 

ORIGINAL CONDITIONS

 

All
reinsurances embraced by this Agreement shall be subject to the same terms and
conditions which govern the respective policies, endorsements, binders and
certificates of the Company, and the Reinsurer shall be entitled to 9% of the
net retained premiums plus interest earned by the Company, such premiums to be
paid as received by the company.

 

 

ARTICLE III

 

ATTACHMENT, COMMENCEMENT AND TERMINATION

 

Liability
hereunder shall be automatic and shall commence obligatorily and simultaneously
with that of the Company. The premium on account of such liability shall be
credited to the Reinsurer from the orginal date of the Reinsurer’s liability.

 

This Agreement shall be effective as of 12:01 AM Eastern Standard time January
1, 2007, and shall remain continuously in force unless terminated by either
party hereto giving the other at least 75 days’ prior written notice of their
intent to terminate, and a copy of such notice shall be provided to Newcastle Special
Opportunities Fund V, LP not fewer than 5 days in advance of delivery to Mont
Fort.

 

In the event this Agreement is terminated, the liability of the
Reinsurer shall cease at the time and date of termination. The Reinsurer shall
be liable only for losses occurring during the period this Agreement is in
force. The date and time on which each loss of the Company occurs shall be the
date and time on which the liability of the Reinsurer attaches.

 

In the event this Agreement is terminated while an accident or
occurrence covered hereby is in progress, it is understood and agreed that
subject to the other conditions of this Agreement, the Reinsurer shall be
liable for its proportion of only such losses resulting from the accident or
occurrence arising before such termination.

 

In the event this Agreement is terminated, the Agreement shall be
commuted based on the net present value of the remaining estimated liabilities
of the Company as so determined by a qualified actuary and reported to the
Company and the Reinsurer (the “Actuary’s Valuation”) as soon as practicable
after and no later than 60 days following such termination and notified to the
parties in writing.

 

In the event that either party shall disagree with the Actuary’s
Valuation, such party shall give written notice of all disagreements (a “Notice
of Disagreement”) to the other party within 30 days after having received such
Actuary’s Valuation and shall specify so far as reasonably practicable each
item of disagreement and the basis for such disagreement and shall specify the
total adjustment as proposed by the party in disagreement. If either party
delivers a Notice of Disagreement to the other party, the parties shall
negotiate in good faith to resolve all disagreements as promptly as practicable.
If the parties are unable to resolve all disagreements within 30 days following
delivery of the Notice of Disagreement, then all unresolved disagreements will
be submitted within 30 days to an independent auditor mutually acceptable to
the parties (“Settlement Auditor”). The parties shall fully co-operate with the
Settlement Auditor and shall provide such Settlement Auditor with access to all
books, information and documents reasonably requested by the Settlement Auditor
to make such determination. The Settlement Auditor shall, within 30 days after
its engagement, deliver to the parties a conclusive written resolution of the
disagreements submitted to it and shall be final and binding on the parties.

 

 

ARTICLE IV

 

ACCOUNTS REPORTS 

 

The Company shall furnish to the Reinsurer quarterly statement of accounts
of business ceded hereunder as soon as possible after the close of the quarter,
but in no event later than 30 days after the close of each quarter, showing net
written premiums, net earned premiums, commissions based on earned premiums and
paid losses and loss expenses.

 

The Company shall also furnish quarterly to the Reinsurer on an
accident year basis, a detailed statistical report that provides quarterly and
year-to-date information as follows:

 

1.     Written premiums, commissions, premiums in force
and unearned premium reserve;

 

2.     paid losses and paid loss expenses less credit far
salvages, subrogation recoveries and loss adjustment expenses refunds; and

 

3.     loss reserve outstanding.

 

ARTICLE V

 

LOSS AND LOSS ADJUSTMENT EXPENSES

 

This Agreement
is subject to the same risks, conditions, privileges, valuations, assignments
waivers and modes of settlement as are or may hereafter be assumed, granted or
adopted by the Company.

 

All loss
settlement made or loss adjustment expense incurred by the Company, provided
they are within the terms of this Agreement, shall be unconditionally binding
upon the Reinsurer and the amounts falling to the share of the reinsurer shall be
payable within 60 days’ after the Company has furnished its quarterly statement
of account.

 

Reinsurer
shall benefit proportionately in all salvage and recoveries.

 

ARTICLE VI

 

INDEMNIFICATION AND ERRORS AND OMISSIONS

 

The Company shall be the sole judge as to what constitutes a claim or
loss covered under the Company’s original policy or policies and as to the
Company’s liability thereunder, and the Reinsurer shall be bound by the
judgment of the Company as to the liability and obligation of the Company under
its policy or policies.

 

Any inadvertent
delays, omissions or errors shall not be held to relieve either party hereto
from any liability which would attach to it hereunder if such delays, omissions
or errors had not been made, provided such delays, omissions or errors are
rectified immediately upon discovery.

 

 

ARTICLE VII

 

ARBITRATION

 

As a condition
precedent to any right of action hereunder, if any dispute shall arise between
the Company and the Reinsurer with reference to this Agreement, whether such
dispute arises before or after termination of this Agreement, such dispute,
upon the written request of either party, shall be submitted to three
arbitrators, one to be chosen by each party, and the third by the two so
chosen. If either party refuses or neglects to appoint an arbitrator within thirty
days after the receipt of written notice from the other party requesting it to
do so, the requesting party may appoint two arbitrators. If the two arbitrators
fail to agree in the selection of a third arbitrator within thirty days minimum
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 Arbitrators
shall be executive officers of insurance or reinsurance companies not affiliated
in any capacity with either party to this Agreement.

 

The arbitrators shall interpret this Agreement as an honorable
engagement and not as merely a legal obligation. They are relieved of all
judicial formalities and may abstain from following the strict rules of law and
they shall make their award with a view to effecting the general purpose of
this Agreement in a reasonable manner rather than in accordance with a literal
interpretation of the language. Each party shall submit its case to its
arbitrator within thirty days of the appointment of the third arbitrator.

 

The decision in writing of any two arbitrators when filed with the
parties hereto shall be final and binding on both parties. Judgment may be
entered upon the final decision of the arbitration in any court having
jurisdiction. Each party shall bear the expense of its own arbitrator and shall
jointly and equally bear with the other party the expense of third arbitrator
and of the arbitration.

 

Said arbitration shall take place in Bermuda, unless some other place
is mutually agreed upon by the Company and the Reinsurer.

 

ARTICLE VIII

 

INSOLVENCY

 

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
(except where this Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the Company or 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) on the basis of the claim or claims allowed by such
liquidator, receiver, conservator or statutory successor 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 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 their own expense, in the proceeding
where such claim is to be adjudicated any defense or defenses that they 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.

 

When two or more Reinsurers are involved in the same claim and a
majority in interest elects to interpose defense to such claim, the expenses
shall be apportioned in accordance with the terms of the reinsurance Agreement
as though such expense had been incurred by the Company.

 

ARTICLE IX

 

ACCESS TO RECORDS

 

The Reinsurer or
their representative shall have free access to the books and records of the
Company at all reasonable times for the purpose of obtaining information
concerning this Agreement or the subject matter thereof.

 

ARTICLE
X

 

GOVERNING
LAW

 

This Agreement shall be
governed by and construed in accordance with Bermuda law.

 

ARTICLE XI

 

CURRENCY

 

Premium and losses hereunder shall be payable in United States
currency.

 

ARTICLE XII

 

LIKE ECOMONICS

 

The intent of the Company and the Reinsurer in entering this Agreement
is to substantially replicate, for all economic purposes, a direct subscription
for preferred shares of the Company by the Reinsurer. The Reinsurer’s rights
and liabilities to the Company under this Agreement, (including the right to
profit commission, settlement and any adjustment) under no circumstances, will
be diminished or increased vis-à-vis the Reinsurer’s rights and liabilities
that would attach under a putative subscription for preferred shares of the
company under the terms of the sample Subscription Agreement attached hereto as
Annex A.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate on this 12th day of January, 2007.

 

 

	
  MONT FORT RE LTD

  	
   

  
	
   

  	
   

  
	
  /s/ Mark Byrne

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  and, on this 12th day of January, 2007.

  	
   

  
	
   

  	
   

  
	
  FLAGSTONE REINSURANCE LIMITED

  	
   

  
	
   

  	
   

  
	
  /s/ David Brown

  	
   

  

 

 

ANNEX A - SUBSCRIPTION AGREEMENT

 

MONT FORT
RE LTD.

MONT FORT HIGH
LAYER CELL

 

Mont Fort Re Ltd.

Crawford House

23 Church Street

Hamilton HM11

Bermuda

 

Ladies and Gentlemen:

 

This letter agreement (the “Subscription Agreement”) relates to the
private placement of Non-Voting Redeemable Series B Preferred Shares, par value
$1 per share (the “Preferred Shares” or the “Shares”), linked to the Mont Fort HIGH
LAYER Cell (the “Cell”) of Mont Fort Re Ltd. (the “Company”). The undersigned
(the “Subscriber”) hereby subscribes for Preferred Shares on the terms and
conditions set out in the Confidential Private Placement Memorandum dated 12
December, 2006 (the “Memorandum”) and the supplement thereto dated 12 January,
2007 relating to the Cell (the “Cell Supplement”). For the avoidance of doubt,
this Subscription Agreement, the Cell Supplement and, so far as consistent with
the Subscription Agreement and the Cell Supplement, the bye-laws of the
Company, together shall constitute the “governing instrument” of the Cell for
the purposes of the Bermuda Segregated Accounts Companies Act 2000 (as
amended).

 

In connection with the execution of this Subscription Agreement and to
induce the Company to sell Preferred Shares to the Subscriber, the Subscriber
understands and agrees and hereby represents and warrants to the Company as
follows:

 

1.             The Subscriber has carefully
reviewed and understands the Memorandum and the Cell Supplement, and the
Subscriber understands the risks of, and other considerations relating to, a
purchase of Preferred Shares and the Company’s business plan, policies and
strategies.

 

2.             Subject to the terms and
conditions set forth herein and in the Memorandum and the Cell Supplement, the
Subscriber, intending to be legally bound, hereby irrevocably subscribes for
the number of Preferred Shares set forth on the signature page of this
Subscription Agreement. The Subscriber is delivering to the Company the
following:

 

(a)           one original counterpart of the signature
page to this Subscription Agreement executed by the Subscriber; and

 

(b)           a check or wire transfer of funds made
payable to the order of Mont Fort Re Ltd. in the amount subscribed for.

 

3.             The Subscriber acknowledges
that this Subscription Agreement will not be valid, binding and enforceable
against the Company until executed by the Subscriber and accepted, approved and
executed by the Company. The Subscriber understands and agrees that the
Company, in its sole discretion, reserves the right to accept or reject this
subscription, in whole or in part, for any reason at any time notwithstanding
prior receipt by the Subscriber of notice of acceptance and 

 

 

that the subscription
proceeds paid herewith will be deemed held in escrow until accepted or rejected
by the Company. In the event that a transfer or check of the Subscriber is
returned unpaid, the Company shall cancel the Preferred Shares issued to the
Subscriber in connection with such dishonored transfer or check and the
Subscriber agrees to reimburse the Company for any expense or loss (including
any trading loss) incurred in connection with the issuance and cancellation of
the Shares issued to the Subscriber. In the event that this subscription is
rejected in whole or in part by the Company, the Company shall promptly (and in
any event within 2 business days) return to the Subscriber the executed
Subscription Agreement and related documents, together with the applicable
portion of the purchase price paid by the Subscriber for the Preferred Shares,
without deduction and without any accrued interest earned thereon, and this
subscription shall thereafter have no force or effect to that extent.

 

4.             The Subscriber understands
and acknowledges that: (i) the Preferred Shares have not been registered for
sale under the U.S. Securities Act of 1993 (the “Securities Act”), or the
Securities laws of any State or other political subdivision of the U.S., and
are being offered for sale to the Subscriber in reliance upon the private
offering exemption contained in Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder; (ii) the reliance of the Company upon
such exemption is predicated, in part, upon the representations and warranties
made herein; and (iii) such exemption may not be available if any of the
Subscriber’s representations and warranties are not true and accurate. The
Company is obligated neither to register the Preferred Shares under the
Securities Act at any time in the future nor to assist the Subscriber in
complying with any exemption from registration.

 

5.             The Subscriber understands
that the Company will not register as an “investment company” under the U.S.
Investment Company Act of 1940, as amended from time to time (the “Investment
Company Act”) by reason of the provisions of Rule 3a-6 thereunder, which
excludes from the definition of “investment company” any foreign insurance
company.

 

6.             The Subscriber is an “accredited
investor,” as such term is defined in Rule 501(a) of Regulation D under the
Securities Act (“Accredited Investor”), and has accurately indicated the basis
for such accreditation on Attachment A hereto, and is purchasing the
Interest for its own account or for the account of one other Accredited
Investor for which the Subscriber is acting as agent with complete
discretionary investment authority and power to bind.

 

7.             The Subscriber is a “qualified
client,” as such term is defined in Rule 205-3 under the U.S. Investment
Advisers Act of 1940, as amended from time to time (the “Advisers Act”), and
has accurately indicated the basis for such accreditation on Attachment A
hereto.

 

8.             The Subscriber has submitted
to the auditors of the Company a completed Questionnaire in the form of Attachment
B hereto.

 

9.             The Subscriber understands
that West End Capital Management (Bermuda) Limited, the investment manager of
the Cell (the “Investment Manager”), will not be registered as an investment
adviser under the Advisers Act.

 

10.           The Subscriber understands
that none of the Bermuda Monetary Authority, the U.S. Securities and Exchange
Commission nor any other governmental authority has passed upon the merits or
qualifications of, or recommended or approved, the Preferred Shares.

 

11.           The Subscriber is aware that
there will be substantial restrictions on the transferability of the Preferred
Shares under this Subscription Agreement, the Company’s bye-laws (the “Bye-

 

 

Laws”), the Securities Act
and applicable Federal and state laws; that there is no established market for
the Preferred Shares, and none is expected to develop in the future; that the
Preferred Shares will not be, and holders of Preferred Shares have no rights to
require that the Preferred Shares be, registered under the Securities Act or
any other securities laws and therefore the Preferred Shares cannot be resold,
re-offered, pledged, hypothecated or otherwise transferred, disposed of or
assigned unless subsequently registered or unless an exemption from such
registration is available. Additionally, the Subscriber is aware that the
Preferred Shares may not be resold, re-offered, pledged, hypothecated or
otherwise transferred, disposed of or assigned, voluntarily or involuntarily
without prior written notice to, and written consent of, the Company (which
consent may be granted or withheld in the Company’s sole discretion) and
fulfillment by the Subscriber and the transferee of any related requirements of
the Company, and the Subscriber agrees that any such transfer or assignment
shall be made only in accordance with the Memorandum and Cell Supplement, all
applicable laws and the consent of the Company. In the event of an offer, sale,
pledge, hypothecation, transfer or disposition permitted under this paragraph,
the Company may require an opinion of counsel acceptable to the Company and
addressing such matters as the Company deems relevant, including but not
limited to (a) whether such offer, sale, pledge, hypothecation, transfer or
disposition is in compliance with the registration requirements of the
Securities Act and (b) whether the offer, sale, pledge, hypothecation, transfer
or disposition is being made to, or will result in Preferred Shares being owned
by, any entity the assets of which are considered to be “plan assets” of any
employee benefit plan or other plan under the U.S. Employee Retirement Income
Security Act of 1974, as amended. In addition, the Company may require such
other documents as it deems necessary. The Subscriber acknowledges that the
Company may restrict transfers or require repurchases of Shares in order to
comply with applicable laws.

 

12.           Notwithstanding any
provisions of this Subscription Agreement to the contrary, the Subscriber will
be permitted to transfer any or all of his, her or its Preferred Shares to a
Permitted Transferee (as defined herein); provided, however,
that, as conditions precedent to the effectiveness of any such transfer (a)
each Permitted Transferee of the Subscriber shall (i) execute a counterpart to
this Subscription Agreement, (ii) complete and submit to the Company (x) an Investor
Qualification Checklist in the form of Attachment A hereto and (y)
paragraphs 39 through 42 hereof, and (iii) complete and submit to the auditor
if the Company a Questionnaire in the form of Attachment B hereto and
(b) the Subscriber and any Permitted Transferee shall comply with the
requirements of paragraph 11 hereof, whereupon such Permitted Transferee shall
be deemed to be the Subscriber hereunder and shall be bound by, and shall be
entitled to the benefits of, this Subscription Agreement with respect to the
transferred Preferred Shares in the same manner as the transferring Subscriber
shall have been prior to the transfer. For the purposes of this Subscription
Agreement, the term “Permitted Transferee” means (A) with respect to any
Subscriber who is a natural person (i) his or her spouse, lineal descendants
(including legally adopted descendants), heirs and legatees of such Subscriber
and (ii) any trust or custodial account for the sole benefit of any person
referred to in (i) or any corporation, limited liability company or partnership
wholly owned and controlled by the persons referred to in (i); and (B) with
respect to any Subscriber which is not a natural person, any Affiliate of such
Subscriber. As used herein, the term “Affiliate” means, with respect to any
individual or entity (each a “Person”), any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Person. For the purpose of this definition,
the term “control” (including, with correlative meaning, the terms “controlling,”

 

 

“controlled by,” and “under
common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 

13.           The Subscriber acknowledges
and understands that the Preferred Shares are subject to the following rights
of first refusal of the Company and the holders of Preferred Shares (the “Shareholders”):

 

(a) Notice. If, at any time, the
Subscriber (the “Seller”) shall desire to transfer Preferred Shares owned by
the Seller representing ten percent (10%) or more of the Preferred Shares then
issued and outstanding (other than to one or more Permitted Transferees of the
Seller), the Seller shall first submit concurrently to the Company and the
other Shareholders a notice (the “Notice”). The Notice shall contain a
reasonably detailed description of the terms of the proposed transfer and shall
also contain irrevocable offers to the Company and to each Shareholder for (x)
the Company to purchase all the Preferred Shares to be transferred or, upon the
Company’s rejection of such offer and approval of such transfer by the Company’s
board of directors (the “Board”), (y) each Shareholder to acquire a number of
Preferred Shares equal to the product of (i) the total number of Preferred
Shares the Seller desires to transfer and (ii) a fraction the numerator of
which is the number of Preferred Shares owned by such Shareholder and the
denominator of which is the total number of outstanding Preferred Shares (less
the number of Preferred Shares owned by the Seller and any Shareholders not
accepting such an offer).

 

(b) Company Acceptance. The Company may
accept the offer by delivering to the Seller, not more than 30 days after the
date of the Notice, a notice for the purchase of all, and not less than all, of
the Preferred Shares so offered at the price specified in the Notice. The
Company may, at its election, inform the Seller prior to the expiration of such
30-day period that it will not purchase the Preferred Shares.

 

(c) Shareholder Acceptance. At any time
within 30 days after the rejection of the offer by the Company and Board
approval of such sale, any or all Shareholders may accept the offer made to
them in the Notice by furnishing written notice to the Seller and may purchase
not less than all of the Shares so offered at the price specified in the Notice.
Each Shareholder may, at its election, inform the Seller prior to the
expiration of such 30-day period that it will not purchase any of the Preferred
Shares.

 

(d) Closing. The sale of the Shares to the
Company or the Shareholders pursuant to this paragraph 13 shall be made on a
business day designated by the Seller, not less than 10 and not more than 30
days after the date of acceptance, on those terms and conditions set forth in
the Notice not inconsistent with this paragraph.

 

(e) Permitted Sale. If at the end of the
respective 30-day periods (or shorter period ending with a voluntary statement
from the Company as contemplated by paragraph (b) or a voluntary statement from
each of the Shareholders as contemplated by paragraph (c)) the offers contained
in the Notice have not been accepted by (i) the Company or (ii) any
Shareholder, the Seller shall have 90 days (or such longer time period
necessary to comply with governmental regulations, in any event not to exceed
150 days) in which to transfer the Preferred Shares, on 

 

 

terms and conditions not more
favorable to the buyer than, and for a price equal to or higher than, as set
forth in such Notice. If, at the end of such period, the Seller has not
completed the transfer of all such Preferred Shares as aforesaid, all the
restrictions on such transfer contained in this paragraph 13 shall again be in
effect with respect to any such Preferred Shares not transferred by the Seller.

 

14.           The Subscriber is aware the
Subscriber will have one opportunity to redeem the Preferred Shares during each
calendar year and that any redemptions may be limited by available funds. The
Company will use its reasonable best efforts to ensure that sufficient funds
are available on the applicable redemption date for any anticipated redemption.
The Subscriber’s overall commitment to investments which are not readily
marketable is not excessive in view of the Subscriber’s net worth and financial
circumstances, and the purchase of the Preferred Shares will not cause such
commitment to become excessive. The Subscriber has no contract, undertaking,
arrangement, or agreement with any person to sell or transfer or to have any
person sell for the Subscriber all or any portion of the Preferred Shares. The
Subscriber has no present obligation, indebtedness, or commitment, nor is any
circumstance in existence, which will compel the Subscriber to secure funds
through the sale of the Preferred Shares, nor is the Subscriber a party to any
plan or undertaking which would require or contemplate that proceeds from the
sale of Preferred Shares be utilized in connection therewith, and the
Subscriber does not now have any reason to anticipate any change in
circumstances or other particular occasion or event which would cause the
Subscriber to sell the Preferred Shares. In view of such facts, the Subscriber
acknowledges that such Subscriber (i) has adequate means of providing for such
Subscriber’s current needs, anticipated future needs and possible contingencies
and emergencies, (ii) is able to bear the economic risk of the investment in
the Preferred Shares for an indefinite period of time, including the risks
summarized in the Memorandum and Cell Supplement, and (iii) has no need for
liquidity in the investment in the Preferred Shares and could afford complete
loss of such investment.

 

15.           The discussion of the tax
consequences arising from an investment in the Company set forth in the
Memorandum and Cell Supplement is general and not complete. The tax
consequences to the Subscriber of an investment in the Preferred Shares will
depend on, among other things, the law at the relevant time and the Subscriber’s
particular circumstances.

 

16.           The Subscriber, such
Subscriber’s advisers, if any, and designated representatives, if any
(collectively with the Subscriber, the “Subscriber Group”) has sufficient
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of the Subscriber’s investment in the Interest
and to make an informed decision relating thereto, and the Subscriber has
substantial experience in making investment decisions of this type or is
relying on such Subscriber’s own advisers or qualified representatives in
making such Subscriber’s investment decision. The Subscriber fully understands
that the Cell has no financial or operating history and that the Preferred
Shares offered by the Company are highly speculative investments which involve
a high degree of risk of loss of the entire investment. The Subscriber Group
has evaluated the nature of the risks involved in purchasing the Preferred
Shares and has carefully reviewed and understands the risks of, and other
considerations relating to, the purchase of Preferred Shares, including the
risks set forth in the Memorandum and Cell Supplement, the tax matters
described in the Memorandum and Cell Supplement, and the Subscriber Group has
confirmed to their full satisfaction that an investment in the Company is a
suitable one for the Subscriber. The Subscriber Group understands that the
risks described in the 

 

 

Memorandum and Cell
Supplement are not a complete list of the risks involved in investment in the
Company.

 

17.           The Subscriber Group has had
the opportunity to ask questions of and receive answers from representatives of
the Company concerning the operations and prospects of the Company and the
terms and conditions of a proposed investment in the Company. The Subscriber
Group has also had the opportunity to obtain additional information necessary
to verify the accuracy of information set forth in the Memorandum and Cell
Supplement about the Company, has had all of its inquiries to representatives
of the Company and the Company answered to its full satisfaction, and has been
furnished with all information requested in writing by the Subscriber relating to
the Company, the terms of the transactions contemplated by the Memorandum and
Cell Supplement, the offering and sale of the Preferred Shares and any other
matters set forth in the Memorandum and Cell Supplement, including all material
information concerning any arrangement under which the Investment Manager may
receive compensation from the Company. The Subscriber Group is satisfied that
it has received information with respect to all matters which it considers
material to make an informed decision. Accordingly, the Subscriber Group has
independently evaluated the risks of purchasing the Interest.

 

18.           The Subscriber has, in
making such Subscriber’s decision to purchase the Preferred Shares, relied
solely upon independent investigations made by the Subscriber and the
Subscriber Group and has not relied upon any representations or other
information (whether oral or written) other than (i) as explicitly set forth in
the Memorandum and Cell Supplement, or (ii) as described in paragraph 17 above,
information furnished or made available to the Subscriber at such Subscriber’s
written request by the Company. The Subscriber is not relying on the Company
with respect to the tax and other economic considerations involved in this
investment and understands that the Subscriber is urged to seek independent
advice from such Subscriber’s professional advisors relating to the suitability
of an investment in the Company in view of such Subscriber’s overall financial
needs and with respect to the legal and tax implications of such an investment.

 

19.           The Subscriber is not
subscribing for Preferred Shares as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or general meeting, or any solicitation by a person
not previously known to the Subscriber in connection with the investments
generally.

 

20.           The Subscriber is purchasing
Preferred Shares for such Subscriber’s own account for investment and not with
a view to, or for resale in connection with, any distribution or other
disposition of the Preferred Shares within the meaning of the Securities Act,
nor with any present intention of distributing or selling the Preferred Shares
or any portion thereof and no one other than the Subscriber will have any
interest in, or any right to acquire, the Preferred Shares or any part thereof
and nor does anyone other than the Subscriber have any interest in this
subscription.

 

21.           The Subscriber has full
right, power and authority to execute this Subscription Agreement, pursuant to
power-of-attorney or otherwise. The Subscriber has duly and validly executed
this Subscription Agreement and such Subscriber has full right, power and
authority to execute, deliver and perform its obligations hereunder.

 

22.           If the Subscriber is not a
natural person, it represents that: (i) it is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it has been
formed; (ii) 

 

 

the execution and delivery
of this Subscription Agreement has been duly authorized by all necessary action
on the part of all officers, directors, stockholders, partners or trustees and
will not violate any agreement to which the Subscriber is a party; (iii) the
individual executing and delivering this Subscription Agreement has the
requisite right, power, capacity and authority to do so on behalf of the
Subscriber; (iv) it has its principal place of business at the address set
forth in paragraph 41 hereof, and (v) it has substantial assets in addition to
the funds to be used to purchase the Preferred Shares. In addition, the
execution and performance of this Subscription Agreement by the Subscriber will
not result in a breach of any of the terms, conditions or provisions of, or
constitute a default under, any of its organizational instruments.

 

23.           This Subscription Agreement
when executed by the Subscriber constitutes the Subscriber’s valid and binding
obligation and the Subscriber has taken no action in connection herewith which
could subject the Company to any valid claim for any commission, fee or other
compensation to a finder or broker. The execution and performance of this
Subscription Agreement by the Subscriber does not violate any statute, regulation,
law, order, writ, injunction, judgment, decree, agreement or controlling
document to which the Subscriber is subject, or require any authorization or
approval under or pursuant to any of the foregoing.

 

24.           Subject to the preceding
sentence, the Subscriber hereby acknowledges and agrees that such Subscriber
may not cancel, terminate or revoke this Subscription Agreement or any
agreement made by the Subscriber hereunder and that this Subscription Agreement
and any agreements of the Subscriber hereunder shall survive the death,
disability or legal incapacity of the Subscriber and shall be binding upon and
inure to the benefit of the Company and their heirs, executors, administrators,
successors, assignees and legal representatives. If the Subscriber is more than
one person, the obligations of the Subscriber hereunder shall be joint and
several and the agreements, representations, warranties and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors, legal
representatives and assigns.

 

25.           The Subscriber understands
that the Company, at any time and for any reason in its sole discretion, may
give notice in writing to any holder of Preferred Shares that it will
compulsorily repurchase, in full or in such part as specified in such notice,
of such Preferred Shares upon a date specified in the notice. Upon the date
specified as the repurchase date in such notice, the Preferred Shares specified
in such notice shall be deemed cancelled without any further action on the part
of such shareholder, and shall be entitled solely to payment calculated in the
manner described in the Memorandum and Cell Supplement.

 

26.           If this subscription is
accepted in whole or in part by the Company in its sole discretion, and the
other conditions precedent set forth herein are met, the Subscriber shall
become a shareholder of the Company upon his name being entered into the
register of members of the Company, and the amount to be paid by the Subscriber
for the Preferred Shares to be issued to such Subscriber may be transferred to
the capital of the Company.

 

27.           Additional Preferred Shares
may be offered or sold by the Company, following the offer and sale of the
Preferred Shares to the Subscriber in such amounts and at such times as the
Company may determine from time to time.

 

28.           This Subscription Agreement
supersedes any previous subscription agreement executed by or on behalf of the
Subscriber relative to Preferred Shares, and any such previous agreement 

 

 

is hereby rescinded and is
of no further force and effect. The Subscriber understands that this
Subscription Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, there are no representations,
covenants or other agreements except as stated or referred to herein, and that
this Subscription Agreement may be amended only by a writing executed by all
parties hereto.

 

29.           This Subscription Agreement
shall be enforced, governed and construed in all respects in accordance with
the laws of Bermuda, without giving effect to the conflict of law principles
thereof.

 

30.           The Subscriber hereby
constitutes and appoints the Company with full power of substitution and
re-substitution, its true and lawful attorney, for it, in its name, place and
stead, and for its use and benefit to execute, deliver, certify, acknowledge,
file and record any certificates, instruments or documents which may be
required by any governmental agency or which the Company deems necessary or
advisable in order to vest in Subscriber good and marketable title to the
Preferred Shares.

 

31.           The Subscriber understands
the meaning and legal consequences of this Subscription Agreement and hereby
agrees to indemnify and hold harmless the Company and each person, if any, who
controls either of them within the meaning of Section 15 of the Securities Act,
against any loss, liability, claim, damage, cost and expense whatsoever
(including but not limited to any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation commended or
threatened or any claim whatsoever) arising out of or based upon any breach of
any of the Subscriber’s representations or warranties or breach or failure by
the Subscriber to comply with any covenant or agreement made by the Subscriber
herein or in any other document furnished by the Subscriber to any of the
foregoing in connection with this subscription or in connection with the sale
or distribution by it of the Preferred Shares or any portion thereof purchased
by it pursuant hereto in violation of the Securities Act or of any applicable
securities law.

 

32.           All of the information that
the Subscriber has heretofore furnished or which is set forth herein is correct
and complete as of the date of this Subscription Agreement and will be true and
correct on the date Preferred Shares are issued to the Subscriber and shall
survive such issuance. If there should be any material change to such
information prior to the issuance of the Preferred Shares or if at any time the
Subscriber shall become an “employee benefit plan” as defined below, the
Subscriber will immediately furnish revised or corrected information to the
Company.

 

33.           Within 10 days after receipt
of a written request from the Company, the Subscriber agrees to provide such
information and to execute and deliver such documents as reasonably may be
necessary to comply with any and all laws and ordinances to which the Company
is subject, provided that nothing herein contained shall require the Subscriber
to provide any such information or execute and deliver any such documents if
the Subscriber determines, in its sole discretion, that doing so is not in
Subscriber’s interest.

 

34.           The Subscriber agrees to
hold the Memorandum and Cell Supplement in confidence, it being understood that
the Memorandum and Cell Supplement are strictly for the Subscriber’s use and is
not to be redistributed or reduplicated by the Subscriber, except to Subscriber’s
advisors.

 

35.           All notices and other
communications hereunder shall be in writing and shall be deemed to have been
given when delivered or mailed by first class, registered or certified mail,
postage 

 

 

prepaid, addressed (a) if to
the Company, to its address set forth above; and (b) if to the Subscriber, to
its address set forth below.

 

36.           Whenever used herein, the
singular number shall include the plural, the plural shall include the
singular, the use of any gender shall include all persons, and all capitalized
terms used and not otherwise defined herein shall have the meanings given them
in the Memorandum and Cell Supplement.

 

37.           This Subscription Agreement
may be executed in counterpart copies, each of which shall be considered an
original and all of which together shall constitute one and the same instrument
binding on the parties, notwithstanding that the parties are not signatories to
the same counterpart.

 

38.           Each provision of this
Subscription Agreement is intended to be severable from every other provision,
and the invalidity or illegality of any portion hereof shall not affect the
validity or legality of the remainder hereof.

 

39.           The Company will provide on
an annual basis all information required by Subscriber in order to make a “QEF”
election with respect to the Preferred Shares.

 

40.           The Employer Identification
Number of the Subscriber is:

 

41.           Under penalties of perjury,
the Subscriber certifies that:

 

(a)           The number shown above
is its correct Taxpayer Identification Number.

 

(b)           It
is not subject to backup withholding because (i) it is exempt from backup
withholding, (ii) it has not been notified by the Internal Revenue Service (the
“IRS”) that it is subject to backup withholding as a result of a failure to
report all interest or dividends, or (iii) the IRS has notified it that it is
no longer subject to backup withholding.

 

42.           The Subscriber is purchasing
the Shares as follows [please initial one]:

 

(a)           The
Subscriber is using or will use to purchase the Preferred Shares funds that are
assets of (i) an “employee benefit plan” (as defined in Section 3(3) of ERISA),
whether or not it is subject to the provisions of Title I of ERISA, (ii) a “plan”
described in Section 4975(e)(1) of the United States Internal Revenue Code of
1986, as amended from time to time (the “Code”) or (iii) an entity whose
underlying assets include assets of an employee benefit plan or plans by reason
of such employee benefit plan or plan’s investment in the entity (such persons
and entities described in clauses (i), (ii) and (iii) being referred to herein
as “Benefit Plan Investors”).

 

OR

 

(b)           The
Subscriber is not using and will not use to purchase the Preferred Shares funds
that are assets of Benefit Plan Investors.

 

 

42.           The
address of the Subscriber’s principal place of business is                                                               .

 

 

IN WITNESS WHEREOF, the undersigned represents
that the foregoing statements are true and correct and that it has executed (or
caused to be executed) this Subscription Agreement on the     
day of January, 2007.

 

 

	
   

  	
   

  
	
  (Print Name of Entity)

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  U.S. $

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Total Amount of investment in Preferred Shares

  	
   

  
	
   

  	
  (in words and in dollars)

  
							

 

 

Mont Fort Re Ltd.

 

ACKNOWLEDGMENT FOR CORPORATE OR PARTNERSHIP
SUBSCRIBER

 

	
  State of

  	
   

  	
  )

  
	
  ss.:

  	
   

  	
   

  
	
  County of

  	
   

  	
  )

  
	
   

  	
   

  	
   

  

 

On this       day of                             ,
2007, before me, the undersigned Notary Public, duly commissioned and sworn,
personally appeared                             ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be (a) (the)                             
of the entity that executed the within instrument on behalf of the entity
therein named, and acknowledged to me that on behalf of such entity he (or she)
duly executed the same.

 

In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate above written.

 

 

	
   

  	
   

  	
   

  
	
  (Notary Public in and for the aforesaid

  	
   

  	
   

  
	
  County and State)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  My commission expires on:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

[Seal]

 

 

Mont Fort
Re Ltd.

 

ACKNOWLEDGMENT FOR TRUST SUBSCRIBER

 

	
  State of

  	
   

  	
  )

  
	
  ss.:

  	
   

  	
   

  
	
  County of

  	
   

  	
  )

  
	
   

  	
   

  	
   

  

 

For Individual Trustees:

 

On this       day of                         ,
2007, before me, the undersigned Notary Public, duly commissioned and sworn,
personally appeared                                        
and                         
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name is (or whose names are) subscribed to the within
instrument, and subscribed and swore to such instrument and acknowledged that
he (or she or they) executed the same.

 

For Corporate Trustee:

 

On this      day of                         ,
2007, before me, the undersigned Notary Public, duly commissioned and sworn,
personally appeared                                          
and                         ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the                         
of the corporation that executed the within instrument, and known to me to be
the person who executed the within instrument on behalf of the corporation
therein named, and acknowledged to me that such corporation executed the same
pursuant to its bylaws or a resolution of its board of directors.

 

In Witness Whereof, I have hereunto set my hand and affixed my official
seal the day and year in this certificate above written.

 

 

	
   

  	
   

  	
   

  
	
  (Notary Public in and for the aforesaid

  	
   

  	
   

  
	
  County and State)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  My commission expires on:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

[Seal]

 

 

* * * *

 

Do not Write Below This Point

 

 

Subscription accepted on                          ,
2007.

 

	
  MONT FORT RE LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
				

 

 

MONT FORT RE LTD.

 

ATTACHMENT A

 

INVESTOR QUALIFICATION

 

Name of Subscriber:                                        

 

1.             Accredited
Investor Qualification. Please check one or more of the appropriate entries
below that accurately describes the Subscriber on whose behalf the Subscription
Agreement is executed.

 

o            (a) 
The Subscriber is a bank as defined in Section 3(a)(2) of the U.S.
Securities Act of 1933, as amended from time to time (the “Securities Act”), or
a savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended from time to time; any insurance
company as defined in Section 2(13) of the Securities Act; any investment
company registered under the U.S. Investment Company Act of 1940, as amended
from time to time (the “Investment Company Act”), or a business development
company as defined in Section 2(a)(48) of the Investment Company Act; a Small
Business Investment Company licensed by the United States Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958, as amended from time to time; a plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000.

 

o            (b) 
The Subscriber is a private business development company as defined in
Section 202(a)(22) of the U.S. Investment Advisers Act of 1940, as amended from
time to time (the “Advisers Act”).

 

o            (c) 
The Subscriber is an organization described under section 501(c)(3) of
the Internal Revenue Code, a corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Preferred Shares offered, with total assets in excess of $5,000,000.

 

o            (d) 
The Subscriber is a trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Preferred Shares offered,
whose purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D promulgated under the Securities Act.

 

 

o            (e) 
The Subscriber is an entity in which all of the equity owners are
accredited investors.

 

2.             Qualified
Client Qualification. Please check one or more of the appropriate entries
below that accurately describes the Subscriber on whose behalf the Subscription
Agreement is executed.

 

o            (a) 
Immediately after entering into the Subscription Agreement, the
Subscriber will have at least $750,000 under the management of the Investment
Manager.

 

o            (b) 
the Subscriber has a net worth of more than $1,500,000.

 

o            (c) 
The Subscriber is a “qualified purchaser,” as defined in Section
2(a)(51)(A) of the Investment Company Act.

 

22

 

Attachment B

 

QUESTIONNAIRE

For Investors in

Mont Fort Re Ltd.

MFR HIGH LAYER Cell

 

The purpose of this questionnaire is to help the
Company determine whether it will generate more than a de minimis amount of
related person insurance income (“RPII”) or otherwise qualify for an exemption
from the RPII rules. For this purpose, “RPII” is any insurance income
attributable to a policy of insurance or reinsurance with respect to which the
person (directly or indirectly) insured is a United States shareholder of the
Company or is a related party or “50% affiliate” (as defined below) to such a
shareholder. For purposes of the preceding sentence, a United States
shareholder is a U.S. Person (as defined below) that owns any
stock of the Company, either directly or indirectly through a corporation,
partnership, trust or estate that is not a U.S. Person.

 

Please refer to the Memorandum for a discussion of the
United States federal income tax consequences to any U.S. shareholder if the
Company generates more than a de minimis amount of RPII and fails to qualify
for any other exemption from the RPII rules. Failure to determine accurately
whether the Company has more than a de minimis amount of RPII could have
adverse tax consequences to other investors, as well as to you.

 

For purposes of this questionnaire, the term “Person”
includes an individual, corporation, partnership, estate or trust. The term “U.S.
Person” means (i) an individual who is a citizen or resident of the United
States, (ii) a corporation or partnership that is organized under the laws of
the United States or any political subdivision thereof, (iii) an estate that is
subject to U.S. federal income tax on all of its income regardless of source
and (iv) any trust if a U.S. court is able to exercise primary jurisdiction
over the administration of the trust and one or more U.S. trustees have the
authority to control all substantial decisions of the trust. A “Non-U.S. Person”
is any Person that is not a U.S. Person.

 

If an entity is disregarded as separate from its owner
for U.S. federal income tax purposes, please reply to this questionnaire as if
the relevant person is the owner of such disregarded entity.

 

A Person is considered a related person or “50% affiliate”
to another Person if (i) such Person is an individual, corporation,
partnership, trust, or estate which controls that other Person or which that
other Person controls; or (ii) such Person is a corporation, partnership,
trust, or estate which is controlled by the same Person or Persons that control
the other Person. Control with respect to a corporation means the direct or
indirect ownership of stock possessing more than 50% of the total voting power
or value of all classes of stock. In the case of a partnership, trust, or
estate, control means the direct or indirect ownership of more than 50% (by
value) of the beneficial interest in such partnership, trust, or estate.

 

The Questionnaire does not need to be completed by (1)
an investor who is an individual Non-U.S. Person or (2) an investor who is a
Non-U.S. Person all of whose ultimate beneficial individual owners are also
Non-U.S. Persons.

 

23

 

Please send your responses to the
attached questionnaire to the address shown as soon as possible but no later
than January 2  , 2007.

 

Deloitte Tax LLP

555 12th Street, NW

Washington, DC 20004

Attn: Richard Safranek

Rsafranek@deloitte.com

Fax: 202-661-1021

Phone:  202-879-5326

 

24

 

Questionnaire

 

If one of the following statements is true, please check the
appropriate box and return the Questionnaire without completing any of the
questions set forth below.

 

o I certify that I am an investor who is an
individual Non-U.S. Person.

 

o I certify that I am an investor who is a
Non-U.S. Person all of whose ultimate beneficial individual owners are also
Non-U.S. Persons.

 

If neither of the statements set forth above is true, please answer the
questions set forth below.

 

1.             Please identify
whether the Person through which you propose to make the investment in the
Company (the “Company Investor”) is a U.S. Person or Non-U.S. Person and
whether, for U.S. tax purposes, the Person is treated as an individual,
corporation, partnership, trust or estate.

 

If the Company Investor is a Non-U.S. Person, please
answer Questions 2 and 3 

 

2.             Please provide a list
of all partners/shareholders/beneficiaries that are U.S. persons holding an
ownership interest (or an option or right to acquire an ownership interest) in
the Company Investor, including their respective ownership interests with
respect to this investment. Please describe any carried interests or variations
in interests based on investment performance or other factors.

 

3.             Please indicate
whether any Person identified under Question 2 or any 50% affiliate to such
Person is an insurance company or reinsurance company (U.S. or non-U.S.).

 

If the Company Investor is a U.S. Person, please
answer Question 4 or 5 and Question 6

 

4.             If the Company
Investor is treated as a partnership or trust for U.S. tax purposes, please
provide a list of all partners/ beneficiaries holding an ownership interest (or
an option or right to acquire an ownership interest) in the entity.

 

5.             If the Company Investor
is treated as a corporation for U.S. tax purposes, please provide a list of all
Persons that own, directly or indirectly, 10% or more of the value of the stock
(or an option or right to acquire 10% or more of the value of the stock) of
such Company Investor.

 

6.             Please indicate
whether the Company Investor or any 50% affiliate of the Company Investor is an
insurance company or reinsurance company (U.S. or non-U.S.).

 

25Exhibit 10.33

 

January 1, 2007

 

Facultative/Obligatory

Surplus

Reinsurance
Contract

Effective: 
January 1, 2007

 

between

 

Flagstone
Reinsurance Limited

Hamilton, Bermuda

 

and

 

Mont
Fort Re Ltd in respect of its segregated account, designated as High Layer Cell

Hamilton,
Bermuda

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
  Article

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Article I - Classes of Business Reinsured

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article II - Commencement and Termination

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article III - Territory (BRMA 51A)

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article IV - Exclusions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article V - Retention and Limit

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article VI - Security

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article VII - Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article VIII - Loss in Excess of Policy Limits/Extra Contractual
  Obligations

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Article IX - Other Reinsurance

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Article X - Losses and Loss Adjustment Expense

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  Article XI - Salvage and Subrogation

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article XII - Original Conditions (BRMA
  37B)

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article XIII - Commission

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article XIV - Reports and Remittances

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article XV - Offset

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article XVI - Access to Records

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article XVII - Errors and Omissions

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article XVIII - Currency (BRMA 12A)

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article XIX - Insolvency (BRMA 19C)

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article XX - Arbitration

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article XXI - Governing Law

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article XXII - Service of Suit

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  Schedule A

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Schedule B

  	
   

  	
  1

  

 

 

Facultative/Obligatory

Surplus

Reinsurance
Contract (“Contract”)

Effective: 
January 1, 2007

 

between

 

Flagstone
Reinsurance Limited

Hamilton, Bermuda

(hereinafter referred to as the “Company”)

 

and

 

Mont
Fort Re Ltd in respect of its segregated account designated as High Layer Cell

Hamilton,
Bermuda

(hereinafter
referred to as the “Reinsurer”)

 

Article I - Classes of
Business Reinsured

 

A.     By
this contract the Company may cede to the Reinsurer and the Reinsurer obligates
itself to accept reinsurance of the Company’s surplus Liability (as hereinafter
defined) under policies, contracts and binders of reinsurance (hereinafter
called “policies”) in force at the effective date hereof or issued or renewed
on or after that date.

 

B.      The
liability of the Reinsurer with respect to each cession hereunder shall
commence obligatorily and simultaneously with that of the Company, subject to
the terms, conditions and limitations hereinafter set forth.

 

Article II - Commencement
and Termination

 

A.     This
Contract shall become effective on January 1, 2007, with respect to losses
occurring on or after that date, and shall continue in force thereafter until
terminated.

 

B.      Either
party may terminate this Contract at the end of any contract year by giving the
other party not less than 365 days’ prior notice by certified mail.

 

C.      Unless
the Company elects to reassume the ceded unearned premium in force on the
effective date of termination, and so notifies the Reinsurer prior to or as
promptly as possible after the effective date of termination, reinsurance
hereunder on business in force on the effective date of termination shall
remain in full force and effect until expiration, cancellation or the next
premium anniversary of such business, whichever first occurs, but in no event
beyond 18 months following the effective date of termination.

 

D.      “Contract
year” as used herein shall mean the period from January 1, 2007 to December 31,
2007, both days inclusive, and each respective 12-month period thereafter that
this Contract continues in force. 
However, if this Contract is terminated, the final contract year 

 

1

 

shall be from the beginning of the then
current contract year through the date of termination if this Contract is
terminated on a “cutoff” basis, or the end of the runoff period if this
Contract is terminated on a “runoff” basis.

 

Article III - Territory
(BRMA 51A)

 

The territorial limits of this Contract shall be worldwide in its
geographical scope.

 

Article IV - Exclusions

 

This Contract does not apply to and specifically excludes any cession
hereunder which is not within the scope of Schedule A.

 

Article V - Retention and
Limit

 

A.     For
each policy subject to this Contract, the Company shall retain and be liable
for an amount of its gross liability that meets the requirements set forth in
Schedule A attached to and forming part of this Contract. With respect to any
one program that meets the requirements set forth in Schedule A, the Company
shall then cede, and the Reinsurer agrees to accept, an amount of the Company’s
surplus liability, subject to a maximum cession to the Reinsurer.

 

B.      Any
policy ceded hereunder shall be disclosed by the Company to the Reinsurer
within 15 days of the end of the month in which the cession of liability by the
Company occurs.

 

C.      Notwithstanding
the foregoing, any reinsurance falling outside the scope of Schedule A hereof
that is specially accepted from the Company in writing by the Underwriting
Committee of the Board of Directors of the Reinsurer shall be covered under
this Contract and be subject to the terms hereof, except as such terms shall be
modified by the special acceptance.

 

Article VI - Security

 

The Reinsurer shall provide security for its obligations hereunder in
accordance with the requirements set forth in Schedule B attached hereto.

 

Article VII - Definitions

 

A.     “Surplus
liability” as used herein is defined as that portion of the Company’s gross
liability on any policy which exceeds the amount of its net retention.

 

B.      The
Company shall be the sole judge of what constitutes “one program.”

 

C.      References
to “the Reinsurer” as used herein shall mean the Reinsurer acting by its Board
of Directors, any duly appointed committee thereof, its duly authorized officers
and 

 

2

 

employees, its duly authorized
representatives or agents, or such other person as it may lawfully appoint.

 

Article VIII - Loss in
Excess of Policy Limits/Extra Contractual Obligations

 

A.     In
the event the Company pays or is held liable to pay an amount of loss in excess
of its policy limit, but otherwise within the terms of its policy (hereinafter “loss
in excess of policy limits”), or any punitive, exemplary, compensatory or
consequential damages other than loss in excess of policy limits (hereinafter “extra
contractual obligations”) such loss in excess of policy limits and/or extra
contractual obligations shall be added to the Company’s loss, if any, under the
policy involved, and the sum thereof shall be subject to the provisions of
Article V.

 

B.      An
extra contractual obligation shall be deemed to have occurred on the same date
as the loss covered or alleged to be covered under the policy.

 

C.      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.

 

D.      If
any provision of this Article shall be rendered illegal or unenforceable by the
laws, regulations or public policy of any country, such provision shall be
considered void in such country, 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.

 

E.      It
is understood that loss in excess of policy limits and extra contractual
obligations paid by the Company under the original contracts subject hereto
shall be covered as contractual losses hereunder.

 

Article IX - Other
Reinsurance

 

A.     The
Company shall be entitled, but not obligated, to purchase reinsurance
protection inuring to the benefit of this Contract.

 

B.      The
Company shall be permitted to carry whole account excess reinsurance or
reinsurance that covers broad classes of risk, 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 - Losses and Loss
Adjustment Expense

 

A.     Whenever
losses sustained by the Company appear likely to result in a claim hereunder,
the Company shall notify the Reinsurer promptly.

 

3

 

B.      Notifications
shall comprise the Company’s best estimate of the expected amount of losses,
inclusive of loss adjustment expense, case reserves and, if at that time
established by the Company, a provision for losses incurred but not reported (“IBNR”).

 

C.      All
loss settlements made by the Company, whether under strict policy conditions or
by way of compromise, shall be binding upon the Reinsurer, and the Reinsurer
agrees to pay or allow, as the case may be, its proportion of each such
settlement in accordance with Article XIV.

 

D.      In
the event of a claim under a policy subject hereto, the Reinsurer shall be
liable for its proportionate share of loss adjustment expense incurred by the
Company in connection therewith (including, but not limited to, litigation
expenses, interest on judgments, expenses of outside adjusters and declaratory
judgment expenses or other legal expenses and costs incurred in connection with
coverage questions and legal actions connected thereto), but not including
office expenses or salaries of the Company’s regular employees, and shall be
credited with its proportionate share of any recoveries of such expense.

 

E.      In
the event that the Company establishes a provision for loss, including IBNR,
the Reinsurer shall be liable for its proportionate share of such provision,
and may be required to provide security for any such obligation.

 

Article XI - Salvage and
Subrogation

 

The Reinsurer shall be credited with its proportionate share of 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.
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
XII - Original Conditions (BRMA 37B)

 

A.     All
reinsurance under this Contract shall be subject to the same rates, terms,
conditions, waivers and interpretations and to the same modifications and
alterations as the respective policies of the Company.  However, in no event shall this be construed
in any way to provide coverage outside the terms and conditions set forth in
this Contract.  The Reinsurer shall be
credited with its exact proportion of the original premiums received by the
Company.

 

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.

 

Article XIII - Commission

 

The Reinsurer shall pay its proportional share of all original
deductions and acquisition expense including taxes on policies ceded by the
Company to the Reinsurer hereunder and shall allow the Company a ceding
commission of 5% on all written premiums gross of such original 

 

4

 

deductions and acquisition expense including taxes.  The Company shall allow the Reinsurer return
commission on return premiums at the same rate.

 

Article XIV - Reports and
Remittances

 

A.     Within
14 days after the end of each month, the Company shall report to the Reinsurer:

 

1.     Ceded gross premiums written and collected during
the month;

 

2.     Commissions, deductions and ceding commission
thereon;

 

3.     Ceded losses and loss adjustment expense incurred
and paid during the month;

 

4.     The change in amount of ceded reserves for
outstanding losses and loss adjustment expense as of the end of the month;

 

5.     The change in amount of ceded IBNR as of the end
of the month; and

 

6.     The balance of (1) less (2) less (3).

 

B.      The
positive balance shown in A (6) above shall be due the Reinsurer and shall be
remitted by the Company with its report. 
The Company may, at its election, withhold from payment an amount equal
to A (4) plus A (5), above, provided the Company credits the Reinsurer with
interest equal to the one-month LIBOR rate as quoted in The Wall Street Journal on the first
business day of the month for which the calculation is made applied to such
cumulative amount held by the Company. Any balance shown to be due the Company
or otherwise due pursuant to the requirements set forth in Schedule B attached
hereto shall be remitted by the Reinsurer as promptly as possible after receipt
and verification of the Company’s report.

 

C.      Annually,
or at such other times as may be reasonably requested, the Company shall
furnish the Reinsurer with such information as the Reinsurer may require in
order to fulfill its financial and regulatory reporting requirements.

 

Article XV - Offset

 

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 XVI - Access to
Records

 

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.

 

5

 

Article
XVII - Errors and Omissions

 

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, however, that such error or omission is rectified as soon
as possible after discovery.

 

Article XVIII - Currency
(BRMA 12A)

 

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 denominated in United States Dollars.

 

Article XIX - Insolvency
(BRMA 19C)

 

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 insured 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 insolvent Company.

 

Article XX - 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

 

6

 

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, either
party may request a justice of a court of general jurisdiction of Hamilton, Bermuda,
to appoint the Umpire.

 

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 on the award may be
entered in any court having jurisdiction.

 

C.      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.

 

D.      Any
arbitration proceedings shall take place in Hamilton, Bermuda; all proceedings
pursuant hereto shall be governed by the law of Bermuda.

 

Article XXI - Governing Law

 

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

 

For the avoidance of doubt, with respect to any obligations of the Reinsurer
to the Company under the terms of this Contract, the Company shall, in
accordance with the Segregated Accounts Companies Act 2000 (as amended), have
recourse only to the assets of High Layer Cell, and not the assets of any other
segregated account or the general account of Mont Fort Re Ltd.

 

Article XXII - Service of
Suit

 

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
Bermuda.  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 Bermuda,
to remove an action to a Bermuda Court, or to seek a transfer of a case to
another court as permitted by the laws of Bermuda.

 

7

 

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

 

 

Hamilton, Bermuda, this 12th day of January in the year  2007.

 

	
   

  	
  /s/ David Brown

  	
   

  
	
   

  	
  Flagstone Reinsurance Limited

  	
   

  
	
   

  	
  By: David Brown, Director

  	
   

  

 

 

Hamilton, Bermuda, this 12th day of January in the year 2007.

 

	
   

  	
  /s/ Mark Byrne

  	
   

  
	
   

  	
  Mont Fort Re Ltd High Layer Cell

  	
   

  
	
   

  	
  By: Mark Byrne, Director

  	
   

  

 

8

 

Schedule
A

 

Facultative/Obligatory

Surplus

Reinsurance
Contract

Effective: 
January 1, 2007

 

issued to

 

Flagstone
Reinsurance Limited

Hamilton, Bermuda

 

Reinsurance
Guidelines

 

 

1)      Policies

 

Policies ceded by the Company to the
Reinsurer shall comprise excess of loss reinsurance policies classified by the
Company as Property Catastrophe, Property Specialty and Other Specialty,
subject to the terms, conditions and limitations herein set forth.  In certain cases the company may cede
industry loss warranties (ILW’s) to the Reinsurer, subject to the terms,
conditions and limitations herein set forth.

 

2)      Cession and Limit

 

The Company shall cede policies up to a
maximum aggregate limit of exposure in each of one or more risk zones. The risk
zones may comprise distinct classes of business, or as respects property
catastrophe business, one or more geographical areas of the world that the
Company considers to have low or no correlation with respect to losses from the
insured perils.

 

The Company and the Reinsurer shall agree to the
number and nature of the risk zones and the limit of exposure for each risk
zone from time to time.

 

In respect of each program of policies ceded
to the Reinsurer, the Company shall retain an amount of limit at least equal to
that ceded to the Reinsurer, it being understood and agreed that for the
purposes of calculating such amount, the sum of limits relating to the Company’s
programs shall include only those of the program(s) being ceded hereto and
other program(s) of the Company, if any, attaching at a level below such ceded
program(s), provided that the Company shall reasonably decide what constitutes
a “program.”

 

In respect of any policy ceded to the
Reinsurer, the Company shall retain an amount of limit at least equal to 30.0%
of the Reinsurer’s share of the limit of such policy.

 

At the time a program is underwritten by the
Company the “expected” mean loss ratio must be less than 50.0% and the annual
expected average loss for the subject policy must be equal to or less than 4.0%
of its limit.  For the purposes of the
preceding sentence, “expected” shall mean as calculated by the Company
utilizing any third-party or proprietary models which the Company considers
credible in each case.

 

1

 

3)      Modification

 

The parties to this Contract authorize the
Reinsurer to modify, change, add or delete any requirements under this Schedule
A, paragraphs (2) and (3), in its sole discretion, upon 14 days’ prior written
notice to the Company.

 

2

 

Schedule
B

 

Facultative/Obligatory

Surplus

Reinsurance
Contract

Effective: 
January 1, 2007

 

issued to

 

Flagstone
Reinsurance Limited

Hamilton, Bermuda

 

1)      Security

 

The Reinsurer shall provide security for its
obligations to the Company under this Contract in the manner set forth in this
Schedule B.

 

2)      Definitions

 

Limit shall mean
the maximum aggregate amount of insurance and reinsurance loss exposures
written by the Reinsurer in any Risk Zone.

 

Reinsurer’s Proportionate Reserves shall mean the Reinsurer’s proportion
of the loss reserves in respect of losses that have been reported to the
Company and allocated loss expenses relating thereto, and unearned premium
reserves, and any amounts relating to reserves in respect of losses or loss
expenses Incurred But Not Reported, as shown in the statement prepared by the
Company.

 

Required Security shall mean a clean, irrevocable and
unconditional Letter of Credit issued by a bank chosen by the Reinsurer and
acceptable to the Company, or such other security as may be reasonably
acceptable to the Company.

 

Risk Zone shall
mean one or more geographical areas of the world, or distinct classes or lines
of business other than property catastrophe, in which the Company underwrites
policies.

 

RITC shall mean
a reinsurance policy or policies purchased by the Reinsurer whereby the
Company, and/or a third party or third parties reasonably acceptable to the
Company, commutes or assumes liability for the run-off to extinction of the
policies ceded to the Company pursuant to this Contract or by a third party.

 

3)      Notice
of Loss

 

The Company agrees that when
it shall set up on its books reserves for losses covered hereunder, or unearned
premium reserves on Policies subject to this Contract, it will forward to the
Reinsurer a statement showing the Reinsurer’s Proportionate Reserves.

 

1

 

4)      Obligation
to Provide Required Security

 

The Reinsurer hereby agrees that upon receiving Notice of Loss it will
provide the Required Security, in an amount equal to the Reinsurer’s
Proportionate Reserves.

 

The Reinsurer and the Company agree that the
obligation to provide Required Security shall survive any expiry or non-renewal
of this Contract and any run-off of the Reinsurer and the insolvency of any of
the Company or the Reinsurer.  Upon the occurrence of any of these events,
the Reinsurer shall be obligated to maintain the Required Security at an amount
equal to the Limit in each Risk Zone in respect of which the Reinsurer may have
incurred a Loss (as determined in the reasonable judgment of the Company) until
such time as the Company reasonably determines that the remaining risk of
adverse development is immaterial, achieved, as necessary, by way of the
purchase of RITC; plus,

 

5)      Periodic
Adjustments to Required Security

 

At quarterly intervals, or at
such other times as may be agreed by the parties, the Company shall prepare a
specific statement of the Reinsurer’s Proportionate Reserves on policies
subject to this Contract for the sole purpose of amending the amount of
Required Security.  Within thirty (30)
days after the receipt of such statement, the amount of the actual security
provided shall be adjusted to reflect the revised amount of Required Security,
through either an amendment to the respective Letter of Credit or such other
adjustment as is necessary and appropriate to the form of security provided.

 

6)      Drawdown
on Required Security

 

The Reinsurer and the Company agree that,
notwithstanding anything to the contrary which may be contained in this
Contract, the Required Security may be drawn upon by the Company or its
successors at any time, without diminution because of the insolvency of the
Company or the Reinsurer, for one or more of the following purposes:

 

a)      To reimburse itself for the
Reinsurer’s share of unearned premiums on account of cancellations, unless paid
in cash by the Reinsurer;

 

b)      To reimburse itself for
Losses, unless paid in cash by the Reinsurer;

 

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

 

d)      To refund to the Reinsurer
any sum in excess of the actual amount required to fund the Reinsurer’s
obligations under this Schedule B, if so requested by the Reinsurer.

 

The Company shall promptly return to the
Reinsurer any amount so drawn on the Required Security which is in excess of
the actual amounts required for a) or b) or, in the case of c), the actual
amount determined to be due.   All
settlements of account under this Contract relating to the Required Security
between the Company and the Reinsurer shall be made in cash or its equivalent.

 

2

 

7)      RITC

 

The Reinsurer shall purchase RITC after
consultation with the Company (which shall advise in good faith), as follows:

 

a)      to the extent necessary to
cure any breach by the Reinsurer of this Schedule B;

 

b)      to the extent necessary to
permit Redemptions, as provided for in the Articles of Association and therein
defined, of up to 50.0% of the aggregate net worth of the Reinsurer and
Holdings after taking into account the requirements of this Schedule B;

 

c)      if Redemption Notices, as
provided for in the Articles of Association and therein defined, are received
by Holdings in respect of Redemptions which, in the aggregate, exceed the
aggregate amount of Subscriptions, as provided for in the Articles of
Association and therein defined;

 

d)      to the extent directed by
the Company; if at any time the Company exercises the Collateral Preservation
Right; or

 

e)      to the extent so resolved by
the Board of Directors of the Reinsurer, any directors appointed by the Company
not exercising their right to vote.

 

The Reinsurer and the Company agree that RITC
shall inure either to the benefit of the Reinsurer or to the benefit of Company
as directed by the Company. In the event that RITC inures to the benefit of the
Company this Contract shall be endorsed accordingly and, subject to the
assignment by the Reinsurer to the Company of any and all rights relating
thereto, the Reinsurer shall be relieved by the Company of any or all liabilities
the subject of RITC.

 

The Reinsurer and the Company agree that,
unless the Company otherwise agrees, the S&P rating of any entity from whom
RITC is purchased shall be not less than “A” (or AM Best rating not less that “A-”)

 

3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]