VALIDUS HOLDINGS LTD (Form: 8-K, Received: 11/30/2012 09:25:23)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 30, 2012


	Validus Holdings, Ltd.
(Exact name of registrant as specified in its charter)


Bermuda	001-33606	98-0501001
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


	29 Richmond Road, Pembroke, Bermuda			HM08
	(Address of principal executive offices)			(Zip Code)


Registrant’s telephone number, including area code:	(441) 278-9000


	Not Applicable
	Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01. Completion of Acquisition or Disposition of Assets

On November 30, 2012, Validus Holdings, Ltd. (“Validus”) completed its acquisition of Flagstone Reinsurance Holdings, S.A. (“Flagstone”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 30, 2012, by and among Validus, Flagstone, Flagstone Reinsurance Holdings (Bermuda) Limited (“Flagstone Bermuda”) and Validus UPS, Ltd. (“Validus UPS”). Pursuant to the terms of the Merger Agreement, the acquisition was completed by means of two mergers. First, Flagstone became a Bermuda entity through a first-step merger with and into Flagstone Bermuda, a newly-formed subsidiary of Flagstone (the “First-Step Merger”). Second, immediately following the First-Step Merger, Flagstone Bermuda merged through a second-step merger with and into Validus UPS, a newly-formed Validus subsidiary (the “Second-Step Merger,” and together with the First-Step Merger, the “Mergers”). Following the Second-Step Merger, the successor-in-interest to Flagstone became wholly owned by Validus. Upon completion of the Mergers, each share of Flagstone issued and outstanding immediately prior to the First-Step Merger was converted into the right to receive 0.1935 Validus common shares, $2.00 in cash, without interest, and cash in lieu of any fractional share to which the holder was entitled (the “Merger Consideration”).

Validus expects to issue a total of approximately 14,202,665 common shares, and to pay approximately $152.4 million pursuant to the terms of the Merger Agreement, based on the number of Flagstone shares deemed to have been outstanding on November 29, 2012, as calculated under the Merger Agreement.

The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached as Exhibit 2.1 to Validus’ Current Report on Form 8-K filed on September 4, 2012 and incorporated by reference herein.

A copy of the press release dated November 30, 2012 announcing the completion of the Mergers is attached hereto as Exhibit 99.1 and incorporated by reference herein.

For important information regarding the Mergers, including the risks of the Mergers and the businesses of Validus and Flagstone, investors are urged to read Validus’ Registration Statement on Form S-4/A, dated October 23, 2012, filed with the Securities and Exchange Commission (the “SEC”).

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information provided in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.

Citi Credit Facility

After the effectiveness of the Mergers, Validus’ newly acquired indirect wholly-owned subsidiaries, Flagstone Reassurance Suisse, SA and Flagstone Capital Management Luxembourg SICAF – FIS, retained an uncommitted, secured $550 million standby letter of credit facility with Citibank Europe PLC. Flagstone Reassurance Suisse, SA and Flagstone Capital Management Luxembourg SICAF – FIS are parties to the Insurance Letters of Credit Master Agreement, dated April 28, 2010, as amended on December 21, 2010 (as so amended, the “Citi Facility”). The Citi Facility comprises a $275 million facility for letters of credit with an expiration date up to 15 months from the date of

issuance and a $275 million facility for letters of credit issued in respect of Funds at Lloyds with an expiration date up to 60 months from the date of issuance, and in each case if requested, subject to automatic extension for successive periods up to one year. The Citi Facility will continue to be used to support the reinsurance obligations of certain subsidiaries of Validus. As of November 27, 2012, approximately $373 million face amount letters of credit had been issued under the Citi Facility.

The foregoing description of the Citi Facility does not purport to be compete and is qualified in its entirety by reference to the full text of the Amendment Letter and Revised Summary of Terms, a copy of which is attached as Exhibit 99.1 to Flagstone’s Current Report on Form 8-K filed on December 23, 2010 and is incorporated by reference herein, as well as the Insurance Letters of Credit Master Agreement, the Pledge Agreement and the Account Control Agreement, copies of which are attached as Exhibits 99.1, 99.2, and 99.3, respectively, to Flagstone’s Current Report on Form 8-K filed on May 4, 2010 and are incorporated by reference herein.

BNY Mellon Supplemental Indentures

In connection with the Mergers, on November 30, 2012, Validus and Validus UPS entered into supplemental indentures (the “BNY Mellon Supplemental Indentures”) to each of the BNY Mellon Indentures (as defined below) providing for (i) the assumption by Validus UPS of the obligation to pay the principal of, premium, if any, and any interest on all of the notes outstanding under the applicable BNY Mellon Indenture (the “BNY Mellon Notes”) according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions under the applicable BNY Mellon Indenture to be performed by Flagstone Bermuda and, concurrently with Validus UPS’ assumption of the BNY Mellon Indentures, (ii) subordinated guarantees by Validus of the obligations of Validus UPS under each of the BNY Mellon Notes described below.


	Validus UPS’ assumptions and Validus’ guarantees are in respect of:

	•	Flagstone Bermuda’s Floating Rate Deferrable Interest Subordinated Notes due 2036 (US Dollar Denominated) (the “US Dollar Notes due 2036”), of which $120 million aggregate principal amount were outstanding as of November 30, 2012; and

	•	Flagstone Bermuda’s Floating Rate Deferrable Interest Junior Subordinated Notes due 2037 (the “Notes due 2037” and, together with the US Dollar Notes due 2036, the “BNY Mellon Notes”), of which $25 million aggregate principal amount were outstanding as of November 30, 2012.

The US Dollar Notes due 2036 were originally issued under a Junior Subordinated Indenture, dated as of August 23, 2006, between Flagstone Bermuda (as successor in interest to Flagstone) and The Bank of New York Mellon Trust Company, National Association (as successor in interest to JPMorgan Chase Bank, National Association), as trustee (as previously supplemented, the “US Dollar Notes due 2036 Indenture”). The Notes due 2037 were originally issued under a Junior Subordinated Indenture, dated as of September 20, 2007, between Flagstone Bermuda (as successor in interest to Flagstone) and The Bank of New York Mellon Trust Company, National Association, as trustee (as previously supplemented, the “Notes due 2037 Indenture” and, together with the US Dollar Notes due 2036 Indenture, the “BNY Mellon Indentures”).

The US Dollar Notes due 2036 have a floating rate of interest equal to LIBOR plus 354 basis points per annum, reset quarterly for the dollar-denominated principal amount. The US Dollar Notes due 2036 mature on September 15, 2036, and may be called at par by Validus UPS at any time.

The Notes due 2037 have a floating rate of interest equal to LIBOR plus 310 basis points per annum, reset quarterly for the dollar-denominated principal amount. The Notes due September 2037 mature on September 15, 2037, and may be called at par by Validus UPS at any time.

Each of the BNY Mellon Indentures contains certain restrictions, including a limitation that restricts Validus UPS’ ability to declare or pay dividends on its capital stock, make payment of principal of or any interest or premium on any debt security that ranks equal or junior to the BNY Mellon Notes, or enter into certain contracts with a greater than 10% shareholder if any Covenant Significant Subsidiary (as defined in the BNY Mellon Indentures) of Validus UPS that is an insurance company rated by A.M. Best, (i) is downgraded by A.M. Best to a financial strength rating below A- and, during any twelve-month period, either fails to renew more than 51% of its net premiums written or sells more than 51% of its rights to renew net premiums written, (ii) is downgraded by A.M. Best to a financial strength rating below B++ or (iii) withdraws its financial strength rating by A.M. Best.

Each of the BNY Mellon Indentures contains customary covenants relating to restrictions on the ability of Validus UPS to consolidate, merge or convey or transfer substantially all of its assets. The BNY Mellon Indentures also contain customary events of default.

The BNY Mellon Notes assumed by Validus UPS and the Validus’ guarantees thereof are unsecured obligations of the respective party, ranking equal in right of payment with all the respective party’s existing and future unsecured and subordinated indebtedness. Interest on each series of BNY Mellon Notes is payable quarterly.

Wilmington Trust Supplemental Indenture

Validus and Validus UPS also entered into a supplemental indenture (the “Wilmington Trust Supplemental Indenture”) to a Junior Subordinated Indenture, dated as of June 8, 2007, among Flagstone Finance S.A. (“Flagstone Finance”), Flagstone Bermuda (as successor-in-interest to Flagstone in the First-Step Merger) and Wilmington Trust Company, as trustee (as previously supplemented, the “Wilmington Trust Indenture”), governing Flagstone Finance’s Floating Rate Deferrable Interest Junior Subordinated Notes due 2037 (the “Wilmington Trust Notes”), of which $88.75 million aggregate principal amount were outstanding as of November 30, 2012. The Wilmington Trust Supplemental Indenture provides for (i) the assumption by Validus UPS of all of the obligations of Flagstone Bermuda to be performed or observed by Flagstone Bermuda under the Wilmington Trust Indenture and the related guarantee by Flagstone Bermuda (the “Flagstone Bermuda Guarantee”) issued under the Wilmington Trust Indenture and, concurrently with Validus UPS’ assumption of the Flagstone Bermuda Guarantee, (ii) subordinated guarantees by Validus of the obligations of Flagstone Finance under the Wilmington Trust Notes.

The Wilmington Trust Notes have a floating rate of interest equal to LIBOR plus 300 basis points per annum, reset quarterly for the dollar-denominated principal amount. The Wilmington Trust Notes mature on July 30, 2037, and may be called at par by Flagstone Finance at any time.

The Wilmington Trust Indenture contains certain restrictions, including a limitation that restricts Validus UPS’ ability to declare or pay dividends on its capital stock, make any payment of principal of or any interest or premium on any debt security that ranks equal or junior to the Wilmington Trust Notes, or enter into certain contracts with a greater

than 10% shareholder if any Covenant Significant Subsidiary (as defined in the Wilmington Trust Indenture) of Validus UPS that is an insurance company rated by A.M. Best, (i) is downgraded by A.M. Best to a financial strength rating below A- and, during any twelve-month period, either fails to renew more than 51% of its net premiums written or sells more than 51% of its rights to renew net premiums written, (ii) is downgraded by A.M. Best to a financial strength rating below B++ or (iii) withdraws its financial strength rating by A.M. Best.

The Wilmington Trust Indenture contains customary covenants relating to restrictions on the ability of Validus UPS to consolidate, merge or convey or transfer substantially all of its assets. The Wilmington Trust Indenture also contains customary events of default.

Each of the guarantees by Validus UPS and Validus of the Wilmington Trust Notes are unsecured obligations of the respective guarantor, ranking equal in right of payment with all the respective guarantor’s existing and future unsecured and subordinated indebtedness. Interest on the Wilmington Trust Notes is payable quarterly.

Amendment to Merrill Lynch Note Purchase Agreement

Additionally, Validus and Validus UPS entered into an amendment (the “Merrill Lynch Amendment”) to a Note Purchase Agreement, dated as of August 23, 2006, between Flagstone Bermuda (as successor-in-interest to Flagstone in the First-Step Merger) and Merrill Lynch International, as purchaser (as previously amended, the “Merrill Lynch Note Purchase Agreement”), governing Flagstone Bermuda’s Floating Rate Deferrable Interest Subordinated Notes due 2036 (Euro Denominated) (the “Merrill Lynch Notes”), of which €13.0 million aggregate principal amount were outstanding as of November 30, 2012. The Merrill Lynch Amendment provides for (i) the assumption by Validus UPS of the obligation to pay the principal of, premium, if any, and any interest on all of the notes outstanding under the Merrill Lynch Notes according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions under the Merrill Lynch Note Purchase Agreement to be performed by Flagstone Bermuda and, concurrently with Validus UPS’ assumption of the Merrill Lynch Note Purchase Agreement, (ii) subordinated guarantees by Validus of the obligations of Validus UPS under the Merrill Lynch Notes.

The Merrill Lynch Notes have a floating rate of interest equal to EURIBOR plus 354 basis points per annum, reset quarterly for the dollar-denominated principal amount. The Merrill Lynch Notes mature on July 30, 2037, and may be called at par by Validus UPS at any time.

The Merrill Lynch Note Purchase Agreement contains customary covenants relating to restrictions on the ability of Validus UPS to consolidate, merge or convey or transfer substantially all of its assets. The Merrill Lynch Note Purchase Agreement also contains customary events of default.

The Merrill Lynch Notes assumed by Validus UPS and the Validus’ guarantees thereof are unsecured obligations of the respective party, ranking equal in right of payment with all the respective party’s existing and future unsecured and subordinated indebtedness. Interest on the Merrill Lynch Notes is payable quarterly.

The foregoing descriptions of the BNY Mellon Indentures, the BNY Mellon Supplemental Indentures, the Wilmington Trust Indenture, the Wilmington Trust Supplemental Indenture and the Merrill Lynch Note Purchase Agreement and the Merrill Lynch Amendment are not complete and are qualified in their entirety by reference to the full and complete terms of the applicable agreements, which are attached to this Current Report on Form 8-K as Exhibits 4.1 through 4.15 and are incorporated by reference herein.

Item 3.02 Unregistered Sales of Equity Securities

The information provided in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.

In connection with the completion of the Mergers, on November 30, 2012, Validus issued a share purchase warrant (the “Warrant”) to Leyton Limited in consideration for the cancellation of a Flagstone share purchase warrant for 630,194 Flagstone shares (the “Cancelled Warrant”). Upon payment during the exercise period (which is from December 1, 2013 to December 31, 2013) of the exercise price of $13.96, subject to adjustments (if any) pursuant to the terms of the Warrant, the Warrant will be converted into the right to receive the Merger Consideration, on a per share basis for each of the Flagstone shares previously issuable upon exercise of the Cancelled Warrant (the Warrant will have value during the exercise period only if the value of the Merger Consideration during the exercise period is greater than the Warrant’s exercise price). The Warrant is being issued pursuant to the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.

The foregoing description of the Warrant is qualified in its entirety by reference to the full text of the Warrant, a copy of which is attached as Exhibit 4.16.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired . Validus will file any financial statements required by Item 9.01(a) by amendment not later than 71 calendar days after the date that this Current Report on Form 8-K must be filed.

(b) Pro forma financial information . Validus will furnish any pro forma financial information required by Item 9.01(b) by amendment not later than 71 calendar days after the date that this Current Report on Form 8-K must be filed.

(d) Exhibits . The following exhibits are filed herewith:


Exhibit No.		Description

2.1		Agreement and Plan of Merger, dated as of August 30, 2012, by and among Validus Holdings, Ltd., Validus UPS, Ltd., Flagstone Reinsurance Holdings, S.A. and Flagstone Reinsurance Holdings (Bermuda) Limited (incorporated by reference to the Current Report on Form 8-K filed on September 4, 2012)

4.1		Junior Subordinated Indenture, dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Amendment to the Registration Statement on Form S-1/A (No. 333-138182) of Flagstone Reinsurance Holdings Limited filed on December 8, 2006)


4.2	First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Flagstone Reinsurance Holdings, S.A. filed on May 19, 2010)

4.3	Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holding, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee

4.4	Third Supplemental Indenture, dated as of November 30, 2012, among Validus UPS, Ltd., Validus Holdings, Ltd. and The Bank of New York Mellon Trust Company, National Association, as trustee

4.5	Junior Subordinated Indenture, dated as of September 20, 2007, between Flagstone Reinsurance Holdings Limited and The Bank of New York Trust Company, National Association, as trustee

4.6	First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust Company, National Association, as trustee

4.7	Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and The Bank of New York Mellon Trust Company, National Association, as trustee

4.8	Third Supplemental Indenture, dated as of November 30, 2012, among Validus UPS, Ltd., Validus Holdings, Ltd. and The Bank of New York Mellon Trust Company, National Association, as trustee

4.9	Junior Subordinated Indenture, dated as of June 8, 2007, among Flagstone Finance S.A., Flagstone Reinsurance Holdings Limited and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Flagstone Reinsurance Holdings Limited filed on June 14, 2007)

4.10	First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Finance S.A., Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of Flagstone Reinsurance Holdings, S.A. filed on May 19, 2010)

4.11	Second Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Flagstone Reinsurance Holdings (Bermuda) Limited, Flagstone Reinsurance Holdings, S.A. and Wilmington Trust Company, as trustee

4.12	Third Supplemental Indenture, dated as of November 30, 2012, among Flagstone Finance S.A., Validus UPS, Ltd., Validus Holdings, Ltd. and Wilmington Trust Company, as trustee

4.13	Note Purchase Agreement, dated as of August 23, 2006, between Flagstone Reinsurance Holdings Limited and Merrill Lynch International

4.14	Amendment No. 1, dated as of November 30, 2012, to the Note Purchase Agreement, among Flagstone Reinsurance Holdings (Bermuda) Limited and the noteholders named therein


4.15	Amendment No. 2, dated as of November 30, 2012, to the Note Purchase Agreement, among Validus UPS, Ltd., Validus Holdings, Ltd. and the noteholders named therein

4.16	Share Purchase Warrant, dated November 30, 2012, between Validus Holdings, Ltd. and Leyton Limited

99.1	Press Release, dated November 30, 2012

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	VALIDUS HOLDINGS, LTD.

	By:	/s/ Robert F. Kuzloski
		Name: Robert F. Kuzloski
		Title: Executive Vice President & General Counsel

Date: November 30, 2012

Exhibit 4.3

SECOND SUPPLEMENTAL INDENTURE

THIS SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”) is dated as of November 30, 2012, among FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED, a Bermuda exempted company (the “ Successor Company ”), FLAGSTONE REINSURANCE HOLDINGS, S.A., a Luxembourg société anonyme , as successor in interest to Flagstone Reinsurance Holdings Limited (the “ Company ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as successor in interest to JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of August 23, 2006, between the Company and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010 (together, the “ Indenture ”), providing for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”);

WHEREAS, the Trustee has heretofore authenticated, and the Company has heretofore issued $120,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036 under the Indenture;

WHEREAS, on the date hereof, the Company will merge with and into the Successor Company, with the Successor Company as the survivor (the “ Merger ”) pursuant to that certain Agreement and Plan of Merger, dated as of August 30, 2012, among the Company, the Successor Company, Validus Holdings, Ltd., a Bermuda exempted company, and Validus UPS, Ltd., a Bermuda exempted company (the “ Merger Agreement ”);

WHEREAS, Section 8.1 of the Indenture provides, in part, that the Company may merge into any other Person or transfer all or substantially all of its properties and assets as an entirety to another Person provided that (a) (i) the Successor Company is an entity organized and existing under the laws of the United States of America or any State or Territory thereof, the District of Columbia, Bermuda, the Cayman Islands or any country, which is a member state of the Organization for Economic Cooperation and Development and (ii) the Successor Company expressly assumes, by an indenture supplement executed and delivered to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Event of

Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture and that all conditions precedent provided for in the Indenture relating to such transfer have been complied with;

WHEREAS, Section 9.1(a) of the Indenture provides that the Company and the Trustee may amend the Indenture without notice or consent of any Holder to evidence the succession of another Person to the Company and the assumption by such successor of the covenants of the Company in the Indenture and in the Securities;

WHEREAS, the Successor Company, pursuant to Section 8.1(c) and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Merger and this Second Supplemental Indenture each complies with Article VIII of the Indenture, (b) that all conditions and covenants provided for in the Indenture relating to the Merger have been complied with and (c) that the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture and all conditions and covenants provided for in the Indenture relating thereto have been complied with; and

WHEREAS, all things necessary (a) to authorize the assumption by the Successor Company of the Company’s obligations under the Indenture and (b) to make this Second Supplemental Indenture when executed by the parties hereto a valid and binding amendment of and supplement to the Indenture have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

2. Assumption of Obligations. The Successor Company hereby expressly assumes, from and after the date hereof, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Indenture on the part of the Company to be performed or observed.

3. Succession and Substitution. The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this Second Supplemental Indenture, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, and the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

4. Representation and Warranties. The Successor Company hereby represents and warrants that (i) it has all necessary power and authority to execute and deliver this Second Supplemental Indenture and to perform the covenants and obligations of the Company under the Indenture and the Securities, (ii) it is the successor of the Company pursuant to the Merger, (iii) it is a Bermuda

exempted company organized and existing under the laws of Bermuda, (iv) both immediately before and after giving effect to this Second Supplemental Indenture, no Event of Default, and no event that, after notice or lapse of time or both, would consitute an Event of Default, shall have happened and be continuing and (v) this Second Supplemental Indenture is executed and delivered pursuant to Section 9.1(a) of the Indenture and does not require consent of any Holders.

5. Effectiveness and Operativeness. This Second Supplemental Indenture shall be deemed to have become effective, and the provisions provided for in this Second Supplemental Indenture shall be deemed to have become operative, immediately upon consummation of the Merger, provided, that:

(a) the Trustee shall have executed a counterpart of this Second Supplemental Indenture and shall have received one or more counterparts of this Second Supplemental Indenture executed by the Successor Company and the Company;

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Second Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Company authorizing this Second Supplemental Indenture.

6. Ratification of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

7. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

8. Trustee Makes No Representations. The Trustee makes no representation as to the validity or sufficiency of this Second Supplemental Indenture. The recitals contained herein shall be taken as the statements of the Successor Company and the Trustee assumes no responsibility for their correctness.

9. Counterparts. The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

10. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS, S.A.

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee

	By:	/s/ Kenneth Helbig

		Name: Kenneth Helbig
		Title: Vice President

[Signature Page to Second Supplemental Indenture]

Exhibit 4.4

THIRD SUPPLEMENTAL INDENTURE

THIS THIRD SUPPLEMENTAL INDENTURE (this “ Third Supplemental Indenture ”) is dated as of November 30, 2012, among VALIDUS UPS, LTD., a Bermuda exempted company (the “ Successor Company ”), VALIDUS HOLDINGS, LTD., a Bermuda exempted company (the “ Guarantor ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as successor in interest to JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, Flagstone Reinsurance Holdings (Bermuda) Limited, a Bermuda exempted company (the “ Company ”) (as successor in interest to Flagstone Reinsurance Holdings, S.A., as successor in interest to Flagstone Reinsurance Holdings Limited) has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of August 23, 2006, between the Company and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010, and the Second Supplemental Indenture, dated as of November 30, 2012 (collectively, the “ Indenture ”), providing for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”);

WHEREAS, on the date hereof, the Company will merge with and into the Successor Company, a wholly-owned subsidiary of the Guarantor, with the Successor Company as the survivor (the “ Merger ”) pursuant to that certain Agreement and Plan of Merger, dated as of August 30, 2012, among Flagstone Reinsurance Holdings, S.A., a Luxembourg société anonyme , the Company, the Guarantor and the Successor Company (the “ Merger Agreement ”);

WHEREAS, in connection with the consummation of the transactions contemplated by the Merger Agreement, the Successor Company will assume all of the obligations of the Company under the Indenture and the Securities, and the Guarantor will provide full and unconditional guarantees (the “ Guarantees ”) of the obligations of the Successor Company under the Indenture and the Securities on the terms and conditions set forth herein and therein;

the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture and that all conditions precedent provided for in the Indenture relating to such transfer have been complied with;

WHEREAS, Section 9.1 of the Indenture provides, in part, that the Company and the Trustee may amend the Indenture without notice or consent of any Holder (a) to evidence the succession of another Person to the Company and the assumption by such successor of the covenants of the Company in the Indenture and in the Securities and (b) to make or amend any provisions with respect to matters or questions arising under the Indenture, which shall not be inconsistent with the other provisions of the Indenture, provided, that such action shall not adversely affect in any material respect the interests of any Holders;

WHEREAS, the Successor Company, pursuant to Section 8.1(c) and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Merger and this Third Supplemental Indenture each complies with Article VIII of the Indenture, (b) that all conditions and covenants provided for in the Indenture relating to the Merger have been complied with and (c) that the execution of this Third Supplemental Indenture is authorized or permitted by the Indenture and all conditions and covenants provided for in the Indenture relating thereto have been complied with; and

WHEREAS, all things necessary (a) to authorize the assumption by the Successor Company of the Company’s obligations under the Indenture, (b) to authorize the Guarantor’s Guarantees of the obligations of the Successor Company under the Indenture and the Securities and (c) to make this Third Supplemental Indenture when executed by the parties hereto a valid and binding amendment of and supplement to the Indenture have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

3. Succession and Substitution. The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this Third Supplemental Indenture, shall

succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, and the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

4. Guarantee.

The following Sections 13.1 through and including Section 13.8 shall be added as a new Article XIII of the Indenture, and shall hereinafter be deemed a part of the Indenture and applicable to the Outstanding Notes. The following definition shall apply to Article XIII of the Indenture, as amended hereby: “ Guarantor ” shall mean Validus Holdings, Ltd., a Bermuda exempted company.

Section 13.1. Guarantees.

(a) With respect to each series of Securities to which this Article XIII is expressly made applicable, the Guarantor hereby unconditionally and irrevocably guarantees to each Holder and to the Trustee and its successors and assigns (i)(a) the full and punctual payment of principal and interest (including any Additional Interest) on the Securities of such Holder when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company to the Holders and the Trustee under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities and (ii) in the case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal (all of the foregoing being hereinafter collectively called the “ Guarantees ”).

(b) The Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guarantees and also waives notice of protest for nonpayment. The Guarantor waives notice of any default under the Securities or the Guarantees. The Guarantees hereunder shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Guarantees or any of them; (v) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guarantees or (vi) any change in the ownership of the Guarantor.

(c) The Guarantor further agrees that its Guarantees hereunder constitute a guarantee of payment, performance and compliance when due (and not a guarantee of collection).

(d) The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto (unless the same shall also be provided the Guarantor), by the Holder of any Security or the Trustee, the recovery of any judgment against the Company or any action to

enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided that, notwithstanding the foregoing, no such waiver, modification, indulgence or circumstance shall, without the consent of the Guarantor, increase the principal amount of a Security or the interest rate thereon or increase any premium payable upon redemption thereof. The Guarantees shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantees or otherwise. Without limiting the generality of the foregoing, the Guarantor covenants that the Guarantees shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Guarantor or would otherwise operate as a discharge of the Guarantor as a matter of law or equity.

(e) The Guarantor further agrees that the Guarantees shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal, premium, if any, or interest on any Security is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against the Guarantor by virtue hereof, upon the failure of the Company to pay the principal of, premium on, if any, or interest on any Security when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other obligation under the Securities, the Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of such obligations under such Securities, (ii) accrued and unpaid interest on such obligations under such Securities (but only to the extent not prohibited by law) and (iii) all other monetary obligations with respect to such Securities and under the Indenture of the Company to the Holders and the Trustee.

(g) The Guarantor will be subrogated to all rights of the Holders against the Company in respect of any amount paid by the Guarantor pursuant to the provisions of the Guarantees; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium on, if any, and interest on such Securities shall have been paid in full. The Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations with respect to the Securities hereby may be accelerated as provided herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations with respect to such Securities, and (y) in the event of any declaration of acceleration of such obligations as provided herein, the Guarantees (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Article XIII .

(h) The Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Article XIII .

Section 13.2. Successors and Assigns.

This Article XIII shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.

Section 13.3. No Waiver.

Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article XIII shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article XIII at law, in equity, by statute or otherwise.

Section 13.4. Modification.

No modification, amendment or waiver of any provision of this Article XIII , nor the consent to any departure by the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstances.

Section 13.5. Notation of Guarantees Not Required.

The Guarantor hereby agrees that the Guarantees set forth in this Article XIII shall remain in full force and effect notwithstanding the absence on any Security of a notation relating to the Guarantees.

Section 13.6. Benefits Acknowledged.

The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantees and waivers made by it pursuant to its Guarantees are knowingly made in contemplation of such benefits.

Section 13.7. Release of Guarantees.

the release of the Guarantees, upon the Company delivering to the Trustee an Officers’ Certificate stating that the Guarantees are released in full.

Section 13.8 Limitation on Guarantor Liability.

The Guarantor, and by its acceptance of Securities, each Holder, hereby confirms that it is the intention of all such parties that the Guarantees of the Guarantor not constitute a fraudulent transfer or conveyance for purposes of Title 11, U.S. Code or any similar federal, state or foreign law for the relief of debtors, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or foreign law to the extent applicable to the Guarantees. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of the Guarantor that are relevant under such laws and after giving effect to any collections from, result in the obligations of the Guarantor under its Guarantees not constituting a fraudulent conveyance or fraudulent transfer under applicable law.

5. Subordination of Guarantees.

The following Sections 14.1 through and including Section 14.12 shall be added as a new Article XIV of the Indenture, and shall hereinafter be deemed a part of the Indenture and applicable to the Outstanding Notes.

Section 14.1. Securities Subordinate to Senior Debt of the Guarantor.

The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XIV , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities pursuant to the Guarantees are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor.

Section 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.

In the event and during the continuation of any default by the Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for redemption or by declaration of acceleration or otherwise, then, upon written notice of such default to the Guarantor by the holders of such Senior Debt of the Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made pursuant to the Guarantees on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

In the event of a bankruptcy, insolvency or other proceeding involving the Guarantor described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof pursuant to the Guarantees. Any payment or distribution, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Guarantees, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities pursuant to the Guarantees shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

Section 14.3. Payment Permitted If No Default.

Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 14.2 or of any Proceeding referred to in Section 14.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Guarantees or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Guarantees or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 14.8 ) that such payment would have been prohibited by the provisions of this Article XIV , except as provided in Section 14.8 .

Section 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.

Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled under the Guarantees except for the provisions of this Article XIV , and no payments made pursuant to the provisions of this Article XIV to the holders of Senior Debt of the Guarantor by Holders of the Securities or the Trustee, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.

Section 14.5. Provisions Solely to Define Relative Rights.

The provisions of this Article XIV are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities under the Guarantees on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor under the Guarantees, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities under the Guarantees and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XIV of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. In addition, nothing contained in this Article XIV is intended to or shall apply to or affect any amounts payable or paid to the Trustee (including in its individual capacity) pursuant to Sections 1.15 or 6.6 .

Section 14.6. Trustee to Effectuate Subordination.

Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XIV and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.

Section 14.7. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

Without in any way limiting the generality of paragraph (a) of this Section 14.7 , the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to

such Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.

Section 14.8. Notice to Trustee.

The Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the Guarantees. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the Guarantees, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Guarantor or a holder of Senior Debt of the Guarantor or from any trustee, agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 14.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security pursuant to the Guarantees), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Guarantor to participate in any payment or distribution pursuant to this Article XIV , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIV , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

Section 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV , the Trustee and the Holders of the Securities shall be entitled to conclusively rely

upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV .

Section 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of the Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Guarantor shall be entitled by virtue of this Article XIV or otherwise.

Section 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Debt of the Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

Section 14.12. Article Applicable to Paying Agents.

If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “ Trustee ” as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee; provided , that Sections 14.8 and 14.11 shall not apply to the Guarantor or any Affiliate of the Guarantor if the Company or such Affiliate acts as Paying Agent.

6. Representations and Warranties.

(a) The Successor Company hereby represents and warrants that (i) it has all necessary power and authority to execute and deliver this Third Supplemental Indenture and to perform the covenants and obligations of the Company under the Indenture and the Securities, (ii) it is the successor of the Company pursuant to the Merger, (iii) it is a Bermuda exempted company organized and existing under the laws of Bermuda, (iv) both immediately before and after giving effect to this Third Supplemental Indenture, no Event of Default, and no event that, after notice or lapse of time or both, would consitute an Event of Default, shall have happened and be continuing and (v) this Third Supplemental Indenture is executed and delivered pursuant to Section 9.1(a) of the Indenture and does not require consent of any Holders.

(b) The Guarantor hereby represents and warrants that (i) it has all necessary power and authority to execute and deliver this Third Supplemental Indenture and to perform its obligations under the terms of the Guarantees contemplated hereby, (ii) it is a corporation organized and existing under the laws of Bermuda and (iii) this Third Supplemental Indenture is executed and delivered pursuant to Section 9.1(b) of the Indenture and does not require the consent of any Holders.

7. Submission to Jurisdiction.

(a) The Successor Company agrees that any judicial proceedings instituted in relation to any matter arising under the Indenture, this Third Supplemental Indenture or the Securities may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Third Supplemental Indenture, the Successor Company hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding.

(b) The Guarantor agrees that any judicial proceedings instituted in relation to any matter arising under the Guarantees may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Third Supplemental Indenture, the Guarantor hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding.

8. Effectiveness and Operativeness. This Third Supplemental Indenture shall be deemed to have become effective, and the provisions provided for in this Third Supplemental Indenture shall be deemed to have become operative, immediately upon consummation of the Merger, provided, that:

(a) the Trustee shall have executed a counterpart of this Third Supplemental Indenture and shall have received one or more counterparts of this Third Supplemental Indenture executed by the Successor Company and the Guarantor;

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Third Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Company authorizing this Third Supplemental Indenture.

9. Ratification of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Third Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

10. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

11. Trustee Makes No Representations. The Trustee makes no representation as to the validity or sufficiency of this Third Supplemental Indenture. The recitals contained herein shall be taken as the statements of the Successor Company and the Guarantor and the Trustee assumes no responsibility for their correctness.

12. Counterparts. The parties hereto may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

13. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

14. Addresses for Notices . All notices or other communications to be addressed to the Company as contemplated by Section 1.5 of the Indenture shall be addressed as follows:


	(a)	if to the Successor Company:

		Validus UPS, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: Treasurer

		with a copy to:

		Validus UPS, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: General Counsel

	(b)	if to the Guarantor:

		Validus Holdings, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: Treasurer

		with a copy to:

		Validus Holdings, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: General Counsel

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	VALIDUS UPS, LTD

	By:	/s/ Jeffrey D. Sangster

		Name: Jeffrey D. Sangster
		Title: Chief Financial Officer


	VALIDUS HOLDINGS, LTD.

	By:	/s/ Joseph E. Consolino

		Name: Joseph E. Consolino
		Title: President and Chief Financial Officer

[Signature Page to Third Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee

	By:	/s/ Kenneth Helbig

		Name: Kenneth Helbig
		Title: Vice President

[Signature Page to Third Supplemental Indenture]

Exhibit 4.5

EXECUTION COPY

JUNIOR SUBORDINATED INDENTURE

between

FLAGSTONE REINSURANCE HOLDINGS LIMITED

and

THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee

Dated as of September 20, 2007


ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION			1
	SECTION 1.1	Definitions	1
	SECTION 1.2	Compliance Certificate and Opinions	10
	SECTION 1.3	Forms of Documents Delivered to Trustee	10
	SECTION 1.4	Acts of Holders	11
	SECTION 1.5	Notices, Etc. to Trustee and Company	13
	SECTION 1.6	Notice to Holders; Waiver	13
	SECTION 1.7	Effect of Headings and Table of Contents	14
	SECTION 1.8	Successors and Assigns	14
	SECTION 1.9	Separability Clause	14
	SECTION 1.10	Benefits of Indenture	14
	SECTION 1.11	Governing Law	14
	SECTION 1.12	Submission to Jurisdiction	14
	SECTION 1.13	Non-Business Days	15
	SECTION 1.14	Agent for Service of Process	15
	SECTION 1.15	Currency Indemnity	15
	SECTION 1.16	No Recourse Against Others	16
ARTICLE II. SECURITY FORMS			16
	SECTION 2.1	Form of Security	16
	SECTION 2.2	Restricted Legend	22
	SECTION 2.3	Form of Trustee’s Certificate of Authentication	28
	SECTION 2.4	Temporary Securities	28
	SECTION 2.5	Definitive Securities	29
ARTICLE III. THE SECURITIES			29
	SECTION 3.1	Payment of Principal and Interest	29
	SECTION 3.2	Denominations	31
	SECTION 3.3	Execution, Authentication, Delivery and Dating	31
	SECTION 3.4	Global Securities	32
	SECTION 3.5	Registration, Transfer and Exchange Generally	40
	SECTION 3.6	Mutilated, Destroyed, Lost and Stolen Securities	41
	SECTION 3.7	Persons Deemed Owners	42


	SECTION 3.8	Cancellation	42
	SECTION 3.9	Deferrals of Interest Payment Dates	43
	SECTION 3.10	[Reserved]	44
	SECTION 3.11	Agreed Tax Treatment	44
	SECTION 3.12	CUSIP Numbers	44
ARTICLE IV. SATISFACTION AND DISCHARGE			44
	SECTION 4.1	Satisfaction and Discharge of Indenture	44
	SECTION 4.2	Application of Trust Money	45
ARTICLE V. REMEDIES			46
	SECTION 5.1	Events of Default	46
	SECTION 5.2	Acceleration of Maturity; Rescission, Annulment, Audit Rights and Additional Reports	47
	SECTION 5.3	Collection of Indebtedness and Suits for Enforcement by Trustee	48
	SECTION 5.4	Trustee May File Proofs of Claim	48
	SECTION 5.5	Trustee May Enforce Claim Without Possession of Securities	49
	SECTION 5.6	Application of Money Collected	49
	SECTION 5.7	Limitation on Suits	49
	SECTION 5.8	Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest	50
	SECTION 5.9	Restoration of Rights and Remedies	50
	SECTION 5.10	Rights and Remedies Cumulative	51
	SECTION 5.11	Delay or Omission Not Waiver	51
	SECTION 5.12	Control by Holders	51
	SECTION 5.13	Waiver of Past Defaults	51
	SECTION 5.14	Undertaking for Costs	52
	SECTION 5.15	Waiver of Usury, Stay or Extension Laws	52
ARTICLE VI. THE TRUSTEE			52
	SECTION 6.1	Corporate Trustee Required	52
	SECTION 6.2	Certain Duties and Responsibilities	53
	SECTION 6.3	Notice of Defaults	54
	SECTION 6.4	Certain Rights of Trustee	54
	SECTION 6.5	May Hold Securities	56
	SECTION 6.6	Compensation; Reimbursement; Indemnity	56


	SECTION 6.7	Resignation and Removal; Appointment of Successor	57
	SECTION 6.8	Acceptance of Appointment by Successor	58
	SECTION 6.9	Merger, Conversion, Consolidation or Succession to Business	59
	SECTION 6.10	Not Responsible for Recitals or Issuance of Securities	59
	SECTION 6.11	Appointment of Authenticating Agent	59
ARTICLE VII. HOLDER’S LISTS AND REPORTS BY COMPANY			61
	SECTION 7.1	Company to Furnish Trustee Names and Addresses of Holders	61
	SECTION 7.2	Preservation of Information, Communications to Holders	61
	SECTION 7.3	Reports by Company	61
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE			62
	SECTION 8.1	Company May Consolidate, Etc., Only on Certain Terms	62
	SECTION 8.2	Successor Company Substituted	63
ARTICLE IX. SUPPLEMENTAL INDENTURES			64
	SECTION 9.1	Supplemental Indentures without Consent of Holders	64
	SECTION 9.2	Supplemental Indentures with Consent of Holders	65
	SECTION 9.3	Execution of Supplemental Indentures	65
	SECTION 9.4	Effect of Supplemental Indentures	66
	SECTION 9.5	Reference in Securities to Supplemental Indentures	66
ARTICLE X. COVENANTS			66
	SECTION 10.1	Payment of Principal, Premium, if any, and Interest	66
	SECTION 10.2	Money for Security Payments to be Held in Trust	66
	SECTION 10.3	Statement as to Compliance	67
	SECTION 10.4	Calculation Agent	67
	SECTION 10.5	Additional Amounts	68
	SECTION 10.6	Additional Covenants	70
	SECTION 10.7	Waiver of Covenants	71
	SECTION 10.8	Treatment of Securities	71
ARTICLE XI. REDEMPTION OF SECURITIES			71
	SECTION 11.1	Optional Redemption	71
	SECTION 11.2	Special Event Redemption	71
	SECTION 11.3	Election to Redeem; Notice to Trustee	72
	SECTION 11.4	Selection of Securities to be Redeemed	72

iii


	SECTION 11.5	Notice of Redemption	72
	SECTION 11.6	Deposit of Redemption Price	73
	SECTION 11.7	Payment of Securities Called for Redemption	73
ARTICLE XII. SUBORDINATION OF SECURITIES			74
	SECTION 12.1	Securities Subordinate to Senior Debt	74
	SECTION 12.2	No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc	74
	SECTION 12.3	Payment Permitted If No Default	76
	SECTION 12.4	Subrogation to Rights of Holders of Senior Debt	76
	SECTION 12.5	Provisions Solely to Define Relative Rights	76
	SECTION 12.6	Trustee to Effectuate Subordination	77
	SECTION 12.7	No Waiver of Subordination Provisions	77
	SECTION 12.8	Notice to Trustee	77
	SECTION 12.9	Reliance on Judicial Order or Certificate of Liquidating Agent	78
	SECTION 12.10	Trustee Not Fiduciary for Holders of Senior Debt	78
	SECTION 12.11	Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights	78
	SECTION 12.12	Article Applicable to Paying Agents	79


SCHEDULES

Schedule A	-	Determination of LIBOR

Exhibit A	-	Form of Officer’s Financial Certificate

Exhibit B		Form of Rule 144A to Regulation S Security Transfer Certificate

Exhibit C		Form of Regulation S to Rule 144A Security Transfer Certificate

Exhibit D		Form of Transfer Certificate for non-Global Securities

JUNIOR SUBORDINATED INDENTURE, dated as of September 20, 2007, between FLAGSTONE REINSURANCE HOLDINGS LIMITED, a Bermuda company (the “Company”), and THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as Trustee (in such capacity, the “Trustee”).

RECITALS OF THE COMPANY

WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and

WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, this Indenture Witnesseth:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

ARTICLE I.

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.1 Definitions .

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article I have the meanings assigned to them in this Article I ;

(b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

(d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;

(e) the words “hereby”, “herein”, “hereof’ and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(f) a reference to the singular includes the plural and vice versa; and

(g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

“ Act ” when used with respect to any Holder, has the meaning specified in Section 1.4 .

“ Additional Amounts ” has the meaning specified in Section 10.5 .

“ Additional Interest ” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security(ies), in each case to the extent legally enforceable.

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Applicable Accounting Principles ” means accounting practices prescribed or permitted by the National Association of Insurance Commissioners, if then applicable to the Company or its subsidiaries, and/or the applicable insurance department or regulator of the jurisdiction of domicile of such Regulated Insurance Company, and in each case, applied consistently throughout the periods involved.

“ Applicable Depositary Procedures ” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

“ Applicable Insurance Regulatory Authority ” means, when used with respect to any Regulated Insurance Company, (x) the insurance department or similar administrative authority or agency located in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is domiciled or (y) to the extent asserting regulatory jurisdiction over such Regulated Insurance Company, the insurance department, authority or agency in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is licensed, and shall include any Federal or national insurance regulatory department, authority or agency that may be created and that asserts insurance regulatory jurisdiction over such Regulated Insurance Company.

“ Authenticating Agent ” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

“ Bankruptcy Code ” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.

“ Board of Directors ” means the board of directors of the Company or any duly authorized committee of that board.

“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“ Business Day ” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.

“ Calculation Agent ” has the meaning specified in Section 10.4 .

“ Common Stock ” means the common shares, par value $0.01 per share, of the Company.

“ Company ” means the Person named as the “ Company ” in the first paragraph of this Indenture until a successor shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Company ” shall mean such successor.

“ Company Request ” and “ Company Order ” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, its President, its General Counsel or one of its Vice Presidents, and by its Chief Financial Officer, its Treasurer, one of its Assistant Treasurers, its Secretary or one of its Assistant Secretaries, and delivered to the Trustee.

“ Covenant Significant Subsidiaries ” shall have the meaning set forth in Section 10.6 .

“ Corporate Trust Office ” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis, 16 ^th Floor, Houston, Texas 77002, Attn: Global Corporate Trust—Flagstone Reinsurance Holdings Limited. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed (telephone: 713-483-6029).

“ Debt ” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every

obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

“ Defaulted Interest ” has the meaning specified in Section 3.1 .

“ Depositary ” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto. DTC will be the initial Depositary.

“ Depositary Participant ” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

“ Dollar ” or “ $ ” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

“ DTC ” means The Depository Trust Company, a New York corporation, or any successor thereto.

“ Event of Default ” has the meaning specified in Section 5.1 .

“ Exchange Act ” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.

“ Expiration Date ” has the meaning specified in Section 1.4 .

“ Extension Period ” has the meaning specified in Section 3.9 .

“ GAAP ” means United States generally accepted accounting principles, consistently applied, from time to time in effect.

“ Global Security ” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

“ Government Obligation ” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided , that (except as required by law) such custodian is not authorized to make any

deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

“ Holder ” means a Person in whose name a Security is registered in the Securities Register.

“ Indenture ” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

“ Insurance Business ” means one or more aspects of the business of selling, issuing or underwriting insurance or reinsurance.

“ Interest Payment Date ” means March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2007, during the term of this Indenture, as such dates may be adjusted pursuant to Section 1.13.

“ Investment Company Act ” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“ Investment Company Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Company is or, within ninety (90) days of the date of such opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the Original Issue Date.

“ LIBOR ” has the meaning specified in Schedule A .

“ LIBOR Business Day ” has the meaning specified in Schedule A .

“ LIBOR Determination Date ” has the meaning specified in Schedule A .

“ Maturity ,” when used with respect to any Security, means the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“ New York Court ” has the meaning specified in Section 1.12 .

“ Notice of Default ” means a written notice of the kind specified in Section 5.1(c ).

“ Officers’ Certificate ” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the General Counsel or a

Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.

“ Operative Documents ” means the Indenture, the Purchase Agreement and the Securities.

“ Opinion of Counsel ” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.

“ Optional Redemption Price ” has the meaning set forth in Section 11.1 .

“ Original Issue Date ” means the date of original issuance of each Security.

“ Outstanding ” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:


	(i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

	(ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided , that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

	(iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

provided , that, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding Securities unless the Company holds all of the Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

“ Paying Agent ” means the Trustee or any Person authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

“ Person ” means a legal person, including any individual, corporation, company, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, government or any agency or political subdivision thereof, or any other entity of whatever nature.

“ Place of Payment ” means, with respect to the Securities, the Corporate Trust Office of the Trustee.

“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“ Proceeding ” has the meaning specified in Section 12.2 .

“ Purchase Agreement ” means the agreement, dated as of the date hereof, between the Company and the Purchasers named therein.

“ Purchaser Under the Purchase Agreement ” has the meaning given to the “Purchaser” in the Purchase Agreement.

“ QIB ” or “ Qualified Institutional Buyer ” means a “qualified institutional buyer” as defined in Rule 144A.

“ QIB/QP ” means a Person that, at the time of its acquisition, purported acquisition or proposed acquisition of Securities, is both a QIB and a QP.

“ QP ” or “ Qualified Purchaser ” means any of (i) a “qualified purchaser” within the meaning of Section 3(c)(7) of the Investment Company Act or (ii) a company beneficially owned exclusively by one or more “qualified purchasers” and/or “knowledgeable employees” with respect to the Company within the meaning of Rule 3c-5 under the Investment Company Act.

“ Redemption Date ” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture, subject to adjustment as specified in Section 1.13 .

“ Redemption Price ” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

“ Reference Banks ” has the meaning specified in Schedule A .

“ Regulation S ”: Regulation S under the Securities Act.

“ Regular Record Date ” for the interest payable on any Interest Payment Date with respect to the Securities (other than a Maturity date) means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

“ Regulated Insurance Company ” means any subsidiary of the Company, whether now owned or hereafter acquired, that is authorized or admitted to carry on or transact Insurance Business in any jurisdiction (foreign or domestic) and is regulated by any Applicable Insurance Regulatory Authority.

“ Responsible Officer ” means, when used with respect to the Trustee, the officer in the Global Corporate Trust department of the Trustee having direct responsibility for the administration of this Indenture.

“ Rights Plan ” means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase, directly or indirectly, shares of its Common Stock which rights (i) are deemed to be transferred with such shares of such Common Stock and (ii) are also issued in respect of future issuances of such Common Stock, in each case until the occurrence of a specified event or events.

“ Rule 144A ” means Rule 144A under the Securities Act.

“ SEC ” means the Securities and Exchange Commission.

“ Securities ” or “ Security ” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

“ Securities Act ” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

“ Securities Register ” and “ Securities Registrar ” have the respective meanings specified in Section 3.5 .

“ Senior Debt ” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding that the obligations under such instrument are not superior in right of payment to the Securities issued under this Indenture; provided , however , that if the Company is subject to the regulation and supervision of any Applicable Insurance Regulatory Authority, the Company shall have received the approval of each appropriate Applicable Insurance Regulatory Authority prior to issuing any such obligation if then required; and provided , further , that Senior Debt shall not be deemed to include (i) any other debt securities and guarantees in respect of such debt securities issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities that are treated as equity capital for regulatory capital purposes guaranteed by the

Company pursuant to an instrument that ranks pari passu with or junior in right of payment to the Securities, or (ii) subordinated debt securities issued by the Company, whether denominated in U.S. dollars or Euro, pursuant to the note purchase agreement, dated August 23, 2007, or the purchase agreement, dated August 23, 2007.

“ Significant Subsidiary(ies) ” is as defined in Section 1-02(w) of Regulation S-X of the Securities Act.

“ Special Event ” means the occurrence of an Investment Company Event or a Tax Event.

“ Special Record Date ” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .

“ Special Redemption Price ” has the meaning set forth in Section 11.2 .

“ Stated Maturity ” means September 15, 2037, subject to adjustment as specified in Section 1.13 .

“ Statutory Financial Statements ” means all financial statements of the Company’s subsidiary insurance companies for each relevant period, each prepared in accordance with Applicable Accounting Principles.

“ Subsidiary ” means a Person more than fifty percent (50%) of the outstanding voting stock or other voting interests of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, “ voting stock ” means stock that ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

“ Tax Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “ Administrative Action ”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the Original Issue Date, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or that the Company will be subject to more than a de minimis amount of other taxes, duties or other governmental charges.

“ Trustee ” means the Person named as the “ Trustee ” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor

Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “ Trustee ” shall mean or include each Person who is then a Trustee hereunder.

“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.

SECTION 1.2 Compliance Certificate and Opinions .

(a) Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.

(b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3 ) shall include:


	(i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;

	(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;

	(iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

	(iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.

SECTION 1.3 Forms of Documents Delivered to Trustee .

(a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b) Any certificate of an officer of the Company or Opinion of Counsel may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it

relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such Person knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

(c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

(d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

SECTION 1.4 Acts of Holders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action or actions embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4 .

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(f) Except as set forth in paragraph (g) of this Section 1.4 , the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6 .

(g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2 , (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6.

(h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4 , the party hereto that sets such record date may designate any day as the “ Expiration Date ” and from time to time may change the Expiration Date to any earlier or later day; provided , that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 ^th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 ^th ) day after the applicable record date.

SECTION 1.5 Notices, Etc. to Trustee and Company .

Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(a) the Trustee by any Holder, or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or

(b) the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at Crawford House, 23 Church Street, Hamilton, Bermuda, HM 11 or at any other address previously furnished in writing to the Trustee by the Company.

SECTION 1.6 Notice to Holders; Waiver .

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 1.7 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

SECTION 1.8 Successors and Assigns .

This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.

SECTION 1.9 Separability Clause.

If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

SECTION 1.10 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.11 Governing Law.

This indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

SECTION 1.12 Submission to Jurisdiction .

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN) (COLLECTIVELY, “NEW YORK COURT” ). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

SECTION 1.13 Non-Business Days.

If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and additional interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after any such Interest Payment Date, other than Maturity date, as the case may be, through but excluding such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

SECTION 1.14 Agent for Service of Process.

The Company will designate and appoint CT Corporation System in New York City as its process agent (the “Process Agent” ) upon which process may be served in any action arising out of or relating to this Indenture which may be instituted in any New York Court by the Trustee or the Holders, in accordance with legal procedures prescribed for such courts within fifteen (15) days of execution of the Indenture by the parties hereto, and will expressly consent to the non-exclusive jurisdiction of any such court in respect of any such action, and waive any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment may only be revoked upon the Company’s appointment of a new Process Agent in New York City and such Process Agent’s acceptance in writing of such appointment upon the same terms specified herein prior to the revocation of the previous Process Agent. Service of process upon the Process Agent and written notice of such service of process to it shall be deemed, in every respect, effective service of process upon the Company. Nothing herein shall in any way be deemed to limit the ability of the Trustee or the Holders to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or to bring actions, suits or proceedings against the Company in such other jurisdictions, and in such manner, as may be permitted by applicable law.

SECTION 1.15 Currency Indemnity.

If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to any payment due hereunder, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency” ) any amount due hereunder in any currency other than the Judgment Currency (the “Currency Due” ), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose, “rate of exchange” means the rate at which the Trustee is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practices. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of payment of the amount due, the Company will, on the day of payment, pay such additional amount, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount paid on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of payment is the amount then due hereunder in the Currency Due. If the

amount of the Currency Due which the Trustee would be able to purchase at such rate of exchange is less than the amount of the Currency Due originally due to it, the Company shall indemnify and save the Trustee and the Holders harmless from and against loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained herein, shall give rise to a separate and independent cause of action and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order.

SECTION 1.16 No Recourse Against Others.

No director, officer, employee, incorporator, Affiliate or stockholder of the Company shall have any liability for any obligations of the Company under the Securities or the Indenture or for a claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities.

ARTICLE II.

SECURITY FORMS

SECTION 2.1 Form of Security.

(a) Securities offered and sold to Persons that are both (x) Qualified Purchasers and (y) QIBs pursuant to a private placement exemption from the Securities Act shall be issued initially in the form of Rule 144A Global Security, which shall be deposited with the Trustee, as custodian for and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Rule 144A Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee or the Depositary or its nominee, as the case may be, as hereinafter provided.

(b) Securities offered and sold to Persons that are both non-U.S. Persons and non-U.S. Residents in offshore transactions in reliance on Regulation S shall be issued in the form of Regulation S Global Securities, which shall be deposited with the Trustee, as custodian for and registered in the name of the Depositary or a nominee of such Depositary, duly executed by the Company and authenticated by the Trustee as provided herein. The aggregate principal amount of the Regulation S Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee or the Depositary or its nominee, as the case may be, as hereinafter provided.

(c) The Securities, including the Certificates of Authentication, shall be in substantially the forms required by this Article II, with such appropriate insertions and variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be consistent herewith, determined by authorized officers of the Company as evidenced by their execution of such Securities.

FLAGSTONE REINSURANCE HOLDINGS LIMITED

Floating Rate Deferrable Interest Subordinated Note due 2037

[REG S CUSIP NUMBER: G3529T AB1
ISIN NUMBER.: USG3529TAB10]

[144A CUSIP NUMBER: 33848G AC 5
ISIN NUMBER.: US33848GAC50]


No. [S/R] ________________	$____________________

Flagstone Reinsurance Holdings Limited, a Bermuda company (hereinafter called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to [______________] or registered assigns, the principal sum of [____________] Dollars ($[ ]) [ if the Security is a Global Security, then insert — or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture] on September 15, 2037 (subject to Section 1.13 of the Indenture), unless redeemed prior to such date in accordance herewith and with the Indenture. The Company further promises to pay interest on said principal sum from September 20, 2007, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 15, June 15, September 15 and December 15 of each year, commencing December 15, 2007, or if any such day is not a Business Day, on the next succeeding Business Day (and additional interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after any such Interest Payment Date, other than a Maturity date, through but excluding such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%, together with Additional Amounts, if any, as provided in Section 10.5 of the Indenture, until the principal hereof is paid or duly provided for or made available for payment; provided , further , that any overdue principal, premium, if any, or Additional Amounts and any overdue installment of interest shall bear Additional Interest at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%; (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. Notwithstanding the foregoing, in no event shall interest accrue hereon at a rate that is higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application.

paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

So long as no Event of Default has occurred and is continuing if (x) the Company determines in good faith that dividends or other distributions shall not be paid from Significant Subsidiaries which are Regulated Insurance Companies to the Company due to concerns expressed by the Applicable Insurance Regulatory Authorities or rating agencies or (y) the Board of Directors of the Company has determined, in good faith, that the Company does not have adequate funds available to it to make interest payments during the requested Extension Period (each of (x) and (y), a “ Deferral Condition ”), the Company shall have the right, at any time and from time to time during the term of this Security, to defer the payment of interest on this Security for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), no interest shall be due and payable. No Extension Period shall end on a date other than an Interest Payment Date, and no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%; compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on this Security, together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security and (iv) no Event of Default has occurred and is continuing. The Company shall give the Holder of this Security and the Trustee written notice of its election to begin any such Extension Period at least five (5) Business Days prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral.

the foregoing, (ii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, (2) a dividend reinvestment or stockholder stock purchase plan and/or (3) the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of an exchange or conversion of any class or series of the Company’s capital stock for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (c) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan, or the redemption or repurchase of rights pursuant thereto or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (iii) enter into any contracts with shareholders holding more than 10% of the outstanding shares of common stock of the Company other than on an arm’s-length-basis and in the ordinary course of business.

Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and other payments of interest shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (the “ Securities ”) issued under the Junior Subordinated Indenture, dated as of September 20, 2007 (the “ Indenture ”), between the Company and The Bank of New York Trust Company, National Association, as Trustee (in such capacity, the “ Trustee ,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.

All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

The Company may, on any Interest Payment Date, at its option and in accordance with the Indenture, on or after September 15, 2012 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date; provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority then required.

In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option and in accordance with the Indenture, redeem this Security, in whole but not in part, subject to the terms and conditions of Article XI of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date; provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority then required.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

The Indenture permits, with certain exceptions as herein and therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the

purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations herein and therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, this Security intend and agree to treat this Security as indebtedness of the Company, for United States federal, state and local tax purposes.

This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this day of ______, 20__.


	Flagstone Reinsurance Holdings Limited

	By:

	Name:
	Title:

SECTION 2.2 Restricted Legend .

(a) Rule 144A Security : Any Security issued, sold or otherwise transferred hereunder pursuant to a private placement exemption or Rule 144A shall bear a legend in substantially the following form and transfers thereof, or any beneficial interests therein, may not be made except in compliance with the restrictions specified in such legend:


	“ [ IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“ DTC ”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

	UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

	THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM


	REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT OR BY REGULATION S UNDER THE SECURITIES ACT.

	THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE I44A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING SUCH SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR” (WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT), FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (V) TO A PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) OR (VI) PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND, IN THE CASE OF (III) OR (VI), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND


	(B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

	THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

	THE HOLDER, OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ ERISA ”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “ CODE ”) (EACH A “ PLAN ”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1, OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH


	EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.”

(b) Regulation S Security : Any Security issued, sold or otherwise transferred hereunder pursuant to Regulation S shall bear a legend in substantially the following form and transfers thereof, or any beneficial interests therein, may not be made except in compliance with the restrictions specified in such legend:


	“ [ IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

	UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

	THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY


	RULE 144A UNDER THE SECURITIES ACT OR BY REGULATION S UNDER THE SECURITIES ACT.

	THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING SUCH SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR” (WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT), FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (V) TO A PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”)) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) OR (VI) PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND, IN THE CASE OF (III) OR (VI), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

	AN INTEREST IN THIS SECURITY MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS DEFINED IN REGULATION S) OR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) AT ANY TIME.


	THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

	THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ ERISA ”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “ CODE ”) (EACH A “ PLAN ”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1, OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR


	SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.”

(c) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.


	SECTION 2.3 Form of Trustee’s Certificate of Authentication .

	The Trustee’s certificate of authentication shall be in substantially the following form:

	This is one of the Securities referred to in the within-mentioned Indenture.


Dated:

	THE BANK OF NEW YORK TRUST
	COMPANY, NATIONAL ASSOCIATION, as
	Trustee

	By:

	Authorized signatory


	SECTION 2.4 Temporary Securities .

(a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

(b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.


	SECTION 2.5 Definitive Securities .

The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

ARTICLE III.

THE SECURITIES


	SECTION 3.1 Payment of Principal and Interest .

(a) The unpaid principal amount of the Securities shall bear interest at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10% until paid or duly provided for; such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, and any overdue principal, premium, if any, or Additional Amounts and any overdue installment of interest shall, to the extent legally enforceable, bear Additional Interest at the rate equal to a variable rate per annum, reset quarterly on an Interest Payment Date, equal to LIBOR plus 3.10%; compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

(b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

(c) Any interest (including Additional Interest) on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (other than a Maturity date) (herein called “ Defaulted Interest ”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company


	shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or

	(ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

(d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates or Maturity dates. Interest payments for the Securities shall be computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period.

(e) Payment of principal of, premium, if any, and interest (including Additional Interest) on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal of, premium, if any, and interest (including Additional Interest) due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and other payments of interest (including Additional Interest) shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

(f) Subject to the foregoing provisions of this Section 3.1 , each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall

carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

SECTION 3.2 Denominations .

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

SECTION 3.3 Execution, Authentication, Delivery and Dating .

(a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Twenty Five Million Dollars ($25,000,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:


	(i) a copy of any Board Resolution relating thereto; and

	(ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.

(b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President, its General Counsel or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

(c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and

delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

(d) Each Security shall be dated the date of its authentication.

SECTION 3.4 Global Securities .

(a) Upon the election of a Holder after the Original Issue Date other than an institutional “accredited investor” within the meaning of Rule 501(a)(I), (2), (3) or (7) under the Securities Act, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for definitive, physical Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such owners of beneficial interests as Holders.

(c) Notwithstanding any provision to the contrary herein, so long as a Global Security remains Outstanding and is held by or on behalf of the Depositary, transfers of a Global Security or any interest therein, in whole or in part, shall only be made in accordance with this Article III .


	(i) Transfers, Exchanges and Cancellations Generally . If (A) any Global Security is to be exchanged or transferred for other Securities or canceled in part, or (B) another Security is to be exchanged in whole or in part for a beneficial interest in any

Global Security, then (i) such Global Security, in the case of clause (A), or such other Security, in the case of clause (B), shall be so surrendered for exchange, transfer or cancellation as provided in this Article III , (ii) the principal amount of the Global Security shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records, and (iii) such transaction shall be subject to the additional provisions set forth herein. Upon any such surrender or reduction in principal amount of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

(ii) Rule 144A Global Security to Regulation S Global Security . If an owner of a beneficial interest in a Rule 144A Global Security deposited with the Depositary wishes at any time to exchange its interest in such Rule 144A Global Security for an interest in the corresponding Regulation S Global Security, or to transfer its interest in such Rule 144A Global Security to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Regulation S Global Security, such owner, provided such owner or, in the case of a transfer to another Person, such Person is not a U.S. Person or a U.S. Resident, may, subject to the immediately succeeding sentence and the rules and procedures of the Depositary, exchange or transfer or cause the exchange or transfer of such interest for an equivalent beneficial interest in the Regulation S Global Security. Upon receipt by the Trustee, as Securities Registrar, of (A) instructions given in accordance with the Depositary’s procedures from an Agent Member directing the Trustee to cause to be credited a beneficial interest in the Regulation S Global Security in an amount equal to the beneficial interest in the Rule 144A Global Security to be exchanged or transferred, but not less than the minimum denomination applicable to Securities held through Regulation S Global Securities, (B) a written order given in accordance with the Depositary’s procedures containing information regarding the participant account of the Depositary and, in the case of a transfer or exchange pursuant to and in accordance with Regulation S, the account to be credited with such increase and (C) a certificate in the form of Exhibit B attached hereto, given by the owner of such beneficial interest (in the case of an exchange) or the transferee of such beneficial interest (in the case of a transfer) stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Global Securities, including in accordance with Regulation S, the Trustee, as Securities Registrar, shall instruct the Depositary to reduce the principal amount of the Rule I44A Global Security and to increase the principal amount of the Regulation S Global Security by the aggregate principal amount of the beneficial interest in the Rule 144A Global Security to be exchanged or transferred, and to credit or cause to be credited to the account of the

Person specified in such instructions a beneficial interest in the Regulation S Global Security equal to the reduction in the principal amount of the Rule 144A Global Security.

(iii) Regulation S Global Security to Rule 144A Global Security . If an owner of a beneficial interest in a Regulation S Global Security deposited with the Depositary wishes at any time to exchange its interest in such Regulation S Global Security for an interest in a corresponding Rule 144A Global Security or to transfer its interest in such Regulation S Global Security to a Person who wishes to take delivery thereof in the form of an interest in the corresponding Rule 144A Global Security, such owner may, subject to the immediately succeeding sentence and the rules and procedures of the applicable Depositary, as the case may be, cause the exchange or transfer of such interest for an equivalent beneficial interest in the Rule 144A Global Security. To the extent that the Trustee, as Securities Registrar, has received (A) instructions from the applicable Depositary, as the case may be, directing the Trustee, as Securities Registrar, to cause to be credited a beneficial interest in the Rule 144A Global Security equal to the beneficial interest in the Regulation S Global Security to be exchanged or transferred but not less than the minimum denomination applicable to Securities held through Rule 144A Global Securities, such instructions to contain information regarding the participant account with the Depositary to be credited with such increase, and (B) a certificate in the form of Exhibit C attached hereto, given by the owner of such beneficial interest (in the case of an exchange) or the transferee of such beneficial interest (in the case of a transfer) stating that the Person acquiring such interest in the Rule 144A Global Security is a QIB/QP and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the U.S. or any other relevant jurisdiction, or that, in the case of an exchange, the owner is a QIB/QP, then the Trustee, as Securities Registrar, will instruct the Depositary to reduce the Regulation S Global Security by the aggregate principal amount of the beneficial interest in the Regulation S Global Security to be transferred or exchanged, and the Trustee, as Securities Registrar, shall instruct the Depositary, concurrently with such reduction, to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security equal to the reduction in the principal amount of the Regulation S Global Security.

(iv) Other Exchanges.

(A) Notwithstanding the foregoing, if an owner of a beneficial interest in a Global Security wishes at any time to transfer an interest in such Global Security to a Person other than a QIB/QP or a Person that is not a U.S. Person or U.S. Resident pursuant to Regulation S, such transfer shall be effected, subject to the Applicable Depositary Procedures, in accordance with the provisions of this Article III and the transferee shall receive a definitive, physical Securities certificate in connection with such transfer upon delivery of a certificate in the form of Exhibit D attached hereto to the Trustee. A Holder of a definitive, physical Security certificate that is a QIB/QP or that is not a U.S. Person or U.S. Resident pursuant to Regulation S may, upon request, and in accordance with the provisions of this Article III , exchange such definitive, physical Security certificate for a beneficial interest in a Global Security.

(B) In the event that a Global Security is exchanged for Securities in definitive, physical registered form without interest coupons, such Securities may be exchanged for one another only in accordance with such procedures and restrictions as are substantially consistent with the provisions above (including certification requirements intended to ensure that such transfers comply with Rule 144A or another exemption from the registration requirements of the Securities Act, or are to non-U.S. Persons and non-U.S. Residents, or otherwise comply with Regulation S, as the case may be) and as may be from time to time adopted by the Company and the Trustee.

(C) Subject to compliance with the transfer restrictions contained in Section 2.2 and Section 3.4(c)(iv) , transfers of interests in a Global Security may be made (x) by book-entry transfer of beneficial interests within the relevant Depositary or (y)(i) in the case of transfers of interests in a Rule 144A Global Security or in a Regulation S Global Security, in accordance with this Article III ; provided , that, in the case of any such transfer of interests pursuant to clause (x) or (y) above, such transfer is made in accordance with subclause (D) below.

(D) Restrictions on Transfers.


	(1) Transfers of interests in a Regulation S Global Security to a U.S. Person or a U.S. Resident that is a QIB/QP shall be made by delivery of an interest in the corresponding Rule 144A Global Security and shall be limited to transfers made pursuant to this Article III. Beneficial interests in a Rule 144A Global Security may only be held through the applicable Depositary.

	(2) Any transfer of an interest in a Security to a U.S. Person or a U.S. Resident that is not a QIB/QP and/or a institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act shall be null and void ab initio and shall not be given effect for any purpose hereunder, and the Trustee shall hold any funds conveyed by the intended transferee of such interest in such Security in trust for the transferor and shall promptly reconvey such funds to such Person in accordance with the written instructions thereof delivered to the Trustee at its address listed herein;

	(3) Any transfer of an interest in a Global Security to a U.S. Person or a U.S. Resident that is not a QIB/QP, but who is an institutional “accredited investor”, may and shall be made by delivery of an interest in definitive, physical Securities and shall be limited to transfers made pursuant to this Article III .

	(4) Transfers of interests in a Rule 144A Global Security to a Person that is not a U.S. Person or U.S. Resident shall be made by delivery of an interest in the corresponding Regulation S Global Security and shall be limited to transfers made pursuant to this Article III. Beneficial interests in a Regulation S Global Security may only be held through the applicable Depositary.

(d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e) Execution of Global Securities Generally . The Company shall execute and the Trustee shall, in accordance with this Section 3.4(e), authenticate and deliver initially one or more Global Securities evidencing the Securities that shall be (i) registered in the name of the Depositary for such Global Security or Global Securities or the nominee of such Depositary and (ii) delivered by the Trustee to such Depositary or pursuant to such Depositary’s instructions or held by the Trustee, as custodian for the Depositary; provided, that no initial Holder may be an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) unless such initial Holder is also a (i) QIB/QP or (ii) a Person that is not a U.S. Person or U.S. Resident pursuant to Regulation S.

(f) Rights of Agent Members in Global Securities Generally . Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any interest in a Global Security held on their behalf by the Depositary or under the Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever (except to the extent otherwise provided herein). Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(h) No owner of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such owners of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

(i) Each owner of a beneficial interest in a Rule 144A Global Security will be deemed to have represented and agreed with the Company as follows (except that in a transfer of a beneficial interest in a Regulation S Global Security to a transferee that takes delivery in the

form of an interest in a Rule 144A Global Security, the transferee will be required to make the required representations in a transfer certificate in the form set forth as Exhibit B ):


	(i) The owner is purchasing the Security for its own account or one or more accounts with respect to which it exercises sole investment discretion, in each case in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof, and both it and each such account (if any) and (A) is a QIB/QP, (B) is not a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than $25,000,000 in securities of issuers that are not Affiliated to it, (C) is not a participant-directed employee plan, such as a 401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless investment decisions with respect to the plan are made solely by the fiduciary, trustee or sponsor of such plan, (D) was not formed for the purpose of investing in the Company (except where each beneficial owner of the holder is a QP) and (E) shall provide written notice to any transferee that any transferee taking delivery of the Security in the form of an interest in a Rule 144A Global Security must satisfy the foregoing qualifications.

	(ii) The owner agrees on its own behalf and on behalf of any account for which it is holding the Security to offer, sell or otherwise transfer such Security (or a beneficial interest therein) only (A) in the required minimum denomination, and (B)(1) in the U.S., only in the form of an interest in a Rule 144A Global Security to a QP that the owner reasonably believes is a QIB, purchasing for its own account or one or more accounts, each of which is a QP that the owner reasonably believes is a QIB, in accordance with Rule 144A, and none of which are (i) a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than $25,000,000 in securities of issuers that are not Affiliated to it, (ii) a participant-directed employee plan, such as a 401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless investment decisions with respect to the plan are made solely by the fiduciary, trustee or sponsor of such plan or (iii) formed for the purpose of investing in the Company (except where each beneficial owner is a QP) or (2) outside the U.S. in the form of an interest in a Regulation S Global Security to a Person that is neither a U.S. Person nor a U.S. Resident in an offshore transaction in accordance with Regulation S under the Securities Act. The owner understands and agrees that neither a U.S. Person nor a U.S. Resident may hold an interest in a Security in the form of a Regulation S Global Security at any time. The owner agrees to provide notice of such transfer restrictions to any subsequent transferee.

	(iii) The owner understands that the Company is entitled to require any Holder of Securities who is a U.S. Person or a U.S. Resident who is determined not to have been a QIB/QP at the time of acquisition of the Security (or interest therein) to (A) if such Person is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, receive definitive, physical Securities or (B) sell such interest to a Person that is a Q1B/QP or to a Person that is neither a U.S. Person nor a U.S. Resident in a transaction meeting the requirements of Regulation S.


	(iv) The owner understands that the Securities have not been approved or disapproved by the SEC or any other governmental authority or agency of any jurisdiction. Any representation to the contrary is a criminal offense.

	(v) The owner agrees that no Security (or any interest therein) may be sold, pledged or otherwise transferred in a denomination of less than $100,000 and integral multiples of $1,000 in excess thereof.

	(vi) The owner (A) has such knowledge and experience in financial and business matters that the owner is capable of evaluating the merits and risks (including for tax, legal, regulatory, accounting and other financial purposes) of its prospective investment in the Securities, (B) is financially able to bear such risk, (C) in making such investment is not relying on the advice or recommendations of the Company, the Trustee or any of their respective Affiliates (or any representative of any of the foregoing), (D) has determined that an investment in the Securities is suitable and appropriate for it, and (E) has had access to such financial and other information concerning the Company and the Securities as it has deemed necessary to make its own independent decision to purchase such Securities, including the opportunity, at a reasonable time prior to its purchase of such Securities, to ask questions and receive answers concerning the Company and the terms and conditions of the offering of the Securities.

	(vii) The owner understands that there is no market for the Securities and that no assurance can be given as to the liquidity of any trading market for the Securities and that it is unlikely that a trading market for the Securities will develop. Accordingly, the owner must be prepared to hold the Securities for an indefinite period of time or until their maturity.

	(viii) The owner agrees that no sale, pledge or other transfer of a Security (or any interest therein) may be made if such transfer would have the effect of requiring the Company to register as an investment company under the Investment Company Act.

	(ix) The owner will be deemed to represent, warrant and covenant, for the duration that it holds an interest in such Security, that either (A) it is not acquiring such Securities with the assets of a Person who is or will be an employee benefit plan, individual retirement account or other Plan or arrangement (each, a “Plan”) subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ER1SA”), OR Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) or (B) its acquisition, holding and disposition of such Securities, throughout the period that it holds such Securities, will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or any substantially similar applicable law), because the acquisition, holding and disposition of such Securities by the holder is and will be eligible for relief under a prohibited transaction exemption, all of the conditions of which are and will be satisfied upon its acquisition of, and throughout the term that it holds, such Securities. Each owner of such Securities will be deemed to represent, warrant and covenant that it will not sell, pledge or otherwise transfer such Securities in violation of the foregoing. In addition, if the owner is, or is acting on behalf of, a Plan, the fiduciaries of such Plan represent, warrant and covenant that they have


	been informed of and understand the Company’s investment objectives, policies and strategies and that the decision to invest such Plan’s assets in such Securities was made with appropriate consideration of relevant investment factors with regard to such Plan and is consistent with the duties and responsibilities imposed upon fiduciaries with regard to their investment decisions under ERISA.

	(x) The owner agrees that (A) any sale, pledge or other transfer of a Security (or any interest therein) made in violation of the transfer restrictions contained in this Indenture, or made based upon any false or inaccurate representation made by the holder or a transferee to the Company, will be void and of no force or effect and (B) none of the Company, the Trustee or the Securities Registrar has any obligation to recognize any sale, pledge or other transfer of a Security (or any interest therein) made in violation of any such transfer restriction or made based upon any such false or inaccurate representation.

	(xi) The owner is not a member of the public in the Cayman Islands.

	(xii) The Rule 144A Global Securities will bear the applicable legends set forth in herein.

	(xiii) The owner has the power and authority to enter into each agreement required to be executed and delivered by or on behalf of the owner in connection with its purchase of Securities and to perform its obligations thereunder and consummate the transactions contemplated thereby, and the Person signing any such documents on behalf of the owner has been duly authorized to execute and deliver such documents and each other document required to be executed and delivered by the owner in connection with its purchase of Securities. Such execution, delivery and compliance by the owner does not conflict with, or constitute a default under, any instruments governing the holder, any applicable law, regulation or order, or any material agreement to which the owner is a party or by which the owner is bound.

	(xiv) If the owner’s permanent address is located in the U.S., the owner was offered the Securities in the state of such owner’s permanent address and intends that the securities law of that state govern the owner’s subscription for the Securities.

	(xv) The owner understands that the Company may require certification acceptable to it (i) to permit the Company to make payments to it without, or at a reduced rate of, withholding or (ii) to enable the Company to qualify for a reduced rate of withholding in any jurisdiction from or through which the Company receives payments on its assets. The owner agrees to provide any such certification that is requested by the Company.

	(xvi) The owner acknowledges that the Company, the Trustee and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that, if any of the acknowledgments, representations or warranties made or deemed to have been made by it in connection with its purchase of the Securities are no longer accurate, the owner will promptly notify the Company and the Trustee.

(j) Each owner of a beneficial interest in a Regulation S Global Security shall be deemed to have represented and agreed with the Company as set forth in clauses (ii) through (xvi) of clause (g) above (except that in a transfer of an interest in a Rule 144A Global Security to a transferee that takes delivery in the form of an interest in a Regulation S Global Security, the transferee will be required to make the required representations in a transfer certificate in the form set forth as Exhibit C ). Each owner of a beneficial interest in a Regulation S Global Security will also be deemed or required (as applicable) to represent, warrant and agree as follows:


	(i) The owner is neither a U.S. Person nor a U.S. Resident purchasing for its own account or one or more accounts, each of which is neither a U.S. Person nor a U.S. Resident, and as to each of which the owner exercises sole investment discretion, in an offshore transaction pursuant to Regulation S and is aware that the sale of the Securities to it is being made in reliance on the exemption from registration provided by Regulation S.

	(ii) The Regulation S Global Securities will bear the applicable legends set forth in herein.

	(iii) The owner understands and agrees that before a Security in the form of an interest in a Regulation S Global Security may be offered, sold, pledged or otherwise transferred to a transferee that takes delivery in the form of a Rule 144A Global Security, the transferee shall be required to provide the Trustee with a transfer certificate in the form attached hereto as Exhibit C to the effect that the transferee is a QIB/QP which is acquiring the interest in the Security in the form of a Rule 144A Global Security in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the U.S. or any other relevant jurisdiction.

(k) Notwithstanding anything contained in this Indenture to the contrary, and to the maximum extent permitted under applicable law, neither the Trustee nor the Securities Registrar (nor any other Transfer Agent) shall be responsible or liable for compliance with applicable federal or state securities law (including the Securities Act, Rule 144A or Regulation S promulgated thereunder), the Investment Company Act, ERISA or the Code (or any applicable regulations thereunder); provided , however , that if a specified transfer certificate or Opinion of Counsel is required by the express terms of this Article III to be delivered to the Trustee or Securities Registrar prior to registration of transfer of a Security, the Trustee and/or Securities Registrar, as applicable, shall be under a duty to receive such certificate or Opinion of Counsel and to examine the same to determine whether it conforms on its face to the requirements hereof (and the Trustee or Securities Registrar, as the case may be, shall promptly notify the party delivering the same if it determines that such certificate or Opinion of Counsel does not so conform).

SECTION 3.5 Registration, Transfer and Exchange Generally .

(a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide

for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

(b) Subject to compliance with Section 2.2(b) , upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at the offices or agencies of the Company designated for such purpose. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

(d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

(e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing and, in the case of Securities other than Global Securities, must be accompanied by a certificate substantially in the forth set forth as Exhibit D hereto.

(f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

(g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5(g ): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.

(a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b) If there shall be delivered to the Company and the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

(d) Upon the issuance of any new Security under this Section 3.6 , the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

(f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7 Persons Deemed Owners.

The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 3.8 Cancellation.

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation

any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

SECTION 3.9 Deferrals of Interest Payment Dates.

(a) So long as no Event of Default has occurred and is continuing if (x) the Company determines in good faith that dividends or other distributions shall not be paid from Significant Subsidiaries which are Regulated Insurance Companies to the Company due to concerns expressed by the Applicable Insurance Regulatory Authorities or rating agencies or (y) the Board of Directors of the Company has determined, in good faith, that the Company does not have adequate funds available to it to make interest payments during the requested Extension Period (each of (x) and (y), a “ Deferral Condition ”), the Company shall have the right, at any time and from time to time during the term of the Securities, to defer the payment of interest on the Securities for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), the Company shall have the right to make no payments or partial payments of interest on any Interest Payment Date. No Extension Period shall end on a date other than an Interest Payment Date and no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at the rate equal to a variable rate per annum equal to LIBOR plus 3.10%, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or until funds for the payment thereof have been made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may extend such Extension Period and further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities and (iv) no Event of Default has occurred and is continuing. The Company shall notify (i) the Holders of the Securities at the address provided upon request to the Securities Registrar, (ii) the Trustee at its Corporate Trust Office and (iii) Cohen & Company Financial Management, LLC at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, (215) 861-7868, Attention: Matthew T. Mueller, in writing and by telephone (except in the case of notice to the Holders) of its election to begin any such Extension Period at least five (5) Business

Days prior to the next succeeding Interest Payment Date on which interest on the Securities would be payable but for such deferral.

(b) In connection with any such Extension Period, the Company shall be subject to the restrictions set forth in Section 10.6 .

SECTION 3.10 [Reserved]

SECTION 3.11 Agreed Tax Treatment.

SECTION 3.12 CUSIP Numbers.

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided , that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE IV.

SATISFACTION AND DISCHARGE

SECTION 4.1 Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a) either

(i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2 ) have been delivered to the Trustee for cancellation; or


	(ii) all such Securities not theretofore delivered to the Trustee for cancellation

	(A) have become due and payable, or

	(B) will become due and payable at their Stated Maturity within one year of the date of deposit, or

	(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

	and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1 the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

SECTION 4.2 Application of Trust Money.

Subject to the provisions of Section 10.2(e) , all money or Government Obligations deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1 , either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the

Trustee. Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII .

ARTICLE V.

REMEDIES

SECTION 5.1 Events of Default.

“ Event of Default ” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days (subject to the deferral of any due date in the case of an Extension Period); or

(b) default in the payment of the principal of or any premium on any Security at its Maturity; or

(c) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

(d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;

(e) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a

bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action; or

(f) any representation, warranty, certification or statement of fact made or deemed made by the Company (i) herein or in the Securities shall be incorrect or misleading in any material respect when made or deemed made or (ii) in the Purchase Agreement or in any document delivered in connection herewith or therewith shall be incorrect or misleading so as to reasonably be expected to have, singly or in the aggregate, a material adverse effect on the condition (financial or otherwise), earnings, business or business prospects, of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business.

SECTION 5.2 Acceleration of Maturity; Rescission, Annulment, Audit Rights and Additional Reports.

(a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and, upon any such declaration, the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable; provided , that the payment of principal and interest and all other amounts due with respect to such Securities remain subordinated to the extent provided hereinafter.

(b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee may rescind and annul such declaration and its consequences if:


	(i) the Company has paid or deposited with the Trustee a sum sufficient to pay:

	(A) all overdue installments of interest on all Securities,

	(B) any accrued Additional Interest on all Securities,

	(C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and

	(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and

	(ii) all Events of Default with respect to Securities, other than the non-payment of amounts that have become due solely by such acceleration, have been cured or waived as provided in Section 5.13 .

No such rescission shall affect any subsequent default or impair any right consequent thereon.

(c) In the event that either (a) an Event of Default has occurred and is continuing or (b) the Company has elected to defer payments of interest on the Securities by extending the interest payment period (as provided for in Section 3.9 hereof), the Company shall provide to the Trustee and the Holders GAAP and statutory financial statements and interim quarterly financial statements, if available, including accompanying management discussion and analysis, for the Company and, if and as available, for its subsidiaries or affiliates. In addition, for the Company or any of its subsidiaries or affiliates which may be in liquidation, under regulatory supervision or in runoff, the Company shall provide to the Purchaser Under the Purchase Agreement any reports and presentations to rating agencies, any run-off plan shared with Applicable Insurance Regulatory Authorities, internal or external actuarial reports and management projections.

SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

(a) The Company covenants that if:


	(i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or

	(ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6 .

(b) If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

(c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 5.4 Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or

any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, at the Company’s expense, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and external counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 .

SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 5.6 Application of Money Collected.

Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6 ;

SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII ;

THIRD: Subject to Article XII , to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

FOURTH: The balance, if any, to the Person or Persons entitled thereto.

SECTION 5.7 Limitation on Suits.

Subject to Section 5.8 , no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

(b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

(e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest (to the extent legally enforceable)) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. The rights of any Holder hereunder or under any other Operative Document may be exercised by such Holder or any collateral manager thereof.

SECTION 5.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.

SECTION 5.10 Rights and Remedies Cumulative .

Except as otherwise provided in Section 3.6(f) , no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11 Delay or Omission Not Waiver .

No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein, Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.

SECTION 5.12 Control by Holders .

The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided , that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture,

(b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

(c) subject to the provisions of Section 6.2 , the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

SECTION 5.13 Waiver of Past Defaults .

(a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or


	(ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

(b) Any such waiver shall be deemed to be on behalf of the Holders of all the Securities.

(c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.14 Undertaking for Costs .

All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

SECTION 5.15 Waiver of Usury, Stay or Extension Laws .

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI.

THE TRUSTEE

SECTION 6.1 Corporate Trustee Required .

There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or a national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or

examination by Federal or state authority and having an office within the United States. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1 , the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI .

SECTION 6.2 Certain Duties and Responsibilities .

(a) Except during the continuance of an Event of Default:


	(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

	(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided , that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

(b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.

(d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:


	(i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

	(ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee under this Indenture; and

	(iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

(e) [Reserved]

SECTION 6.3 Notice of Defaults .

Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided , that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided , further , that in the case of any default of the character specified in Section 5.1(c) , no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 6.4 Certain Rights of Trustee .

Subject to the provisions of Section 6.2 :

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking

such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided , that if the Trustee does not receive such instructions from the Company within ten (10) Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

(c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

(h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;

(i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;

(j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

(k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;

(l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and

(m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

SECTION 6.5 May Hold Securities .

The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

SECTION 6.6 Compensation; Reimbursement; Indemnity .

(a) The Company agrees:


	(i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

	(ii) to reimburse the Trustee upon its request for all documented reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and external counsel), except any such expense,


	disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and

	(iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

(b) To secure the Company’s payment obligations in this Section 6.6 , the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

(c) The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

(d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

SECTION 6.7 Resignation and Removal; Appointment of Successor .

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8 .

(b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.8 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for

by the first sentence of this subsection may be combined with the instrument called for by Section 6.8 .

(c) Unless an Event of Default shall have occurred and be continuing, the Trustee may be removed at any time by the Company by a Board Resolution. If an Event of Default shall have occurred and be continuing, the Trustee may be removed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.

(d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Company, by a Board Resolution, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when an Event of Default shall have occurred and be continuing, the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8 , any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(e) The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.8 Acceptance of Appointment by Successor .

(a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .

(c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI .

SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business .

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided , that such Person shall be otherwise qualified and eligible under this Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

SECTION 6.10 Not Responsible for Recitals or Issuance of Securities .

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 6.11 Appointment of Authenticating Agent

(a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its

combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11 .

(b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11 . which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

(d) The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

(e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11 , the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Securities referred to in the within mentioned Indenture.

Dated:


	THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

	By:

		Authenticating Agent

	By:

		Authorized signatory

ARTICLE VII.

HOLDER’S LISTS AND REPORTS BY COMPANY

SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders .

The Company will furnish or cause to be furnished to the Trustee:

(a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

(b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,

in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

SECTION 7.2 Preservation of Information, Communications to Holders .

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

SECTION 7.3 Reports by Company .

(a) So long as the Company is neither subject to Section 13 or 15(d) of the Exchange Act nor exempt from such reporting requirements pursuant to Rule 12g3-2(b) under the Exchange Act, the Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The Company shall furnish to the Trustee Statutory Financial Statements promptly following their filing with the Applicable Insurance Regulatory Authority. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with Section 7.3(b) hereof.

(b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Cohen & Company Financial Management, LLC (at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, Attn: Matthew Mueller, or such other address as designated by Cohen & Company Financial Management, LLC), and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Cohen & Company Financial Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as Exhibit A including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than one hundred twenty five (125) days after the end of each fiscal year of the Company.

(c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “ Commission ”) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“ EDGAR ”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.

ARTICLE VIII.

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms .

The Company shall not, while any of the Securities remain outstanding, consolidate or amalgamate with or merge into any other Person or sell, convey, transfer or lease all or substantially all of its properties and assets as an entirety to any Person unless:

(a) if the Company shall consolidate or amalgamate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or amalgamation into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof, the District of

Columbia, Bermuda, the Cayman Islands or any other country, which is a member state of the Organization for Economic Cooperation and Development unless it has: (1) agreed to make all payments due in respect of the Securities without withholding or deduction for, or on account of, any taxes, duties, assessments or other governmental charges under the laws or regulations of the jurisdiction of organization or residence (for tax purposes) of such entity or any political subdivision or taxing authority thereof or therein unless required by applicable law, in which case such entity shall have agreed to pay such additional amounts as shall be required so that the net amounts received and retained by the Holders of such Securities after payment of all taxes (including withholding taxes), duties, assessments or other governmental charges, will be equal to the amounts that such Holders would have received and retained had no such taxes (including withholding taxes), duties, assessments or other governmental charges been imposed; (2) irrevocably and unconditionally consented and submitted to the jurisdiction of any United States federal court or New York state court, in each case located in the Borough of Manhattan, The City of New York, in respect of any action, suit or proceeding against it arising out of or in connection with this Indenture or the Securities and irrevocably and unconditionally waived, to the fullest extent permitted by law, any objection to the laying of venue in any such court or that any such action, suit or proceeding has been brought in an inconvenient forum; (3) irrevocably appointed an agent in The City of New York for service or process in any action, suit or proceeding referred to in clause (2) above; and (4) has provided an Opinion of Counsel that the Holders’ rights to enforce the Company’s obligations in the successor’s jurisdiction of organization are substantially the same as provided to creditors in Bermuda and there are no currency restrictions in such jurisdiction, and the successor shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1 .

SECTION 8.2 Successor Company Substituted .

(a) Upon any consolidation, amalgamation or merger by the Company with or into any other Person, or any sale, conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a), the successor entity formed by such consolidation or amalgamation or into which the Company is merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be

substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such sale, conveyance, transfer or lease, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

(b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

(c) In case of any such consolidation, amalgamation, merger, sal; conveyance, transfer or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX.

SUPPLEMENTAL INDENTURES

SECTION 9.1 Supplemental Indentures without Consent of Holders .

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:

(a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided , that such action pursuant to this clause (b) shall not adversely affect in any material respect the interests of any Holders; or

(c) to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided , that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or

(d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the

Company for United States Federal income tax purposes, provided , that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders; or

(e) provide for any replacement Trustee in accordance with Article VI .

SECTION 9.2 Supplemental Indentures with Consent of Holders .

(a) With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided , that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,


	(i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest (or manner of calculation of the rate of interest) thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or

	(ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or

	(iii) modify any of the provisions of this Section 9.2 , Section 5.13 or Section 10.7 , except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.

(b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3 Execution of Supplemental Indentures .

In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s

own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder promptly after the execution thereof.

SECTION 9.4 Effect of Supplemental Indentures .

Upon the execution of any supplemental indenture under this Article IX , this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 9.5 Reference in Securities to Supplemental Indentures .

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X.

COVENANTS

SECTION 10.1 Payment of Principal, Premium, if any, and Interest .

The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture. As of the date of this Indenture, the Company represents that it has no present intention to exercise its right under Section 3.9 to defer payments of interest on the Securities.

SECTION 10.2 Money for Security Payments to be Held in Trust .

(a) If the Company shall at any time act as its own Paying Agent with respect to the Securities, it will, on or before each due date of the principal of and any premium or interest (including any Additional Interest) on the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium or interest (including Additional Interest) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee in writing of its failure so to act.

(b) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 am., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.

(c) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.

(d) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

(e) Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 10.3 Statement as to Compliance .

The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

SECTION 10.4 Calculation Agent .

(a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “ Calculation Agent ”). The Company has initially appointed the Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Company at any time. So long as the Trustee holds any of the Securities, the Calculation Agent shall be the Trustee, except as described in the immediately preceding sentence. If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.

(b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate and payment amount (which payment amount shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

SECTION 10.5 Additional Amounts .

All payments of principal of and premium, if any, interest (including any Additional Interest) and any other amounts on, or in respect of, the Securities of any series shall be made without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which the Company is organized (each, a “ taxing jurisdiction ”) or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any regulations or ruling promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof).

If a withholding or deduction at source is required, the Company shall, subject to certain limitations and exceptions set forth below, pay to the Holder of any such Security such additional amounts (“ Additional Amounts ”) as may be necessary so that every net payment of principal, premium, if any, interest (including any Additional Interest) or any other amount made to such Holder, after such withholding or deduction, shall not be less than the amount provided for in such Security and this Indenture to be then due and payable; provided , however , that the Company shall not be required to make payment of such Additional Amounts for or on account of:

(a) any tax, fee, duty, assessment or governmental charge of whatever nature which would not have been imposed but for the fact that such Holder: (A) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing jurisdiction or any political subdivision thereof or otherwise had some connection with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Security; (B) presented such Security, where presentation is required, for payment in the relevant taxing jurisdiction or any political subdivision thereof, unless such Security could not have been presented for payment elsewhere; or (C) presented such Security, where presentation is required, more than thirty (30) days after the date on which the payment in respect of such Security first became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of thirty (30) days;

(b) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge;

(c) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Security to comply with any reasonable request by the Company addressed to the Holder within ninety (90) days of such request (A) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, assessment or other governmental charge;

(d) any withholding or deduction required to be made pursuant to any EU Directive on the taxation of savings implementing the conclusions of the ECOFIN Council meetings of 26-27 November 2000, 3 June 2003 or any law implementing or complying with, or introduced in order to confirm to, such EU Directive; or

(e) any combination of items (a), (b), (c) and (d);

Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium, interest (including Additional Interest) or any other amounts on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent

that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of Additional Amounts in those provisions hereof where such express mention is not made.

SECTION 10.6 Additional Covenants .

(a) The Company covenants and agrees with each Holder of Securities that if (1) an Event of Default shall have occurred and be continuing, (2) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities or such Extension Period, or any extension thereof, shall be continuing, or (3) any insurance company, which is a Covenant Significant Subsidiary (as defined hereinafter) of the Company, is rated by A.M. Best Company, Inc. and (x) is downgraded by A.M. Best Company, Inc. to a rating below A-and fails to renew more than 51% of its net premiums written in one or more transactions during any twelve (12) month period; (y) is downgraded by A.M. Best Company, Inc.to a rating below A-and sells more than 51% of its rights to renew net premiums written of its Covenant Significant Subsidiaries in one or more transactions over the course of a twelve (12) month period; or (z) (A) is downgraded by A.M. Best Company, Inc. to a rating below B++ or (B) withdraws its rating by A.M. Best Company, Inc., then, the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company’s capital stock or make any guarantee payments with respect to the foregoing, (ii) make any payment of principal or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase or similar plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Event of Default, Extension Period or the application of the circumstances specified in clause (3) above, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith), or (iii) enter into any contracts with shareholders holding more than 10% of the outstanding shares of common stock of the Company other than on an arm’s-length-basis and in the ordinary course of business ((i), (ii) and (iii) above, collectively, the “ Block ”); provided , however , that the Block shall only apply to subsections 3(x) and (y) above for so long as any such insurance subsidiary which is a Covenant Significant Subsidiaries

is rated below A- by A.M. Best Company, Inc.; provided , further , that the Block shall only apply to subsection 3(z) above for so long as any such insurance subsidiary which is a Covenant Significant Subsidiary is rated below B++ by A.M. Best Company, Inc. For purposes of this Section 10.6 only, a “ Covenant Significant Subsidiary ” shall have the meaning as defined in Section 1-02(w) of Regulation S-X (“ Reg S-X ”) of the Securities Act, except that wherever Reg S-X states “10 percent,” such “10 percent” shall be replaced by “20 percent.”

SECTION 10.7 Waiver of Covenants .

The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.8 Treatment of Securities .

The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding and back-up withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-SBEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes, or any other applicable form establishing a complete exemption from U.S. withholding and back-up withholding tax.

ARTICLE XI.

REDEMPTION OF SECURITIES

SECTION 11.1 Optional Redemption .

The Company may, at its option, on any Interest Payment Date, on or after September 15, 2012, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest (to the extent legally enforceable), through but excluding the date fixed as the Redemption Date (the “ Optional Redemption Price ”); provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authorities with respect to such redemption if then required.

SECTION 11.2 Special Event Redemption .

Prior to September 15, 2012, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at

a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof; together, in the case of any such redemption, with accrued interest, including any Additional Interest (to the extent legally enforceable), through but excluding the date fixed as the Redemption Date (the “ Special Redemption Price ”), provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority with respect to such redemption if then required.

SECTION 11.3 Election to Redeem; Notice to Trustee .

The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

SECTION 11.4 Selection of Securities to be Redeemed .

(a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided , that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

SECTION 11.5 Notice of Redemption .

(a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part.

(b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:


	(i) the Redemption Date;

	(ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

	(iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;

	(iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and

	(v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.

(c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

SECTION 11.6 Deposit of Redemption Price .

Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.2 ) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

SECTION 11.7 Payment of Securities Called for Redemption .

(a) If any notice of redemption has been given as provided in Section 11.5 , the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to, but excluding, the Redemption Date.

(b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof; at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

(c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from and including the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII.

SUBORDINATION OF SECURITIES

SECTION 12.1 Securities Subordinate to Senior Debt .

The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.

SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc .

(a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for redemption or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

(b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the

commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

(d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 12.3 Payment Permitted If No Default .

Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8) that such payment would have been prohibited by the provisions of this Article XII , except as provided in Section 12.8 .

SECTION 12.4 Subrogation to Rights of Holders of Senior Debt .

Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article II , and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

SECTION 12.5 Provisions Solely to Define Relative Rights .

The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional

Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (0) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 12.6 Trustee to Effectuate Subordination .

Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

SECTION 12.7 No Waiver of Subordination Provisions .

(a) No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b) Without in any way limiting the generality of paragraph (a) of this Section 12.7 , the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

SECTION 12.8 Notice to Trustee .

(a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee,

agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

(b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent .

Upon any payment or distribution of assets of the Company referred to in this Article XII , the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII .

SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt .

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.

SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights .

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent

as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XII , and no implied covenants or obligations with respect to the holders of such Senior Debt shall be read into this Indenture against the Trustee. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 .

SECTION 12.12 Article Applicable to Paying Agents .

If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “ Trustee ” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee; provided , that Sections 12.8 and 12.11 shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent.

* * * *

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

* * * *

Schedule A

DETERMINATION OF LIBOR

With respect to the Securities, the London interbank offered rate (“ LIBOR ”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

(1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (except with respect to the first interest payment period, such date shall be two (2) Business Days prior to the Closing Date (each such day, a “ LIBOR Determination Date ”), LIBOR for any given Security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Reuters Screen LIBOR01 (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.

(2) If, on any LIBOR Determination Date, such rate does not appear on Reuters Screen LIBOR01 or such other page as may replace such Screen, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. It on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

(3) As used herein: “ Reference Banks ” means four major banks in the London interbank market selected by the Calculation Agent; and “ LIBOR Business Day ” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.

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


	FLAGSTONE REINSURANCE HOLDINGS
	LIMITED

	By:	/s/ James O’Shaughnessy

	Name: James O’Shaughnessy
	Title: Chief Financial Officer

	THE BANK OF NEW YORK TRUST
	COMPANY, NATIONAL ASSOCIATION as
	Trustee

	By:	/s/ Maria D. Calzado

	Name: Maria D. Calzado
	Title: Vice President

Exhibit A

Form of Officer’s Financial Certificate

The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) and Section 10.3 of the Junior Subordinated Indenture, dated as of September 20, 2007 (the “Indenture”), among Flagstone Reinsurance Holdings Limited (the “Company”) and The Bank of New York Trust Company, National Association, as trustee, that, as of [date], [20 ], the Company, if applicable, and its Subsidiary Insurance Companies (as defined below) had the following ratios and balances:

[For the Company, if applicable, and each Subsidiary Insurance Company (as defined below) provide:]

[INSURANCE COMPANY]
As of [Quarterly/Annual Financial Date], 20


NAIC Risk Based Capital Ratio (authorized control level)		_____	%
Total Policyholders’ Surplus	$	_____
Consolidated Debt to Total Policyholders’ Surplus		_____	%
Total Shareholders’ Equity	$	_____
Consolidated Debt to Total Shareholders’ Equity		_____	%
Total Assets	$	_____
NAIC Class 1 & 2 Rated Investments to Total Fixed Income Investments		_____	%
NAIC Class 1 & 2 Rated Investments to Total Investments		_____	%
Return on Policyholders’ Surplus		_____	%
Net Premiums Written	$	_____
[For Property & Casualty Companies, also provide:]
Expense Ratio		_____	%
Loss and LAE Ratio		_____	%
Combined Ratio		_____	%
Net Premiums Written (annualized) to Policyholders’ Surplus		_____	%
Net Premiums Written (annualized) to Shareholders’ Equity		_____	%


•	A table describing the quarterly report calculation procedures is provided on page 3 hereof

The following is a complete list as of [Quarterly/Annual Financial Data] of the Company’s companies which conduct insurance or reinsurance business (the “Subsidiary Insurance Companies”):

[List of subsidiary insurance companies]

Exhibit A

Pursuant to Section 10.3 of the Indenture, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the calendar year ending on __________, 20__ [, except as follows: specify each such default and the nature and status thereof .]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating for Significant Subsidiaries and other subsidiaries (if readily available), financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and the Statutory Financial Statements (as defined in the Indenture), if any, for the fiscal quarter ended [date], 20_, to the extent applicable.]

The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20__ and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (except as otherwise noted therein).

The Statutory Financial Statements fairly present in all material respects in accordance with Applicable Accounting Principles, as defined in the Indenture, the financial position of the subject insurance company and have been prepared in accordance with Applicable Accounting Principles.

IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this _________ day of ____________, 20 __.


	By:


	Name:

	Flagstone Reinsurance Holdings Limited
	Crawford House
	23 Church Street, 3 ^rd Floor
	Hamilton HM11 Bermuda

Exhibit A

Financial Definitions

INSURANCE COMPANY


Report Item		Description of Calculation

NAIC Risk Based Capital Ratio-P&C		Total Adjusted Capital/Authorized Control Level Risk-Based Capital
NAICRisk Based Capital Ratio-Life		(Total Adjusted Capital-Asset Valuation Reserve)/Authorized Control Level Risk-Based Capital
Total Capital and Surplus-Life		Common Capital Stock + Preferred Capital Stock + Aggregate Write-Ins for other than special surplus funds + Surplus Notes + Gross Paid-In and Contributed Surplus + Aggregate Write-Ins for Special Surplus Funds + Unassigned Funds (Surplus) — Treasury Stock
Total Capital and Surplus-P&C		Aggregate Write-Ins for Special Surplus Funds + Common Capital Stock + Preferred Capital Stock + Aggregate Write Ins for other than special surplus funds + Surplus Notes + Gross Paid-In and Contributed Surplus + Unassigned Funds (Surplus) — Treasury Stock
Total Class 1 & 2 Rated Investments to Total Fixed Income Investments		(Total Class I + Total Class 2 Rated Investments)/Total Fixed Income Investments
Total Class 1 & 2 Rated Investments to Total Investments		(Total Class I + Total Class 2 Rated Investments)/Total Investments
Total Assets		Total Assets
Return on Policyholders’ Surplus		Net Income/Policyholders’ Surplus
Expense Ratio		Other Underwriting Expenses Incurred/Net premiums Earned
Loss and LAE Ratio		(Losses Incurred + Loss Expenses Incurred)/Net Premiums Earned
Combined Ratio		Expense Ratio + Loss and LAB Ratio
Net Premiums Written (annualized) to Policyholders’ Surplus		Net Premiums Written/Policyholders’ Surplus

Exhibit B

FORM OF REGULATION S GLOBAL SECURITY TRANSFEREE CERTIFICATE

The Bank of New York Trust Company, National Association,
as Trustee

601 Travis Street, 16th Floor
Houston, TX 77002
Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re: Floating Rate Deferrable Interest Subordinated Notes due 2037 (the “Securities”)

Reference is hereby made to the Indenture, dated as of September 20, 2007 (the “ Indenture ”), among Flagstone Reinsurance Holdings Limited, a company organized under the laws of Bermuda (the “ Company ”), and The Bank of New York Trust Company, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings assigned to them pursuant to the Indenture.

This letter relates to U.S. $___ aggregate outstanding principal amount of the Company’s Floating Rate Deferrable Interest Subordinated Notes due 2037, which are held in the form of an interest in a Rule 144A Global Security with the Depository (144A CUSIP NUMBER: 33848G AC5, ISIN NUMBER.: US33848GAC50) in the name of _____________________________ [name of transferor] (the “ Transferor ”) to effect the transfer of the Securities in exchange for an equivalent beneficial interest in a Regulation S Global Security in the name of __________________ [name of transferee] (the “ Transferee ”).

In connection with such request, and in respect of such Securities, the Transferee does hereby certify that such Securities are being transferred (i) in accordance with the transfer restrictions set forth in the Indenture relating to the Securities and (ii) pursuant to an exemption from registration under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

In addition, the Transferee hereby represents, warrants and covenants for the benefit of the Company and the Trustee that:


1.	the offer of the Securities was not made to a Person in the United States;

2.	at the time the buy order was originated, the Transferee was outside the United States and the transfer constitutes an offshore transaction (within the meaning of Regulation S);

3.	no directed selling efforts have been made in contravention of the requirements of Rule 903(a) or 904(a) of Regulation S, as applicable;

4.	the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;

5.	Neither the Transferee nor any account for which it is acting is a U.S. Person nor a U.S. Resident (within the meaning of the Investment Company Act);

B-1

Exhibit B


6.	if the sale is made during a restricted period and the provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1) of Regulation S are applicable thereto, the Transferee confirms that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be; and

7.	for the duration that it holds any interest in such Security, either (i) it is not acquiring such Security with the assets of a Plan or another employee benefit plan subject to applicable law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code or (ii) the acquisition, holding or disposition of such Security by the Transferee, throughout the period that it holds such Security, will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of another employee benefit plan, any substantially similar applicable law), because the purchase, holding and disposition of such Security is and will be eligible for relief under a prohibited transaction exemption, all of the conditions of which are and will be satisfied upon its acquisition of, and throughout the term that it holds, such Security. The Transferee represents, warrants and covenants that it will not sell, pledge or otherwise transfer such Security in violation of the foregoing.

In addition, the Transferee hereby represents, warrants and agrees with the Company as to the provisions set forth in Article III of the Indenture.

The Transferee understands that the Company, the Trustee and their respective counsel will rely upon the accuracy and truth of the foregoing representations, and the Transferee hereby consents to such reliance. Further, the Transferee irrevocably authorizes the Company, the Trustee and their respective counsel to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.


	[Name of Transferee]

	By:

	Name:
	Title:

Dated: _____________,

B-2

Exhibit B

Taxpayer Identification Number: Address for Notices:
Wire Instructions for Payments:


	Bank:

	Address:

	Bank ABA #:

	Account No.:					Tel:


	FAO:					Fax:


	Attn.:					Attn:

Registered Name (if Nominee):

B-3

Exhibit C

FORM OF RULE 144A GLOBAL SECURITY TRANSFEREE CERTIFICATE

The Bank of New York Trust Company, National Association,
as Trustee

601 Travis Street, 16th Floor
Houston, TX 77002
Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re: Floating Rate Deferrable Interest Subordinated Notes due 2037 (the “Securities”)

Reference is hereby made to the Indenture, dated as of September 20, 2007 (the “ Indenture ”), among Flagstone Reinsurance Holdings Limited, a company organized under the laws of Bermuda, and The Bank of New York Trust Company, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings assigned to them pursuant to the Indenture.

This letter relates to U.S. $___________________ aggregate outstanding principal amount of the Company’s Floating Rate Deferrable Interest Subordinated Notes due 2037 which are held in the form of an interest in a Regulation S Global Security deposited with the Depository (REG S CUSIP NUMBER: USG3529T AB1, ISIN NUMBER.: US G3529TAB10) in the name of __________________ [name of transferor] (the “ Transferor ”) and a request by the Transferor to effect the transfer of the Securities in exchange for an equivalent beneficial interest in a Rule 144A Global Security in the name of ____________________ [name of transferee] (the “ Transferee ”).

In connection with such request, and in respect of such Securities, the Transferee does hereby certify that such Securities are being transferred in accordance with (i) the applicable transfer restrictions set forth in the Indenture relating to the Securities and (ii) Rule 144A under the United States Securities Act of 1933, as amended, and any applicable securities laws of any state of the United States and any other relevant jurisdiction, and that the Transferee is purchasing the Securities for its own account or one or more accounts with respect to which the Transferee exercises sole investment discretion, and the Transferee and any such account (A) are both Qualified Institutional Buyers within the meaning of Rule 144A and Qualified Purchasers as defined in the Indenture, (B) is not a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than $25,000,000 in securities of issuers that are not affiliated to it, (C) is not a participant-directed employee plan, such as a 401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless investment decisions with respect to the plan are made solely by the fiduciary, trustee or sponsor of such plan, and (D) was not formed for the purpose of investing in the Company (unless each of its beneficial owners is a Qualified Purchaser).

The Transferee hereby represents, warrants and agrees with the Issuer as to the provisions set forth in Article III of the Indenture.

Further, the Transferee hereby certifies, represents and warrants that, for the duration that it holds any interest in such Securities, either (i) it is not acquiring such Securities with the assets

C-1

Exhibit C

of a Plan or another employee benefit plan subject to applicable law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code or (ii) the acquisition, holding and disposition of such Securities by the Transferee, throughout the period that it holds such Securities, will not result in a nonexempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of another employee benefit plan, any substantially similar applicable law), because the purchase, holding and disposition of such Securities is and will be eligible for relief under a prohibited transaction exemption, all of the conditions of which are and will be satisfied upon its acquisition of, and throughout the term that it holds, such Securities. The Transferee represents, warrants and covenants that it will not sell, pledge or otherwise transfer such Securities in violation of the foregoing.

The Transferee understands that the Company, the Trustee and their respective counsels will rely upon the accuracy and truth of the foregoing representations, and the Transferee hereby consents to such reliance. Further, the Transferee irrevocably authorizes the Company, the Trustee and their respective counsel to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.


	[Name of Transferee]

	By:

	Name:
	Title:

Dated: _______________

Taxpayer Identification Number: Wire Instructions for Payments:	Address for Notices:


	Bank:

	Address:

	Bank ABA #:

	Account No.:					Tel:


	FAO:					Fax:


	Attn.:					Attn:

Registered Name (if Nominee):

The Transferor agrees to the foregoing and certifies that it reasonably believes that such Transferee and its accounts, if any, are both Qualified Institutional Buyers within the meaning of such Rule 144A and Qualified Purchasers as defined in the Indenture.

C-2

Exhibit C


	[Name of Transferor]

	By:

	Date:

C-3

Exhibit D

FORM OF NON-GLOBAL SECURITY TRANSFEREE CERTIFICATE

The Bank of New York Trust Company, National Association,
as Trustee

601 Travis Street, 16th Floor
Houston, TX 77002
Attention: Global Corporate Trust - Flagstone Reinsurance Holdings Limited

Re: Floating Rate Deferrable Interest Subordinated Notes due 2037 (the “Securities”)

Reference is hereby made to the Indenture, dated as of September 20, 2007 (the “ Indenture ”), among Flagstone Reinsurance Holdings Limited, a company organized under the laws of Bermuda, and The Bank of New York Trust Company, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings assigned to them pursuant to the Indenture.

This letter relates to U.S. $_________________ aggregate outstanding principal amount of the Company’s Floating Rate Deferrable Interest Subordinated Notes due 2037 in the name of ______________________ [name of transferor] (the “ Transferor ”) and a request by the Transferor to effect the transfer of the Securities in exchange for an equivalent beneficial interest in Security in the name of _________________ [name of transferee] (the “ Transferee ”).

In connection with such request and our purchase of the Securities, the Transferee does hereby certify that:

We understand that the Securities have not been registered under the Securities Act and may not be offered or sold except as permitted in the Indenture and in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Securities that, if we decide to offer, sell or otherwise transfer any such Securities, (i) such offer, sale or transfer will be made only (a) to the Company, (b) pursuant to Rule 144A to a person we reasonably believe is a Qualified Institutional Buyer that purchases such Securities for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (c) to a person that is neither a U.S. Person (as defined in Regulation S) nor a U.S. Resident (within the meaning of the Investment Company Act) in an offshore transaction in accordance with Rule 903 or Rule 904 of Regulation S, acting for its own account or for the account of one or more Persons with respect to which it exercises sole investment discretion, each of which is neither a U.S. Person (as defined in Regulation S) nor a U.S. Resident (within the meaning of the Investment Company Act) (a “ Regulation S Purchaser ”), or (d) pursuant to an exemption from the registration requirements of the Securities Act to an “accredited investor” within the meaning of subparagraph (a)(1),(2), (3) or (7) of Rule 501 under the Securities Act (an “ Institutional Accredited Investor ”) that is acquiring such Securities for its own account, or for the account of such an Institutional Accredited Investor, for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, subject to the requirements of the Indenture and to the right of the Company prior to any such

D-1

Exhibit D


	offer, sale or transfer pursuant to clause (d) above to require the delivery of an opinion of counsel, certification and/or other information satisfactory to the Company. We understand that the Certificates for any security that we receive will bear a legend substantially to the effect of the foregoing and agree to notify each transferee of the resale restrictions referred to therein.

2.	We acknowledge the matters specified in paragraph 1 above, represent that we satisfy the conditions specified for transferees in paragraph 1 above and certify that we are an Institutional Accredited Investor. In addition, we represent that we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks or our investment in the Securities, and we and any account for which we are acting are each able to bear the economic risks of our or its investment for an indefinite period of time.

3.	We are acquiring the Securities purchased by us for our own account (or for one or more accounts as to each of which we exercise sole investment discretion and have authority to make, and do make, the statements contained in this Certificate) and not with a view to any distribution of the Securities, subject, nevertheless, to the understanding that the disposition of our property will, at all times, be and remain within our control.

4.	In the event that we purchase any Securities, we will acquire such Securities having an aggregate principal amount not less than $100,000, for our own account and for each separate account for which we are acting.

5.	We acknowledge that we are not a fiduciary of (i) an employee benefit plan, individual retirement account or other plan or arrangement subject to Title I of ERISA or section 4975 of the Code; of (ii) an entity whose underlying assets include “plan assets” by reason of any Plan’s investment in the entity, and are not purchasing any of the Securities on behalf of or with “plan assets” by reason of any Plan’s investment in the entity.

6.	We acknowledge that the Company and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agree that if any of the acknowledgments, representations, warranties and agreements deemed to have been made by our purchase of any of the Securities are no longer accurate, we shall promptly notify the Company. If we are acquiring any Securities as a fiduciary or agent for one or more investor accounts, we represent that we have sole discretion with respect to each such investor account and that we have full power to make the foregoing acknowledgments, representations, warranties and agreements on behalf of each such investor account.


	[Name of Transferee]

	By:

	Name:
	Title:

D-2

Exhibit D


Dated: _____________,

Upon transfer, the Securities (having a principal amount of $[____________]) shall be registered in the name of the new beneficial owner as follows:


Name:

Address:




Taxpayer ID Number:

D-3

Exhibit 4.6

EXECUTION COPY

FIRST SUPPLEMENTAL INDENTURE

This FIRST SUPPLEMENTAL INDENTURE (this “ First Supplemental Indenture ”) is dated as of May 17, 2010, among FLAGSTONE REINSURANCE HOLDINGS, S.A., a Luxembourg company (the “ Successor Company ”) (as successor to FLAGSTONE REINSURANCE HOLDINGS LIMITED, a Bermuda company (the “ Company ”), the Company and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, successor to THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company and the Trustee have entered into an indenture (the “ Indenture ”) dated as of September 20, 2007;

WHEREAS, the Company and the Successor Company wish to enter into this First Supplemental Indenture in connection with the change of the name and place of incorporation of the Company to that of the Successor Company and the continuance of the Company as the Successor Company through a redomestication (collectively, the “ Redomestication ”);

WHEREAS, Section 8.1 of the Indenture provides, in part, that the Company may transfer all or substantially all of its properties and assets as an entirety to another Person provided that (a) (i) the Successor Company is an entity organized and existing under the laws of any country which is a member state of the Organization for Economic Cooperation and Development and (ii) the Successor Company expressly assumes, by an indenture supplement executed and delivered to the Trustees, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (b) no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture;

WHEREAS, the Company, pursuant to Section 8.1 and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Redomestication and this First Supplemental Indenture each comply with Article VIII of the Indenture, (b) that all conditions

precedent provided for in the Indenture relating to the Redomestication have been complied with and (c) that the execution of this Supplemental Indenture is authorized or permitted by the Indenture and all conditions precedent provided for in the Indenture relating thereto have been complied with.

WHEREAS, all things necessary to authorize the assumption by the Successor Company of the Company’s obligations under the Indenture and to make this First Supplemental Indenture when executed by the parties hereto a valid and binding amendment of and supplement to the Indenture have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions . Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

2. Assumption of Obligations . The Successor Company hereby expressly assumes, from and after the date hereof, all of the obligations of the Company under the Indenture and the Securities.

3. Succession and Substitution . The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this First Supplemental Indenture, shall succeed to, and be substituted for, the Company under the Indenture and the Securities.

4. Effectiveness and Operativeness . This First Supplemental Indenture shall be deemed to have become effective, and the provisions provided for in this First Supplemental Indenture shall be deemed to have become operative as of the date hereof.

5. Ratification of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

6. Governing Law . THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK .

7. Trustee Makes No Representation . The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture. The recitals contained herein shall be taken as the statements of the Company and the Successor Company and the Trustee assumes no responsibility for their correctness.

8. Counterparts . The parties hereto may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

9. Effect of Headings . The Section headings herein are for convenience only and shall not effect the construction thereof.

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.


FLAGSTONE REINSURANCE HOLDINGS LIMITED

By:	/s/ William F. Fawcett

	Name:	William F. Fawcett
	Title:	General Counsel and Corporate Secretary

FLAGSTONE REINSURANCE HOLDINGS, S.A.

By:	/s/ William F. Fawcett

	Name:	William F. Fawcett
	Title:	General Counsel and Corporate Secretary

Flagstone First Supplemental Indenture

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.


THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee

By:	/s/ Bill Marshall

	Name:	Bill Marshall
	Title:	Vice President

Flagstone First Supplemental Indenture

Exhibit 4.7

SECOND SUPPLEMENTAL INDENTURE

THIS SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”) is dated as of November 30, 2012, among FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED, a Bermuda exempted company (the “ Successor Company ”), FLAGSTONE REINSURANCE HOLDINGS, S.A., a Luxembourg société anonyme , as successor in interest to Flagstone Reinsurance Holdings Limited (the “ Company ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as successor in interest to THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of September 20, 2007, between the Company and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010 (together, the “ Indenture ”), providing for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”);

WHEREAS, the Trustee has heretofore authenticated, and the Company has heretofore issued $25,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2037 under the Indenture;

be performed or observed; (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture and that all conditions precedent provided for in the Indenture relating to such transfer have been complied with;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

the Securities, (ii) it is the successor of the Company pursuant to the Merger, (iii) it is a Bermuda exempted company organized and existing under the laws of Bermuda, (iv) both immediately before and after giving effect to this Second Supplemental Indenture, no Event of Default, and no event that, after notice or lapse of time or both, would consitute an Event of Default, shall have happened and be continuing and (v) this Second Supplemental Indenture is executed and delivered pursuant to Section 9.1(a) of the Indenture and does not require consent of any Holders.

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Second Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Company authorizing this Second Supplemental Indenture.

7. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

9. Counterparts. The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

10. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS, S.A.

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee

	By:	/s/ Kenneth Helbig

		Name: Kenneth Helbig
		Title: Vice President

[Signature Page to Second Supplemental Indenture]

Exhibit 4.8

THIRD SUPPLEMENTAL INDENTURE

THIS THIRD SUPPLEMENTAL INDENTURE (this “ Third Supplemental Indenture ”) is dated as of November 30, 2012, among VALIDUS UPS, LTD., a Bermuda exempted company (the “ Successor Company ”), VALIDUS HOLDINGS, LTD., a Bermuda exempted company (the “ Guarantor ”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, as successor in interest to THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, Flagstone Reinsurance Holdings (Bermuda) Limited, a Bermuda exempted company (the “ Company ”) (as successor in interest to Flagstone Reinsurance Holdings, S.A., as successor in interest to Flagstone Reinsurance Holdings Limited) has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of September 20, 2007, between the Company and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010, and the Second Supplemental Indenture, dated as of November 30, 2012 (collectively, the “ Indenture ”), providing for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”);

WHEREAS, the Successor Company, pursuant to Section 8.1(c) and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Merger and this Third Supplemental Indenture each complies with Article VIII of the Indenture, (b) that all conditions and covenants provided for in the Indenture relating to the Merger have been complied with and (c) that the execution of this Third Supplemental Indenture is authorized or permitted by the Indenture and all conditions and covenants provided for in the Indenture relating thereto have been complied with; and

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

3. Succession and Substitution. The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this Third Supplemental Indenture, shall

4. Guarantee.

Section 13.1. Guarantees.

(c) The Guarantor further agrees that its Guarantees hereunder constitute a guarantee of payment, performance and compliance when due (and not a guarantee of collection).

Section 13.2. Successors and Assigns.

Section 13.3. No Waiver.

Section 13.4. Modification.

Section 13.5. Notation of Guarantees Not Required.

Section 13.6. Benefits Acknowledged.

Section 13.7. Release of Guarantees.

the release of the Guarantees, upon the Company delivering to the Trustee an Officers’ Certificate stating that the Guarantees are released in full.

Section 13.8 Limitation on Guarantor Liability.

5. Subordination of Guarantees.

Section 14.1. Securities Subordinate to Senior Debt of the Guarantor.

Section 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.

Section 14.3. Payment Permitted If No Default.

Section 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.

Section 14.5. Provisions Solely to Define Relative Rights.

Section 14.6. Trustee to Effectuate Subordination.

Section 14.7. No Waiver of Subordination Provisions.

Section 14.8. Notice to Trustee.

Section 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV , the Trustee and the Holders of the Securities shall be entitled to conclusively rely

Section 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.

Section 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.

Section 14.12. Article Applicable to Paying Agents.

6. Representations and Warranties.

7. Submission to Jurisdiction.

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Third Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Company authorizing this Third Supplemental Indenture.

10. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

12. Counterparts. The parties hereto may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

13. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

14. Addresses for Notices . All notices or other communications to be addressed to the Company as contemplated by Section 1.5 of the Indenture shall be addressed as follows:


	(a)	if to the Successor Company:

		Validus UPS, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: Treasurer

		with a copy to:

		Validus UPS, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: General Counsel

	(b)	if to the Guarantor:

		Validus Holdings, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: Treasurer

		with a copy to:

		Validus Holdings, Ltd.
		29 Richmond Road
		Pembroke HM 08, Bermuda
		Attention: General Counsel

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	VALIDUS UPS, LTD

	By:	/s/ Jeffrey D. Sangster

		Name: Jeffrey D. Sangster
		Title: Chief Financial Officer


	VALIDUS HOLDINGS, LTD.

	By:	/s/ Joseph E. Consolino

		Name: Joseph E. Consolino
		Title: President and Chief Financial Officer

[Signature Page to Third Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee

	By:	/s/ Kenneth Helbig

		Name: Kenneth Helbig
		Title: Vice President

[Signature Page to Third Supplemental Indenture]

Exhibit 4.11

SECOND SUPPLEMENTAL INDENTURE

THIS SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”) is dated as of November 30, 2012, among FLAGSTONE FINANCE S.A., a Luxembourg société anonyme (the “ Company ”), FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED, a Bermuda exempted company (the “ Successor Guarantor ”), as successor in interest to FLAGSTONE REINSURANCE HOLDINGS, S.A., a Luxembourg société anonyme (the “ Guarantor ”), the Guarantor and WILMINGTON TRUST COMPANY, a Delaware trust company, as trustee under the indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company and the Guarantor (as successor in interest to Flagstone Reinsurance Holdings Limited) has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of June 8, 2007, between the Company, the Guarantor and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010 (together, the “ Indenture ”), providing for the issuance of the Company’s floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”), which Securities are guaranteed on a subordinated basis by the Guarantor (the “ Guarantee ”);

WHEREAS, the Trustee has heretofore authenticated, and the Company has heretofore issued $100,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2037 under the Indenture, of which $88,750,000 aggregate principal amount of such notes remain outstanding;

WHEREAS, on the date hereof, the Guarantor will merge with and into the Successor Guarantor, with the Successor Guarantor as the survivor (the “ Merger ”) pursuant to that certain Agreement and Plan of Merger, dated as of August 30, 2012, among the Guarantor, the Successor Guarantor, Validus Holdings, Ltd., a Bermuda exempted company, and Validus UPS, Ltd., a Bermuda exempted company (the “ Merger Agreement ”);

WHEREAS, Section 8.1 of the Indenture provides, in part, that the Guarantor may merge into any other Person or transfer all or substantially all of its properties and assets as an entirety to another Person provided that (a) (i) the Successor Guarantor is an entity organized and existing under the laws of the United States of America or any State or Territory thereof, the District of Columbia, Bermuda, the Cayman Islands, Luxembourg or any other country which is a member state of the Organization for Economic Cooperation and Development and (ii) the Successor Guarantor

expressly assumes, by an indenture supplement executed and delivered to the Trustee, all of the obligations of the Guarantor to be performed or observed by it under the Indenture or the Guarantee; (b) immediately after giving effect to such transfer, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture;

WHEREAS, Section 9.1(a) of the Indenture provides that the Company and the Guarantor, when authorized by a Board Resolution, and the Trustee may amend the Indenture without notice or consent of any Holder to evidence the succession of another Person to the Guarantor;

WHEREAS, the Successor Guarantor, pursuant to Section 8.1(b)(iii) and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Merger and this Second Supplemental Indenture each complies with Article VIII of the Indenture, (b) that all conditions and covenants provided for in the Indenture relating to the Merger have been complied with and (c) that the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture and all conditions and covenants provided for in the Indenture relating thereto have been complied with; and

WHEREAS, all things necessary (a) to authorize the assumption by the Successor Guarantor of the Guarantor’s obligations under the Indenture and the Guarantee and (b) to make this Second Supplemental Indenture when executed by the parties hereto a valid and binding amendment of and supplement to the Indenture have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

2. Assumption of Obligations. Pursuant to, and in compliance and in accordance with, Section 8.1(b) of the Indenture, the Successor Guarantor hereby expressly assumes, from and after the effective date of the Merger (the “ Effective Time ”), all of the obligations of the Guarantor to be performed or observed by it under the Indenture and the Guarantee.

3. Succession and Substitution. Pursuant to, and in compliance and in accordance with, Section 8.2 of the Indenture, the Successor Guarantor, from and after the Effective Time, by virtue of the aforesaid assumption and the delivery of this Second Supplemental Indenture, shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under the Indenture, with the same effect as if the Successor Guarantor had originally been named in the Indenture as the Guarantor, and the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.

4. Representations and Warranties.

(a) Each of the Company and the Successor Guarantor represents and warrants (i) it has all necessary power and authority to execute and deliver this Second Supplemental Indenture and to perform the Indenture, (ii) immediately after giving effect to the Merger and this Second Supplemental Indenture, no Event of Default, and no event which, after notice or lapse of time or both, would constitute an Event of Default, has occurred and is continuing and (iii) this Second Supplemental Indenture is executed and delivered pursuant to Article VIII and Section 9.1(a) of the Indenture and does not require the consent of any Holders.

(b) The Successor Guarantor represents and warrants that (i) it is the successor of the Guarantor pursuant to the Merger effected in accordance with applicable law and (ii) it is an entity organized and existing under the laws of Bermuda.

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Second Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Guarantor authorizing the execution and delivery of this Second Supplemental Indenture.

7. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

8. Trustee Makes No Representations. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or the due execution thereof by the Company or the Successor Guarantor. The recitals contained herein shall be taken as the statements solely of the Company or the Successor Guarantor, as the case may be, and the Trustee assumes no responsibility for the correctness thereof.

9. Counterparts. The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

10. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE FINANCE S.A.

	By:	/s/ William F. Fawcett

		Name: William F. Fawcett
		Title: Director


	FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS, S.A.

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Second Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


	WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Trustee

	By:	/s/ Michael H. Wass

		Name: Michael H. Wass
		Title: Financial Services Officer

[Signature Page to Second Supplemental Indenture]

Exhibit 4.12

THIRD SUPPLEMENTAL INDENTURE

THIS THIRD SUPPLEMENTAL INDENTURE (this “ Third Supplemental Indenture ”) is dated as of November 30, 2012, among FLAGSTONE FINANCE S.A., a Luxembourg société anonyme (the “ Company ”), VALIDUS UPS, LTD., a Bermuda exempted company (the “ Successor Guarantor ”), as successor in interest to FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED, a Bermuda exempted company (the “ Guarantor ”), VALIDUS HOLDINGS, LTD., a Bermuda exempted company (the “ Additional Guarantor ”), and WILMINGTON TRUST COMPANY, a Delaware trust company, as trustee under the indenture referred to below (the “ Trustee ”).

W I T N E S S E T H :

WHEREAS, the Company and the Guarantor (as successor in interest to Flagstone Reinsurance Holdings Limited) has executed and delivered to the Trustee a Junior Subordinated Indenture, dated as of June 8, 2007, between the Company, the Guarantor and the Trustee, as supplemented by the First Supplemental Indenture, dated as of May 17, 2010, and the Second Supplemental Indenture, dated as of November 30, 2012 (collectively, the “ Indenture ”), providing for the issuance of the Company’s floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”), which Securities are guaranteed on a subordinated basis by the Guarantor (the “ Guarantee ”);

WHEREAS, on the date hereof, the Guarantor will merge with and into the Successor Guarantor, a wholly owned subsidiary of the Additional Guarantor, with the Successor Guarantor as the survivor (the “ Merger ”) pursuant to that certain Agreement and Plan of Merger, dated as of August 30, 2012, among Flagstone Reinsurance Holdings, S.A., a Luxembourg société anonyme , the Guarantor, the Additional Guarantor and the Successor Guarantor (the “ Merger Agreement ”);

WHEREAS, in connection with the consummation of the transactions contemplated by the Merger Agreement, the Successor Guarantor will assume all of the obligations of the Guarantor under the Indenture and the Guarantee, and the Additional Guarantor desires to provide a full and unconditional guarantee of the obligations of the Company under the Indenture and the Securities on the terms and conditions set forth herein;

the United States of America or any State or Territory thereof, the District of Columbia, Bermuda, the Cayman Islands, Luxembourg or any other country which is a member state of the Organization for Economic Cooperation and Development and (ii) the Successor Guarantor expressly assumes, by an indenture supplement executed and delivered to the Trustee, all of the obligations of the Guarantor to be performed or observed by it under the Indenture or the Guarantee; (b) immediately after giving effect to such transfer, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’ Certificate and an Opinion of Counsel have been delivered to the Trustee, each stating that such transfer and the supplemental indenture comply with Article VIII of the Indenture;

WHEREAS, Section 9.1 of the Indenture provides, in part, that the Company and the Guarantor, when authorized by a Board Resolution, and the Trustee may enter into one or more indentures supplemental to the Indenture without notice or consent of any Holder (a) to evidence the succession of another Person to the Guarantor and (b) to make or amend any provisions with respect to matters or questions arising under the Indenture, which shall not be inconsistent with the other provisions of the Indenture, provided, that such action shall not adversely affect in any material respect the interests of any Holders;

WHEREAS, the Successor Guarantor, pursuant to Section 8.1(b)(iii) and Section 9.3 of the Indenture and in accordance with Section 1.2 of the Indenture, has delivered to the Trustee, or caused to be delivered to the Trustee on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating (a) that the Merger and this Third Supplemental Indenture each complies with Article VIII of the Indenture, (b) that all conditions and covenants provided for in the Indenture relating to the Merger have been complied with and (c) that the execution of this Third Supplemental Indenture is authorized or permitted by the Indenture and all conditions and covenants provided for in the Indenture relating thereto have been complied with; and

WHEREAS, all things necessary (a) to authorize the assumption by the Successor Guarantor of the Guarantor’s obligations under the Indenture and the Guarantee, (b) to authorize the Additional Guarantor’s guarantee of the obligations of the Company under the Indenture and the Securities and (c) to make this Third Supplemental Indenture when executed by the parties hereto a valid and binding amendment of and supplement to the Indenture have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

3. Succession and Substitution . Pursuant to, and in compliance and in accordance with, Section 8.2 of the Indenture, the Successor Guarantor, from and after the Effective Time, by virtue of the aforesaid assumption and the delivery of this Third Supplemental Indenture, shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under the Indenture, with the same effect as if the Successor Guarantor had originally been named in the Indenture as the Guarantor, and the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.

4. Representations and Warranties.

(a) Each of the Company, the Successor Guarantor and the Additional Guarantor represents and warrants that (i) it has all necessary power and authority to execute and deliver this Third Supplemental Indenture and to perform the Indenture, (ii) immediately after giving effect to the Merger and this Third Supplemental Indenture, no Event of Default, and no event which, after notice or lapse of time, or both, would constitute an Event of Default, has occurred and is continuing and (iii) this Third Supplemental Indenture is executed and delivered pursuant to Article VIII and Section 9.1(a) and (b) of the Indenture and does not require the consent of any Holders.

5. Additional Guarantee.

The following Sections 15.1 through and including Section 15.8 shall be added as a new Article XV of the Indenture, and shall hereinafter be deemed a part of the Indenture and applicable to the Outstanding Notes. The following definition shall apply to Article XV of the Indenture, as amended hereby: “ Additional Guarantor ” shall mean Validus Holdings, Ltd., a Bermuda exempted company.

Section 15.1. Additional Guarantees.

(a) With respect to each series of Securities to which this Article XV is expressly made applicable, the Additional Guarantor hereby unconditionally and irrevocably guarantees to each Holder and to the Trustee and its successors and assigns (i)(a) the full and punctual payment of principal and interest (including any Additional Interest) on the Securities of such Holder when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company to the Holders and the Trustee under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities and (ii) in the case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal (all of the foregoing being hereinafter collectively called the “ Additional Guarantees ”).

(b) The Additional Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Additional Guarantees and also waives notice of protest for

nonpayment. The Additional Guarantor waives notice of any default under the Securities or the Additional Guarantees. The Additional Guarantees hereunder shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Additional Guarantees or any of them; (v) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Additional Guarantees or (vi) any change in the ownership of the Additional Guarantor.

(c) The Additional Guarantor further agrees that its Additional Guarantees hereunder constitute a guarantee of payment, performance and compliance when due (and not a guarantee of collection).

(d) The Additional Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted to the Company with respect thereto (unless the same shall also be provided the Additional Guarantor), by the Holder of any Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor; provided that, notwithstanding the foregoing, no such waiver, modification, indulgence or circumstance shall, without the consent of the Additional Guarantor, increase the principal amount of a Security or the interest rate thereon or increase any premium payable upon redemption thereof. The Additional Guarantees shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Additional Guarantees or otherwise. Without limiting the generality of the foregoing, the Additional Guarantor covenants that the Additional Guarantees shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Additional Guarantor or would otherwise operate as a discharge of the Additional Guarantor as a matter of law or equity.

(e) The Additional Guarantor further agrees that the Additional Guarantees shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal, premium, if any, or interest on any Security is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against the Additional Guarantor by virtue hereof,

upon the failure of the Company to pay the principal of, premium on, if any, or interest on any Security when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other obligation under the Securities, the Additional Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid amount of such obligations under such Securities, (ii) accrued and unpaid interest on such obligations under such Securities (but only to the extent not prohibited by law) and (iii) all other monetary obligations with respect to such Securities of the Company to the Holders and the Trustee.

(g) The Additional Guarantor will be subrogated to all rights of the Holders against the Company in respect of any amount paid by the Additional Guarantor pursuant to the provisions of the Additional Guarantees; provided, however, that the Additional Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium on, if any, and interest on such Securities shall have been paid in full. The Additional Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations with respect to the Securities hereby may be accelerated as provided herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations with respect to such Securities, and (y) in the event of any declaration of acceleration of such obligations as provided herein, the Additional Guarantees (whether or not due and payable) shall forthwith become due and payable by the Additional Guarantor for the purposes of this Article XV .

(h) The Additional Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Article XV .

Section 15.2. Successors and Assigns.

This Article XV shall be binding upon the Additional Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.

Section 15.3. No Waiver.

Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article XV shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article XV at law, in equity, by statute or otherwise.

Section 15.4. Modification.

No modification, amendment or waiver of any provision of this Article XV , nor the consent to any departure by the Additional Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Additional Guarantor in any case shall entitle the Additional Guarantor to any other or further notice or demand in the same, similar or other circumstances.

Section 15.5. Notation of Additional Guarantees Not Required.

The Additional Guarantor hereby agrees that the Additional Guarantees set forth in this Article XV shall remain in full force and effect notwithstanding the absence on any Security of a notation relating to the Additional Guarantees.

Section 15.6. Benefits Acknowledged.

The Additional Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantees and waivers made by it pursuant to its Additional Guarantees are knowingly made in contemplation of such benefits.

Section 15.7. Release of Additional Guarantees.

Provided that no notice that an Event of Default has occurred and is continuing has been delivered to the Holders, the Additional Guarantees shall be automatically and unconditionally released and discharged, and no further action by the Additional Guarantor, the Company or the Trustee is required for the release of the Additional Guarantees, upon the Company delivering to the Trustee an Officers’ Certificate stating that the Additional Guarantees are released in full.

Section 15.8 Limitation on Additional Guarantor Liability.

The Additional Guarantor, and by its acceptance of Securities, each Holder, hereby confirms that it is the intention of all such parties that the Additional Guarantees of the Additional Guarantor not constitute a fraudulent transfer or conveyance for purposes of Title 11, U.S. Code or any similar federal, state or foreign law for the relief of debtors, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or foreign law to the extent applicable to the Additional Guarantees. To effectuate the foregoing intention, the Trustee, the Holders and the Additional Guarantor hereby irrevocably agree that the obligations of the Additional Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of the Additional Guarantor that are relevant under such laws and after giving effect to any collections from, result in the obligations of the Additional Guarantor under its Additional Guarantees not constituting a fraudulent conveyance or fraudulent transfer under applicable law.

6. Subordination of Additional Guarantees.

The following Sections 16.1 through and including Section 16.12 shall be added as a new Article XVI of the Indenture, and shall hereinafter be deemed a part of the Indenture and applicable to the Outstanding Notes.

Section 16.1. Securities Subordinate to Senior Debt of the Additional Guarantor.

The Additional Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XVI , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities pursuant to the Additional Guarantees are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Additional Guarantor.

Section 16.2. No Payment When Senior Debt of the Additional Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.

In the event and during the continuation of any default by the Additional Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Additional Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for redemption or by declaration of acceleration or otherwise, then, upon written notice of such default to the Additional Guarantor by the holders of such Senior Debt of the Additional Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made pursuant to the Additional Guarantees on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

In the event of a bankruptcy, insolvency or other proceeding involving the Additional Guarantor described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt of the Additional Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof pursuant to the Additional Guarantees. Any payment or distribution, whether in cash, securities or other property (other than securities of the Additional Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Additional Guarantees, to the payment of all Senior Debt of the Additional Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities pursuant to the Additional Guarantees shall be paid or delivered directly to the holders of Senior Debt of the Additional Guarantor in accordance with the priorities then existing among such holders until all Senior

Debt of the Additional Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

Section 16.3. Payment Permitted If No Default.

Nothing contained in this Article XVI or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Additional Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 16.2 or of any Proceeding referred to in Section 16.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Additional Guarantees or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Additional Guarantees or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 16.8 ) that such payment would have been prohibited by the provisions of this Article XVI , except as provided in Section 16.8 .

Section 16.4. Subrogation to Rights of Holders of Senior Debt of the Additional Guarantor.

Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Additional Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Additional Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Additional Guarantor pursuant to the provisions of this Article XVI (equally and ratably with the holders of all indebtedness of the Additional Guarantor that by its express terms is subordinated to Senior Debt of the Additional Guarantor to substantially the same extent as the Additional Guarantees are subordinated to the Senior Debt of the Additional Guarantor and are entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Additional Guarantor) to the rights of the holders of such Senior Debt of the Additional Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Additional Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Additional Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled under the Additional Guarantees except for the provisions of this Article XVI , and no payments made pursuant to the provisions of this Article XVI to the holders of Senior Debt of the Additional Guarantor by Holders of the Securities or the Trustee, shall, as among the Additional Guarantor, its creditors other than holders of Senior Debt of the Additional Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Additional Guarantor to or on account of the Senior Debt of the Additional Guarantor.

Section 16.5. Provisions Solely to Define Relative Rights.

The provisions of this Article XVI are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities under the Additional Guarantees on the one

hand and the holders of Senior Debt of the Additional Guarantor on the other hand. Nothing contained in this Article XVI or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Additional Guarantor and the Holders of the Securities, the obligations of the Additional Guarantor under the Additional Guarantees, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Additional Guarantor of the Holders of the Securities under the Additional Guarantees and creditors of the Additional Guarantor other than their rights in relation to the holders of Senior Debt of the Additional Guarantor or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XVI of the holders of Senior Debt of the Additional Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. In addition, nothing contained in this Article XVI is intended to or shall apply to or affect any amounts payable or paid to the Trustee (including in its individual capacity) pursuant to Sections 1.15 or 6.6 .

Section 16.6. Trustee to Effectuate Subordination.

Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XVI and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.

Section 16.7. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior Debt of the Additional Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Additional Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Additional Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

Without in any way limiting the generality of paragraph (a) of this Section 16.7 , the holders of Senior Debt of the Additional Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XVI or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Additional Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Additional Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Additional Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Additional Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Additional Guarantor, (iii) release any Person liable in any manner for the

payment of Senior Debt of the Additional Guarantor and (iv) exercise or refrain from exercising any rights against the Additional Guarantor and any other Person.

Section 16.8. Notice to Trustee.

The Additional Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Additional Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the Additional Guarantees. Notwithstanding the provisions of this Article XVI or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the Additional Guarantees, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Additional Guarantor or a holder of Senior Debt of the Additional Guarantor or from any trustee, agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 16.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security pursuant to the Additional Guarantees), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Additional Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Additional Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Additional Guarantor to participate in any payment or distribution pursuant to this Article XVI , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Additional Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XVI , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

Section 16.9. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Additional Guarantor referred to in this Article XVI , the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Additional Guarantor and other indebtedness of the Additional Guarantor, the

amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XVI .

Section 16.10. Trustee Not Fiduciary for Holders of Senior Debt of the Additional Guarantor.

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of the Additional Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Additional Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Additional Guarantor shall be entitled by virtue of this Article XVI or otherwise.

Section 16.11. Rights of Trustee as Holder of Senior Debt of the Additional Guarantor; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XVI with respect to any Senior Debt of the Additional Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Additional Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

Section 16.12. Article Applicable to Paying Agents.

If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “ Trustee ” as used in this Article XVI shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XVI in addition to or in place of the Trustee; provided , that Sections 16.8 and 16.11 shall not apply to the Additional Guarantor or any Affiliate of the Additional Guarantor if the Company or such Affiliate acts as Paying Agent.

7. Submission to Jurisdiction.

(a) The Successor Guarantor agrees that any judicial proceedings instituted in relation to any matter arising under the Guarantee may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Third Supplemental Indenture, the Successor Guarantor hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding.

(b) The Additional Guarantor agrees that any judicial proceedings instituted in relation to any matter arising under the Additional Guarantees may be brought in any United States Federal or New York State court sitting in the Borough of Manhattan, The City of New York, New York to the extent that such court has subject matter jurisdiction over the controversy, and, by execution and delivery of this Third Supplemental Indenture, the Additional Guarantor hereby irrevocably accepts, generally and unconditionally, the jurisdiction of the

aforesaid courts, acknowledges their competence and irrevocably agrees to be bound by any judgment rendered in such proceeding.

(b) the Trustee shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Third Supplemental Indenture; and

(c) the Trustee shall have received a copy of a Board Resolution of the Guarantor authorizing the execution and delivery of this Third Supplemental Indenture.

10. Governing Law. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

11. Trustee Makes No Representations. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Third Supplemental Indenture or the due execution thereof by the Company, the Successor Guarantor or the Additional Guarantor. The recitals contained herein shall be taken as the statements solely of the Company, the Successor Guarantor or the Additional Guarantor, as the case may be, and the Trustee assumes no responsibility for the correctness thereof.

12. Counterparts. The parties may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, all of them together represent the same agreement.

13. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	FLAGSTONE FINANCE S.A.

	By:	/s/ William F. Fawcett

		Name: William F. Fawcett
		Title: Director

	VALIDUS UPS, LTD.

	By:	/s/ Jeffrey D. Sangster

		Name: Jeffrey D. Sangster
		Title: Chief Financial Officer

	VALIDUS HOLDINGS, LTD.

	By:	/s/ Joseph E. Consolino

		Name: Joseph E. Consolino
		Title: President and Chief Financial Officer

[Signature Page to Third Supplemental Indenture]

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.


	WILMINGTON TRUST COMPANY,
	not in its individual capacity, but solely as Trustee

	By:	/s/ Michael H. Wass

		Name: Michael H. Wass
		Title: Financial Services Officer

[Signature Page to Third Supplemental Indenture]

Exhibit 4.13
EXECUTION COPY

NOTE PURCHASE AGREEMENT

among

FLAGSTONE REINSURANCE HOLDINGS LIMITED

and

MERRILL LYNCH INTERNATIONAL, as Purchaser

Dated as of August 23, 2006

NOTE PURCHASE AGREEMENT
€13,000,000 Floating Rate Deferrable Interest Subordinated Notes due 2036

THIS NOTE PURCHASE AGREEMENT, dated as of August 23, 2006 (this “ Note Purchase Agreement ”), is entered into among Flagstone Reinsurance Holdings Limited (the “ Company ”), and Merrill Lynch International or its permitted assignees (the “ Purchaser ”).

W I T N E S S E T H:

WHEREAS, the Company proposes to issue and sell Thirteen Million Euros (€13,000,000) in aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036, bearing a variable rate per annum, reset quarterly, equal to EURIBOR (as defined in Schedule 3 ) plus 3.54% (the “ Securities ”and, together with this Note Purchase Agreement, the “ Operative Documents ”) ;

NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

1. Purchase and Sale of the Securities.

(a) The Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, the Securities for an aggregate amount (the “ Purchase Price ”) equal to Thirteen Million Euros (€13,000,000). The Purchaser shall be responsible for the rating agency costs and expenses.

(b) Delivery or transfer of, and payment for, the Securities shall be made at 10:00 A.M. Chicago time (11:00 A.M. New York time), on August 23, 2006 or such later date (not later than 30 days later) as the parties may designate (such date and time of delivery and payment for the Securities being herein called the “ Closing Date ”).The Securities shall be transferred and delivered to the Purchaser against the payment of the Purchase Price to the Company made by wire transfer in immediately available funds on the Closing Date to a U.S. account designated in writing by the Company.

(c) Delivery of the Securities, duly executed and registered in the name of the Purchaser or its designees (subject to compliance with Section 13 ) and denominations and in the form set out in Schedule 2 hereto with such changes as may be agreed in writing by the Purchaser and the Company, shall be made at such location as the Purchaser shall designate. The Company agrees to have the Securities available for inspection and checking by the Purchaser in Chicago, Illinois, not later than 1:00 P.M., Chicago time (2:00 P.M. New York time), on the business day prior to the Closing Date. The closing for the purchase and sale of the Securities shall occur at the offices of Mayer, Brown, Rowe & Maw LLP, 71 South Wacker Drive, Chicago, Illinois 60606, or such other place as the parties hereto shall agree.

2. Conditions. The obligations of the parties under this Note Purchase Agreement are subject to the following conditions:

(a) The representations and warranties contained herein, and the statements of the Company made in any certificates pursuant to this Note Purchase Agreement, shall be accurate as of the date of delivery of the Securities.

(b) (i) Sidley Austin LLP, special New York counsel for the Company (“ Sidley ”), shall have delivered an opinion, dated the Closing Date, addressed to the Purchaser and Cohen Bros. Financial Management, LLC, in substantially the form set out in Annex A-I hereto, (ii) Attride-Stirling & Woloniecki, special Bermuda counsel for the Company (“ Bermuda Counsel ”and, together with “ Sidley ” the “ Company Counsel ”), shall have delivered an opinion, dated the Closing Date, addressed to the Purchaser and Cohen Bros. Financial Management, LLC, in substantially the form set out in Annex A-II hereto, and (iii) the Company shall have furnished to the Purchaser the opinion of the Company’s General Counsel or a certificate signed by the Company’s Chief Executive Officer, President, an Executive Vice President, Chief Financial Officer, Treasurer or Assistant Treasurer or Secretary, dated the Closing Date, addressed to the Purchaser, in substantially the form set out in Annex A-III hereto. In rendering their opinion, the Company Counsel may rely as to factual matters upon certificates or other documents furnished by officers and directors of the Company and by government officials (provided, however, that copies of any such certificates or documents are delivered to the Purchaser) and by and upon such other documents as such counsel may, in their reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion. The Company Counsel may specify the jurisdictions in which they are admitted to practice and that they are not admitted to practice in any other jurisdiction and are not experts in the law of any other jurisdiction. Such Company Counsel Opinion shall not state that they are to be governed or qualified by, or that they are otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).

(c) The Purchaser shall have been furnished the opinion of Sidley Austin LLP, special tax counsel for the Company, dated the Closing Date, addressed to the Purchaser and Cohen Bros. Financial Management, LLC, in substantially the form set out in Annex B hereto.

(d) The Company shall have furnished to the Purchaser a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, dated as of the Closing Date, as to (i) and (ii) below.


	(i) the representations and warranties of the Company in this Note Purchase Agreement are true and correct on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and

	(ii) since the date of the Financial Statements (as defined below), there has been no material adverse change in the condition (financial or other), earnings, business or business prospects of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions occurring in the ordinary course of business.

(e) Subsequent to the date of the Financial Statements, there shall not have been any change, or any development involving a prospective change, in or affecting the condition (financial or other), earnings, business or business prospects of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business, the effect of which is, in the Purchaser’s reasonable judgment, so material and adverse as to make it impractical or inadvisable to proceed with the purchase of the Securities.

(f) On or prior to the Closing Date, the Company shall have provided evidence satisfactory to the Purchaser of the financial ratings set forth in the Cohen Letter (as defined below).

(g) On or prior to the Closing Date, the Company shall have furnished to the Purchaser and its special external counsel such further information, certificates and documents as the Purchaser or its counsel may reasonably request.

If any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Note Purchase Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Note Purchase Agreement shall not be reasonably satisfactory in form and substance to the Purchaser or its counsel, this Note Purchase Agreement and all the Purchaser’s obligations hereunder may be canceled at, or at any time prior to, the Closing Date by the Purchaser. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile and confirmed in writing.

Each certificate signed by any officer of the Company and delivered to the Purchaser or the Purchaser’s special external counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Company and not by such officer in any individual capacity.

3. Representations and Warranties of the Company . The Company represents and warrants to, and agrees with the Purchaser, as follows:

(a) Neither the Company, nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation D (“ Regulation D ”) under the Securities Act (as defined below)), nor any person acting on its or their behalf (provided, that the Company makes no representation, warranty or agreement with respect to the Purchaser or its Affiliates), has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act of 1933, as amended (the “ Securities Act ”).

(b) Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf (provided, that the Company makes no representation, warranty or agreement with respect to the Purchaser or its Affiliates), has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.

(c) The Securities (i) are not and have not been listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of

an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under section 8 of the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“ Rule 144A ( d )( 3 )”).

(d) Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf (provided, that the Company makes no representation, warranty or agreement with respect to the Purchaser or its Affiliates), has engaged, or will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.

(e) The Company is not, and, immediately following consummation of the transactions contemplated hereby and the application of the net proceeds therefrom, will not be, an “investment company” within the meaning of section 3(a) of the Investment Company Act.

(f) The Company has not paid or agreed to pay to any person or entity, directly or indirectly, any compensation for soliciting another to purchase any of the Securities, except for the sales commission the Company has agreed to pay to Cohen Bros. & Company (or to the Company’s introducing agent on their behalf) pursuant to the letter agreement between the Company and Cohen Bros. & Company, dated August 11, 2006.

(g) The Securities have been duly authorized by the Company and, on the Closing Date, will have been duly executed when delivered to the Purchaser against payment therefor in accordance with the Note Purchase Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Note Purchase Agreement, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws affecting creditors’ rights generally and to general principles of equity.

(h) This Note Purchase Agreement has been duly authorized, executed and delivered by the Company.

(i) Neither the issue and sale of the Securities nor the execution and delivery of and compliance with the Operative Documents by the Company, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of the charter or bylaws of the Company or any subsidiary of the Company or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency, or instrumentality, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or their respective properties or assets (collectively with any arbitrators or courts, the “ Governmental Entities ”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any property or assets of the Company or any of the Company’s subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, except for such conflicts, breaches, violations, defaults, Repayment

Events (as defined below) or any pledge, security interest, claim, lien or other encumbrance of any kind (each, a “ Lien ”) which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), earnings, business or business prospects of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business (a “ Material Adverse Effect ”) or (iii) require the consent, approval, authorization or order of any court or Governmental Entity. As used herein, a “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries prior to its scheduled maturity.

(j) The Company has been duly organized and is validly existing as a company with limited liability in good standing under the laws of Bermuda, with all requisite power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and, where applicable, is in good standing as a foreign company in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified or be in good standing would not, singly or in the aggregate, have a Material Adverse Effect.

(k) The Company has no subsidiaries that are material to its business, financial condition or earnings other than those subsidiaries listed in Schedule 1 attached hereto (as defined in Section 1-02(w) of Regulation S-X of the Securities Act, collectively, the “ Significant Subsidiaries ”). Each Significant Subsidiary has been duly organized or formed and is validly existing and, where applicable, in good standing under the laws of the jurisdiction in which it is organized or formed, with all requisite power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact. Each Significant Subsidiary is duly qualified to transact business and, where applicable, is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified or be in good standing would not, singly or in the aggregate, have a Material Adverse Effect.

(l) Each of the Company and each of the Company’s subsidiaries hold all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (including, without limitation, insurance licenses from the insurance departments of the various states and jurisdictions where the Company’s insurance subsidiaries write insurance business or otherwise conduct insurance or reinsurance business, as the case may be. or as may be required by any applicable insurance statutes of such states or other jurisdictions (collectively, the “ Insurance Licenses ”)) (collectively, including the Insurance Licenses, the “ Governmental Licenses ”) of and from Governmental Entities necessary to conduct their respective businesses as now being conducted, and neither the Company nor any of the Company’s subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental License, except where the failure to hold such Governmental Licenses or the receipt of an unfavorable decision, ruling or finding in respect of any such proceeding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such

Governmental Licenses to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in such compliance would not, singly or in the aggregate, have a Material Adverse Effect.

(m) All of the issued and outstanding shares of capital stock of the Company and each of its subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding shares of capital stock of each subsidiary of the Company is owned by the Company, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and outstanding shares of capital stock of the Company or any subsidiary were issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws or other organizational document of such entity or under any agreement to which the Company or any of its subsidiaries is a party, subject to exceptions that would not, singly or in the aggregate, have a Material Adverse Effect.

(n) Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter or by-laws or other organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract. indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.

(o) There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company or any of the Company’s subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.

(p) The accountants of the Company who certified the Financial Statements (as defined below) are independent public accountants of the Company and its subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “ Commission ”)thereunder.

(q) The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries for the fiscal year ended December 31, 2005 (the “ Financial Statements ”) and the interim unaudited consolidated financial statements of the Company and its consolidated subsidiaries for the six months ended June 30, 2006 (the “ Interim Financial Statements ”) provided to the Purchaser are the most recent available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“ GAAP ”), the financial position of the

Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject, in the case of Interim Financial Statements, to year-end adjustments (which are expected to consist solely of normal recurring adjustments). Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein).

(r) [ Reserved ]

(s) The Company and any of its subsidiaries, taken as a whole, do not have any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company or its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Company and all of its subsidiaries since the date of the most recent balance sheet included in such Financial Statements.

(t) The Company has not filed, and is not required by Governmental Entities, regulators, insurance commissioners or similar entities of the jurisdictions of organization of the Company or its insurance subsidiaries, if any, to file any regulatory or similar reports, until April 2007.

(u) Since the date of the Financial Statements, there has not been (A) any material adverse change or development with respect to the condition (financial or otherwise), earnings, business or business prospects of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock other than regular quarterly dividends on the Company’s common stock.

(v) The authorized capitalization of the Company and its subsidiary insurance companies are as set forth in the Financial Statements and the Interim Financial Statements and meet all applicable regulatory requirements with respect thereto.

(w) [ Reserved ]

(x) None of the Company nor any of its subsidiaries, or any of their respective officers, directors, employees or representatives, is subject or is party to, or has received any notice from any Regulatory Agency (as defined below) that any of them will become subject or party to any investigation with respect to, any cease-and-desist order, agreement, civil monetary penalty, consent agreement, memorandum of understanding or other regulatory enforcement action, proceeding or order with or by, or is a party to any commitment letter or similar undertaking to, or is subject to any directive by, or has been a recipient of any supervisory letter from, or has adopted any board resolutions at the request of, any Regulatory Agency that, in any

such case, currently restricts in any material respect the conduct of their business, taken as a whole, or that in any material manner relates to their capital adequacy, capital reserves, their marketing or sales practices, their ability or authority to pay dividends or make distributions to their shareholders or make payments of principal or interest on their debt obligations, their management or their business, taken as a whole (each, a “ Regulatory Action ”), nor has the Company or any of its subsidiaries been advised by any Regulatory Agency that it is considering issuing or requesting any such Regulatory Action; and there is no unresolved violation, criticism or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of the Company or any of its subsidiaries, except where such unresolved violation, criticism or exception would not, singly or in the aggregate, have a Material Adverse Effect. As used herein, the term “ Regulatory Agency ” means any federal or state agency charged with the supervision or regulation of insurance companies or holding companies of insurance companies, or companies engaged in the insurance of insurance company reserves, or any court, administrative agency or commission or other governmental agency, authority or instrumentality having supervisory or regulatory authority with respect to the Company or any of its subsidiaries.

(y) No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the executive officers of the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.

(z) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Company of its obligations under the Operative Documents, as applicable, or the consummation by the Company of the transactions contemplated by the Operative Documents; provided , however , that the Company makes no representation or warranty with to any U.S. state securities laws.

(aa) Each of the Company and each subsidiary of the Company has good and marketable title to all of its respective real and personal properties, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Company or any subsidiary of the Company holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect; and none of the Company or any subsidiary of the Company has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.

(bb) The Company has no present intention to exercise its option to defer payments of interest on the Securities as provided in Schedule 2 . The Company believes that the likelihood that it would exercise its rights to defer payments of interest on the Securities as provided in Schedule 2 at any time during which the Securities are outstanding is remote because of the restrictions that would be imposed on the Company’s ability to declare or pay dividends or distributions on, or to redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock and on the Company’s ability to make any payments of

principal, interest or premium, if any, on, or repay, repurchase or redeem, any of its debt securities that rank pari passu in all respects with or junior in interest to the Securities.

(cc) The information provided by the Company pursuant to this Note Purchase Agreement does not, as of the date hereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(dd) The Company and the Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby, including, but not limited to, real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against. All policies of insurance and fidelity or surety bonds insuring the Company or any of the Significant Subsidiaries and the Company’s or Significant Subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect, subject to exceptions that would not, singly or in the aggregate, have a Material Adverse Effect. The Company and each of the Significant Subsidiaries are in compliance with the terms of such policies and instruments, subject to exceptions that would not, singly or in the aggregate, have a Material Adverse Effect. Neither the Company nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business as is currently conducted, subject to exceptions that would not, singly or in the aggregate, have a Material Adverse Effect. Within the past twelve months, neither the Company nor any Significant Subsidiary has been denied any insurance coverage which it has sought or for which it has applied, subject to exceptions that would not, singly or in the aggregate, have a Material Adverse Effect.

4. Representations and Warranties of the Purchaser . The Purchaser, represents and warrants to, and agrees with, the Company as follows:

(a) The Purchaser is aware that the Securities have not been and will not be registered under the Securities Act or any other securities laws and may not be offered, sold or otherwise transferred within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an effective registration statement or pursuant to an exemption from the registration requirements of the Securities Act or in a transaction not subject thereto and in accordance with the transfer restrictions set forth herein. Prior to any transfer of the Securities by the Purchaser, the Purchaser agrees to inform its transferee of the foregoing matters.

(b) The Purchaser is (i) a “qualified institutional buyer,” as such term is defined in Rule 144A under the Securities Act or (ii) an “accredited investor,” as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.

(c) Neither the Purchaser, nor any of the Purchaser’s Affiliates, nor any person acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or will engage, in any form

of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Securities.

(d) The Purchaser understands and acknowledges that (i) no public market exists for any of the Securities and that it is unlikely that a public market will ever exist for the Securities, (ii) the Purchaser is purchasing the Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and the Purchaser agrees to the legends and transfer restrictions applicable to the Securities contained in this Note Purchase Agreement, and (iii) the Purchaser has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be required to bear the economic risk of an investment in the Securities for an indefinite period of time.

(e) The Purchaser is a company duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite (i) power and authority to execute, deliver and perform the Operative Documents to which it is a party, to make the representations and warranties specified herein and therein and to consummate the transactions contemplated herein and (ii) right and power to purchase the Securities.

(f) The Purchaser represents and warrants that: (i) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers in connection herewith to the extent it has deemed necessary; (b) it has had a reasonable opportunity to ask questions or and receive answers from officers and representatives of the Company concerning its financial condition and results of operations and the purchase of the Securities and any such questions have been answered to its satisfaction; (c) it has had the opportunity to review all publicly available records and filings concerning the Company and it has carefully reviewed such records and filings that it considers relevant to making an investment decision; and (d) it has made its own investment decisions based upon its own judgment, due diligence and advise from such advisers as it has deemed necessary and not upon any view expressed by the Company.

(g) This Note Purchase Agreement has been duly authorized, executed and delivered by the Purchaser and no filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any governmental body, agency or court having jurisdiction over the Purchaser, other than those that have been made or obtained, is necessary or required for the performance by the Purchaser of its obligations under this Note Purchase Agreement or to consummate the transactions contemplated herein.

5. Agreements of the Company. The Company agrees with the Purchaser as follows:

(a) During the period from the date of this Agreement to the Closing Date, the Company shall use its best efforts and take all action necessary or appropriate to cause their representations and warranties contained in Section 4 hereof to be true as of the Closing Date,

after giving effect to the transactions contemplated by this Note Purchase Agreement, as if made on and as of the Closing Date.

(b) [ Reserved ].

(c) The Company will not, nor will it permit any of its Affiliates to, nor will it permit any person acting on its or their behalf (other than the Purchaser or its Affiliates) to, resell any Securities that have been acquired by any of them.

(d) The Company will not, nor will it permit any of its Affiliates or any person acting on its or their behalf (other than the Purchaser or its Affiliates as to which the Company makes no agreement) to, engage in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.

(e) The Company will not, nor will it permit any of its Affiliates or any person acting on its or their behalf (other than the Purchaser or its Affiliates as to which the Company makes no agreement) to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.

(f) The Company will not, nor will it permit any of its Affiliates or any person acting on its or their behalf (other than the Purchaser or its Affiliates as to which the Company makes no agreement) to, engage in any form of “general solicitation or general advertising” (within the meaning of Regulation D) in connection with any offer or sale of the any of the Securities.

(g) So long as any of the Securities are outstanding, (i) the Securities shall not be listed on a national securities exchange registered under section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system, (ii) the Company shall not be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under section 8 of the Investment Company Act, (iii) the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3) and (iv) the Company shall not engage in any activity which would cause it to be an “investment company” required to be registered under the provisions of the Investment Company Act.

(h) The Company shall furnish to (i) the holders, and subsequent holders of the Securities, (ii) Cohen Bros. Financial Management LLC (at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, or such other address as designated by Cohen Bros. Financial Management LLC) and (iii) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made by either such beneficial owner or by Cohen Bros. Financial Management LLC), a duly completed and executed certificate in the form attached hereto as Annex C , including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.

(i) So long as the Securities are outstanding and considered “restricted securities” under Rule 144(a)(3) under the Securities Act, the Company, during any period in which it is not subject to and in compliance with section 13 or 15(d) of the Exchange Act, nor exempt from

such reporting requirements pursuant to Rule 12g3-2(b) under the Exchange Act, shall provide to each holder of the Securities and to each prospective purchaser (as designated by such holder) of the Securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Securities Act. This covenant is intended to be for the benefit of the Purchaser, the holders of the Securities, and the prospective purchasers designated by the Purchaser and such holders, from time to time, of the Securities.

(j) [ Reserved ].

(k) In the event that either (a) an Event of Default (as defined in Schedule 2 ) has occurred and is continuing, or (b) the Company has elected to defer payments of interest on the Securities by extending the interest payment period under the Securities (as provided for in Section 8(a) of Schedule 2 ), the Company shall provide to (i) the holders, and subsequent holders of the Securities, (ii) Cohen Bros. Financial Management LLC (at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, or such other address as designated by Cohen Bros. Financial Management LLC) and (iii) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made by either such beneficial owner or by Cohen Bros. Financial Management LLC) GAAP and statutory financial statements and interim quarterly financial statements, if available, including accompanying management discussion and analysis, for the Company and, if and as available, for its subsidiaries or affiliates. In addition, for the Company or any of its subsidiaries or affiliates which may be in liquidation. under regulatory supervision or in runoff, the Company shall provide to the Purchaser any reports and presentations to rating agencies, any run-off plan shared with regulatory authorities, internal or external actuarial reports and management projections.

6. Calculation Agent and Fiscal Agent.

(a) The Company undertakes that, on or before the first Interest Payment Date and so long as any of the Securities remain outstanding, it shall hire, at its expense, an agent appointed to calculate EURIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule 3 hereto (the “ Calculation Agent ) to act as fiscal agent to administer, invoice, collect, calculate and distribute interest and principal amounts in respect of the Securities (the “ Fiscal Agent ”), which Fiscal Agent shall be the Euro-zone office of a major bank engaged in the Euro-zone interbank market. The Fiscal Agent, once appointed, shall also act as the Paying Agent and the Securities Registrar (as such terms are defined in Schedule 2 ) and may be the same entity as the Calculation Agent. The Company shall notify the Holders of the appointment of such Fiscal Agent at the Company’s expense. Neither the Calculation Agent nor the Fiscal Agent may resign its duties without a successor reasonably acceptable to the Company having been appointed at the expense of the Company.

(b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (Brussels time) on each EURIBOR Determination Date (as defined in Schedule 3 ). but in no event later than 11:00 a.m. (Brussels time) on the Business Day immediately following each EURIBOR Determination Date, the Calculation Agent will calculate the Interest Rate and payment amount (which payment amount shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company and, if applicable, the Fiscal Agent (if the Calculation Agent and the

Fiscal Agent are not the same entity). The Calculation Agent will also specify to the Company and, if applicable, the Fiscal Agent the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (Brussels time) on each EURIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Euro are offered in the Euro-zone interbank market.

7. Payment of Expenses. The Company agrees to pay all costs and expenses incident to the performance of the obligations of the Company under this Note Purchase Agreement, whether or not the transactions contemplated herein are consummated or this Note Purchase Agreement is terminated, including all costs and expenses incident to (i) the authorization, issuance, sale and delivery of the Securities and any taxes payable by the Company in connection therewith; and (ii) the fees and expenses of the counsel, the accountants and any other experts or advisors retained by the Company.

If the sale of the Securities provided for in this Note Purchase Agreement is not consummated because any condition set forth in Section 2 hereof to be satisfied by either the Company is not satisfied, because this Note Purchase Agreement is terminated pursuant to Sections 9(i) , ( ii ), ( iii ) or ( iv ) or because of any failure, refusal or inability on the part of the Company to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder other than by reason of a default by the Purchaser, the Company will reimburse the Purchaser upon demand for all reasonable out-of-pocket expenses that shall have been incurred by the Purchaser in connection with the proposed purchase and sale of the Securities. The Company shall not in any event be liable to the Purchaser for the loss of anticipated profits from the transactions contemplated by this Note Purchase Agreement.

8. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold harmless the Purchaser, the Purchaser’s Affiliates and Cohen Bros. & Company (collectively, the “ Indemnified Parties ”) and the Indemnified Parties’ respective directors, officers, employees and agents and each person who “controls” the Indemnified Parties within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (A) third party claims relating to (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available to the Purchaser by or on behalf of the Company, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the breach or alleged breach of any representation, warranty or agreement of the Company contained herein, and (B) with respect to all other claims, (i) any untrue statement of a material

fact contained in any information or documents furnished or made available to the Purchaser by or on behalf of the Company, (ii) the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the breach of any representation, warranty or agreement of the Company contained herein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Company may otherwise have.

(b) Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8 , promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and/or defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in paragraph (a) above. Purchaser shall be entitled to appoint counsel to represent the Indemnified Party in any action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action; provided , that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.

(c) In order to provide for just and equitable contribution in circumstances under which the indemnification provided for in this Section 8 is for any reason held to be unenforceable for the benefit of an Indemnified Party in respect of any losses, liability, claims. damages or expenses referred to therein, then the indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Purchaser, on the other hand, from the offering of the Securities, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the Company, on the one hand, and the Purchaser, on the other hand, in connection with the statements, omissions or breaches, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

(d) The relative benefits received by the Company, on the one hand, and the Purchaser, on the other hand, in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities (before deducting expenses) received by the Company and any fee received by the Purchaser bear to the aggregate of such net proceeds and such fee.

(e) The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 8 was determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8 . The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigation, preparing or defending against any litigation, or any investigation or proceeding by any Governmental Entity, commenced or threatened, or any claim whatsoever based upon any such untrue or (as specified in Section 8(a)) alleged untrue statement, omission or (as specified in Section 8(a)) alleged omission or breach or (as specified in Section 8(a)) alleged breach.

(f) Notwithstanding any provision of this Section 8 to the contrary, the Purchaser shall not be required to contribute any amount in excess of the amount of any fee it has received.

(g) No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(h) For purposes of this Section 8 , each person, if any, who controls the Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and the respective partners, directors, officers, employees and agents of the Purchaser or any such controlling person shall have the same rights to contribution as the Purchaser, while each officer and director of the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company.

(i) The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Company may otherwise have to any Indemnified Party.

9. Termination. This Note Purchase Agreement shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the Company prior to delivery of and payment for the Securities, if prior to such time (i) a downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization,” as that term is used by the Commission in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Company’s debt securities, (ii) the Company shall be unable to sell and deliver to the Purchaser at least €13,000,000, in aggregate principal amount of the Securities other than as a result of a Purchaser default, (iii) the Company or any of its subsidiaries that is an insurance company shall cease to be “adequately-capitalized” under the statutes, rules, regulations, codes or ordinances of any Regulatory Agency within the meaning of any applicable regulations of any Regulatory Agency, or any formal

administrative or judicial action is taken by any appropriate state or federal insurance regulator against the Company or of its subsidiary insurance companies for unsafe and unsound insurance practices, or violations of law, (iv) a suspension or material limitation in trading in any of the Company’s securities shall have occurred on the exchange or quotation system upon which the Company’ securities are traded, if any, (v) a general moratorium on commercial insurance activities shall have been declared either by federal or Bermuda authorities or (vi) there shall have occurred any outbreak or escalation of hostilities, or declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on the U.S. or European financial markets is such as to make it, in the Purchaser’s reasonable judgment, impracticable or inadvisable to proceed with the offering or delivery of the Securities.

10. Representations and Indemnities to Survive. The agreements, representations, warranties, indemnities and other statements of the Company or its respective officers or trustees and of the Purchaser set forth in or made pursuant to this Note Purchase Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Purchaser, the Company or any of the their respective officers, directors, trustees or controlling persons, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Note Purchase Agreement.

11. Amendments. This Note Purchase Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto; provided, however, that after the Closing Date, this Note Purchase Agreement, including the Schedules, and the Securities, may not be modified, amended, altered or supplemented, except upon the prior written consent of the Holders of at least a majority of the Outstanding Securities.

12. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Purchaser, will be mailed, delivered by hand or courier or sent by facsimile and confirmed to the Purchaser at Merrill Lynch Finance Centre, 2 King Edward Street, London EC1A 1HQ England, Attn: Andrew Bellis, Facsimile: 44 0 20 7995 0039; with a copy to Mayer, Brown, Rowe & Maw LLP, 71 South Wacker Drive, Chicago, Illinois 60606, Attention: J. Paul Forrester, Facsimile: (312) 701-7711 or other address as the Purchaser shall designate for such purpose in a notice to the Company; and if sent to the Company, will be mailed, delivered by hand or courier or sent by facsimile and confirmed to it at Flagstone Reinsurance Holdings Limited, Crawford House, 23 Church Street, 3 ^rd Floor, Hamilton HM11 Bermuda, Attention: Todd White, Facsimile: (441) 296-9879.

13. Successors and Assigns . This Note Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Note Purchase Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or obligations of the Company under this Note Purchase Agreement may be assigned, whether by operation of law or otherwise, without the Purchaser’s prior written consent. The rights and obligations of the Purchaser under this Note Purchase Agreement may be assigned by the Purchaser without the Company’s consent; provided that the assignee assumes the obligations of

the Purchaser and makes the representations, warranties and agreements of the Purchaser under this Note Purchase Agreement and each assignee and its collateral manager, if any, shall be entitled to enforce the rights of the Purchaser hereunder.

14. Applicable Law . THIS NOTE PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

15. Submission to Jurisdiction . ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS NOTE PURCHASE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS NOTE PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS NOTE PURCHASE AGREEMENT.

16. Appointment of Process Agent. The Company will designate and appoint CT Corporation System in New York City as its process agent (the “ Process Agent ”) upon which process may be served in any action arising out of or relating to this Note Purchase Agreement which may be instituted in any New York court by the Purchaser or the holders of the Securities, in accordance with legal procedures prescribed for such courts within fifteen (15) days of execution of the Note Purchase Agreement by the parties hereto, and will expressly consent to the non-exclusive jurisdiction of any such court in respect of any such action, and waive any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment may only be revoked upon the Company’s appointment of a new Process Agent in New York City and such Process Agent’s acceptance in writing of such appointment upon the same terms specified herein prior to the revocation of the previous Process Agent. Service of process upon the Process Agent and written notice of such service of process to it shall be deemed, in every respect, effective service of process upon the Company. Nothing herein shall in any way be deemed to limit the ability of the Purchaser or the holders of the Securities to serve any such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or to bring actions, suits or proceedings against the Company in such other jurisdictions, and in such manner, as may be permitted by applicable law.

17. Entire Agreement. This Note Purchase Agreement, together with the Operative Documents and the other documents delivered in connection with the transactions contemplated hereby, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Note

Purchase Agreement, together with the Operative Documents and the other documents delivered in connection with the transactions contemplated hereby, supersedes all prior agreements and understandings between the parties with respect to such subject matter.

18. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in ever other respect and of the remaining provisions hereof shall not be in any way impaired or affect, it being intended that all of the Purchaser’s rights and privileges shall be enforceable to the fullest extent permitted by law.

19. Counterparts and Facsimile. This Note Purchase Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Note Purchase Agreement may be executed by any one or more of the parties hereto by facsimile.

20. Currency Indemnity. If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to any payment due hereunder or under the Securities, it becomes necessary to convert into the currency of such jurisdiction (the “ Judgment Currency ”) any amount due hereunder in any currency other than the Judgment Currency (the “ Currency Due ”), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose, “rate of exchange” means the rate at which the Purchaser or a Holder of the Securities is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practices. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of payment of the amount due, the Company will, on the day of payment, pay such additional amount, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount paid on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of payment is the amount then due hereunder in the Currency Due. If the amount of the Currency Due which the Purchaser or such Holder would be able to purchase at such rate of exchange is less than the amount of the Currency Due originally due to it, the Company shall indemnify and save the Purchaser and the Holders harmless from and against loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained herein, shall give rise to a separate and independent cause of action and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order.

IN WITNESS WHEREOF, this Purchase Agreement has been entered into as of the date first written above.


F LAGSTONE R EINSURANCE H OLDINGS L IMITED

By:	/s/James O’Shaughnessy

	Name:	James O’Shaughnessy
	Title:	Chief Financial Officer

Flagstone Reinsurance Holdings Limited
Euro-Purchase Agreement


M ERRILL L YNCH I NTERNATIONAL

By:	/s/ R. A. Bellis

	Name:	Andrew Bellis
	Title:	Director

Flagstone Reinsurance Holdings Limited
Euro-Purchase Agreement

Schedule 1

List of Significant Subsidiaries

Flagstone Reinsurance Limited

Schedule 2

TERMS AND CONDITIONS OF THE SECURITIES

SECTION 1. Payment of Principal and Interest .

(a) The unpaid principal amount of the Securities shall bear interest at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to EURIBOR plus 3.54% until paid or duly provided for, such interest to accrue from the date of original issuance of each Security (the “ Original Issue Date ”) or from the most recent Interest Payment Date to which interest has been paid or duly provided for, and any overdue principal, premium, if any, Additional Amounts and any overdue installment of interest shall bear Additional Interest (to the . extent legally enforceable) at the rate equal to a variable rate per annum, reset quarterly on an Interest Payment Date, equal to EURIBOR plus 3.54%, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

“ Interest Payment Date ” means March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2006, during the term of the Securities, subject to the Business Day Convention.

“ Business Day Convention ” means that if any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Note Purchase Agreementor the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and additional interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after any such Interest Payment Date, other than a Redemption Date or Maturity date, as the case may be, through but excluding such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

“ Additional Interest ” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Securities, in each case to the extent legally enforceable.

(b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on September 15, 2036 subject to adjustment as specified in the definition of “Business Day Convention” (the “ Stated Maturity ”) (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a

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Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“ Redemption Date ” means, when used with respect to any Security to be redeemed, the date fixed for such redemption, subject to adjustment as specified in the definition of “Business Day Convention”.

(c) Any interest (including Additional Interest) on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (other than a Maturity date) (herein called “ Defaulted Interest ”) shall forthwith cease to be payable to the Person in whose name a Security is registered in the Securities Register (the “ Holder ”) on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:


	(i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Holders in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time shall make arrangements satisfactory to the Holders for the deposit of an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Company shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Holders of the notice of the proposed payment. The Company shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the

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	Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or

	(ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed and, upon such notice as may be required by such exchange.

Payment of principal of, premium, if any, and interest (including Additional Interest) on the Securities shall be made in such coin or currency of the European Union as at the time of payment is legal tender for payment of public and private debts.

“ Paying Agent ” means any Person authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

Payments of principal of, premium, if any, and interest (including Additional Interest) due at the Maturity of such Securities shall be made at the place of payment given by the Holder to the Company upon surrender of such Securities to the Company or the Paying Agent, if any, and other payments of interest (including Additional Interest) shall be made by wire transfer at such place and to such account at a banking institution in the European Union as may be designated in writing to the Company or the Paying Agent, if any, at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

“ Business Day ” means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed; provided, however, that for purposes of calculating the interest rate for the Securities, “Business Day” shall also be a day on which dealings in deposits in Euro are offered in the Euro-zone interbank market.

(e) Subject to the foregoing provisions, each Security delivered upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

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SECTION 2. Denominations .

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of €100,000 and any integral multiple of €1,000 in excess thereof.

SECTION 3. Execution, Delivery and Dating .

The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President, its General Counsel, its Chief Financial Officer or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

SECTION 4. Registration, Transfer and Exchange Generally .

(a) The Company shall keep a register (the “ Securities Register ”) in which it, as the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities.

(b) Subject to compliance with Section 17 hereof, upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at the offices or agencies of the Company designated for such purpose. Whenever any Securities are so surrendered for exchange, the Company shall execute the Securities that the Holder making the exchange is entitled to receive.

(d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Note Purchase Agreement, as the Securities surrendered upon such transfer or exchange.

(e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company (or the Securities Registrar if the Company is not the Securities Registrar), duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

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(g) the Company shall not be required pursuant to the provisions of this Section 4(g) : (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates Flagstone Reinsurance Holdings Limited, Crawford House, 23 Church Street, Third Floor, Hamilton HM 11 Bermuda, as its office and agency for such purposes. The Company shall give prompt written notice to the Holders of any change in the location of any such office or agency.

SECTION 5. Mutilated, Destroyed, Lost and Stolen Securities .

(a) If any mutilated Security is surrendered to the Company together with such security or indemnity as may be required by the Company to save it harmless, the Company shall execute in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b) If there shall be delivered to the Company (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save it harmless, then, in the absence of notice to the Company that such Security has been acquired by a bona fide purchaser, the Company shall execute, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(d) Upon the issuance of any new Security under this Section 5 , the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

(e) Every new Security issued pursuant to this Section 5 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Note Purchase Agreement equally and proportionately with any and all other Securities duly issued hereunder.

(f) The provisions of this Section 5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

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SECTION 6. Persons Deemed Owners .

The Company and any agent of the Company shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company nor any agent of the Company shall be affected by notice to the contrary.

SECTION 7. Cancellation .

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Company, be delivered to the Company, and any such Securities and Securities surrendered directly to the Company for any such purpose shall be promptly canceled by it.

SECTION 8. Deferrals of Interest Payment Dates .

(a) So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of the Securities, to defer the payment of interest on the Securities for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), the Company shall have the right to make no payments or partial payments of interest on any Interest Payment Date. No Extension Period shall end on a date other than an Interest Payment Date and no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at the rate equal to a variable rate per annum equal to EURIBOR plus 3.54%, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or until funds for the payment thereof have been made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may extend such Extension Period and further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities and (iv) no Event of Default has occurred and is continuing. The Company shall notify (i) the Holders of the Securities at the address provided upon request to the Securities Registrar and (ii) Cohen Bros. Financial Management LLC at Cira Centre, 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, (215) 861-7868, Attention: Matthew T. Mueller, in writing and by telephone (except in the case of notice to the Holders) of its election to begin any such Extension

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Period at least five (5) Business Days prior to the next succeeding Interest Payment Date on which interest on the Securities would be payable but for such deferral.

(b) In connection with any such Extension Period, the Company shall be subject to the restrictions set forth in Section 11 .

SECTION 9. Agreed Tax Treatment .

Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local tax purposes. The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form).

SECTION 10. Additional Amounts .

All payments of principal of and premium, if any, interest (including any Additional Interest) and any other amounts on, or in respect of, the Securities shall be made without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of Bermuda or any other jurisdiction in which the Company is organized (each, a “ taxing jurisdiction ”) or any political subdivision or taxing authority thereof or therein, unless such taxes, fees, duties, assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any regulations or ruling promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (ii) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof).

If a withholding or deduction at source is required, the Company shall, subject to certain limitations and exceptions set forth below, pay to the Holder of any such Security such additional amounts (“ Additional Amounts ”) as may be necessary so that every net payment of principal, premium, if any, interest (including any Additional Interest) or any other amount made to such Holder, after such withholding or deduction, shall not be less than the amount provided for in such Security and this Note Purchase Agreement to be then due and payable; provided , however , that the Company shall not be required to make payment of such Additional Amounts for or on account of:


	a.	any tax, fee, duty, assessment or governmental charge of whatever nature which would not have been imposed but for the fact that such Holder: (A) was a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or was physically present in, the relevant taxing jurisdiction or any political subdivision thereof or otherwise had some

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		connection with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of payment under, such Security; (B) presented such Security, where presentation is required, for payment in the relevant taxing jurisdiction or any political subdivision thereof, unless such Security could not have been presented for payment elsewhere; or (C) presented such Security, where presentation is required, more than thirty (30) days after the date on which the payment in respect of such Security first became due and payable or provided for, whichever is later, except to the extent that the Holder would have been entitled to such Additional Amounts if it had presented such Security for payment on any day within such period of thirty (30) days;

	b.	any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge;

	c.	any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of such Security to comply with any reasonable request by the Company addressed to the Holder within ninety (90) days of such request (A) to provide information concerning the nationality, residence or identity of the Holder or such beneficial owner or (B) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (A) or (B), is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision thereof as a precondition to exemption from all or part of such tax, assessment or other governmental charge;

	d.	any withholding or deduction required to be made pursuant to any EU Directive on the taxation of savings implementing the conclusions of the ECOFIN Council meetings of 26-27 November 2000, 3 June 2003 or any law implementing or complying with, or introduced in order to confirm to, such EU Directive; or

	e.	any combination of items (a), (b), (c) and (d);

Whenever in this Note Purchase Agreement or in the Security there is mentioned, in any context, the payment of the principal of or any premium, interest (including Additional Interest) or any other amounts on, or in respect of, any Security or the net proceeds received on the sale or exchange of any Security, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of Additional Amounts in those provisions hereof where such express mention is not made.

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SECTION 11. Events of Default .

(a) “ Event of Default ” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(i) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days (subject to the deferral of any due date in the case of an Extension Period); or

(ii) default in the payment of the principal of or any premium on any Security at its Maturity; or

(iii) default in the performance, or breach, of any covenant or warranty of the Company in this Note Purchase Agreement and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

(iv) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;

(v) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action; or

(vi) Any representation, warranty, certification or statement of fact made or deemed made by the Company (i) in this Schedule 2 or in the Securities shall be incorrect or misleading in any material respect when made or deemed made or (ii) in this Note Purchase

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Agreement or in any document delivered in connection herewith or therewith shall be incorrect or misleading so as to reasonably be expected to have, singly or in the aggregate, a material adverse effect on the condition (financial or otherwise), earnings, business or business prospects, of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business.

(b) Acceleration of Maturity; Rescission and Annulment . If an Event of Default occurs and is continuing, then and in every such case the Holders of not less than twenty five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company, and, upon any such declaration, the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable; provided, that the payment of principal and interest and all other amounts due with respect to such Securities remain subordinated to the extent provided hereinafter.

At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company, may rescind and annul such declaration and its consequences if:

(i) the Company has paid a sum sufficient to pay:


		(A) all overdue installments of interest on all Securities,

		(B) any accrued Additional Interest on all Securities, and

		(C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities; and


	(ii) all Events of Default with respect to Securities, other than the non-payment of the amounts that have become due solely by such acceleration, have been cured or waived.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

In the event that either (i) an Event of Default has occurred and is continuing or (ii) the Company has elected to defer payments of interest on the Securities by extending the interest payment period (as provided for in Section 8(a) hereof), the Company shall provide to the Holders GAAP and statutory financial statements and interim quarterly financial statements, if available, including accompanying management discussion and analysis, for the Company and, if and as available, for its subsidiaries or affiliates. In addition, for the Company or any of its subsidiaries or affiliates which may be in liquidation, under regulatory supervision or in runoff, the Company shall provide to the Purchaser under the Note Purchase Agreement any reports and presentations to rating agencies, any run-off plan shared with Applicable Insurance Regulatory

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Authorities, internal or external actuarial reports and management projections. “ Applicable Insurance Regulatory Authority ” means, when used with respect to any Regulated Insurance Company, (x) the insurance department or similar administrative authority or agency located in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is domiciled or (y) to the extent asserting regulatory jurisdiction over such Regulated Insurance Company, the insurance department, authority or agency in each state or jurisdiction (foreign or domestic) in which such Regulated Insurance Company is licensed, and shall include any Federal or national insurance regulatory department, authority or agency that may be created and that asserts insurance regulatory jurisdiction over such Regulated Insurance Company.

(c) Collection of Indebtedness and Suits for Enforcement. The Company covenants that if: (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof, then the Company will pay to the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest). If the Company fails to pay such amounts forthwith upon such demand, the Holders may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

(d) Unconditional Rights of Holders to Receive Principal, Premium, if any, and Interest. Notwithstanding any other provision in this Note Purchase Agreement. the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest (to the extent legally enforceable)) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. The rights of any Holder under this Note Purchase Agreement or under the Securities may be exercised by such Holder or any collateral manager of any such Holder.

(e) Restoration of Rights and Remedies . If any Holder has instituted any proceeding to enforce any right or remedy under this Note Purchase Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case the Company and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted.

(f) Rights and Remedies Cumulative. Except as otherwise provided in this Note Purchase Agreement, no right or remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or

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employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

(g) Delay or Omission Not Waiver . No delay or omission of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given hereby or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Holders.

(h) Waiver of Past Defaults . The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default: (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to the Holders a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or (ii) in respect of a covenant or provision hereof that cannot be modified or amended without the consent of each Holder of any Outstanding Security. Any such waiver shall be deemed to be on behalf of the Holders of all the Securities. Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Note Purchase Agreement; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

(i) Undertaking for Costs . Each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Note Purchase Agreement, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 11(i) shall not apply to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

(j) Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Note Purchase Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law.

(k) Restrictions during Events of Default, Extension Periods. The Company covenants and agrees with each Holder of Securities that if (1) an Event of Default shall have occurred and be continuing, (2) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities or such Extension Period, or any extension

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thereof, shall be continuing, or (3) any insurance company, which is a Covenant Significant Subsidiary (as defined hereinafter) of the Company, is rated by A.M. Best Company, Inc. and (x) is downgraded by A.M. Best Company, Inc. to a rating below A- and fails to renew more than 51% of its net premiums written in one or more transactions during any twelve (12) month period; (y) is downgraded by A.M. Best Company, Inc. to a rating below A- and sells more than 51% of its rights to renew net premiums written of its Covenant Significant Subsidiaries in one or more transactions over the course of a twelve (12) month period; or (z) (A) is downgraded by A.M. Best Company, Inc. to a rating below B++ or (B) withdraws its rating by A.M. Best Company, Inc., then, the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company’s capital stock or make any guarantee payments with respect to the foregoing, (ii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase or similar plan or in connection with the issuance of capital stock of the Company ( or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Event of Default, Extension Period or the applicability of the circumstances specified in clause (3) above, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock. warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith), or (iii) enter into any contracts with shareholders holding more than 10% of the outstanding shares of common stock of the Company other than on an arm’s-length-basis and in the ordinary course of business ((i), (ii) and (iii) above, collectively, the “ Block ”) ; provided , however , that the Block shall only apply to subsections 3(x) and (y) above for so long as any such insurance subsidiary which is a Covenant Significant Subsidiary is rated below A- by A.M. Best Company, Inc.; provided , further , that the Block shall only apply to subsection 3(z) above for so long as any such insurance subsidiary which is a Covenant Significant Subsidiary is rated below B++ by A.M. Best Company, Inc. For purposes of this Section 10.6 only, a “ Covenant Significant Subsidiary ”shall have the meaning as defined in Section 1-02(w) of Regulation S-X (“ Reg S-K ”) of the Securities Act, except that wherever Reg S-X states “10 percent,” such “10 percent” shall be replaced by “20 percent.”

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issuances of such Common Stock, in each case until the occurrence of a specified event or events.

“ Common Stock ” means the common shares, par value $0.01 per share, of the Company.

“ Outstanding ” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore delivered under this Note Purchase Agreement, except: (i) Securities theretofore canceled by the Company or delivered to the Company for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided , that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Note Purchase Agreement; and (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been delivered pursuant to this Note Purchase Agreement, unless proof satisfactory to the Company is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company; provided , that, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding Securities unless the Company holds all of the Outstanding Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Company the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

SECTION 12. Consolidation, Merger, Conveyance, Transfer or Lease .

(a) Company May Consolidate, Etc., Only on Certain Terms . The Company shall not, while any of the Securities remain outstanding, consolidate or amalgamate with or merge into any other Person or sell, convey, transfer or lease all or substantially all of its properties and assets as an entirety to any Person unless:

(i) if the Company shall consolidate or amalgamate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or amalgamation into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof, the District of Columbia, Bermuda, the Cayman Islands or any other country, which is a member state of the Organization for Economic Cooperation and Development unless it has: (1) agreed to make all payments due in respect of the Securities without withholding or deduction for, or on account of, any taxes, duties, assessments or other governmental charges under the laws or regulations of the jurisdiction of organization or residence (for tax purposes) of such entity or any political subdivision or taxing authority thereof or therein unless required by applicable law, in which case such entity shall have agreed to pay such additional amounts as shall be required so that the net amounts received and retained by the Holders of such Securities after payment of all taxes

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(including withholding taxes), duties, assessments or other governmental charges, will be equal to the amounts that such Holders would have received and retained had no such taxes (including withholding taxes), duties, assessments or other governmental charges been imposed; (2) irrevocably and unconditionally consented and submitted to the jurisdiction of any United States federal court or New York state court, in each case located in the Borough of Manhattan, The City of New York, in respect of any action, suit or proceeding against it arising out of or in connection with this Note Purchase Agreement or the Securities and irrevocably and unconditionally waived, to the fullest extent permitted by law, any objection to the laying of venue in any such court or that any such action, suit or proceeding has been brought in an inconvenient forum; (3) irrevocably appointed an agent in The City of New York for service or process in any action, suit or proceeding referred to in clause (2) above; and (4) has provided an opinion of counsel that the Holders’ rights to enforce the Company’s obligations in the successor’s jurisdiction of organization are substantially the same as provided to creditors in Bermuda and there are no currency restrictions in such jurisdiction, and the successor shall expressly assume, by note purchase agreement substantially and substantively in the same form as this Note Purchase Agreement, executed and delivered to the Holders, in form reasonably satisfactory to the Holders, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Note Purchase Agreement on the part of the Company to be performed or observed;

(ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(iii) the Company has delivered to the Holders an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Holders may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 12 .

(b) Successor Company Substituted . Upon any consolidation, amalgamation or merger by the Company with or into any other Person, or any sale, conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person, the successor entity formed by such consolidation or amalgamation into which the Company is merged or to which such sale, conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Note Purchase Agreement with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance, merger, amalgamation or transfer, the Company shall be discharged from all obligations and covenants under this Note Purchase Agreement and the Securities. Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company. All the Securities so issued shall in all respects have the same legal rank and benefit under this Note Purchase Agreement as the Securities theretofore or thereafter issued in accordance with the terms of this Note Purchase Agreement. In case of any such consolidation, amalgamation, merger, sale,

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conveyance, transfer or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

SECTION 13. Covenants.

(a) Payment of Principal, Premium, if any, and Interest . The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Note Purchase Agreement. As of the date of this Note Purchase Agreement, the Company represents that it has no present intention to exercise its right to defer payments of interest on the Securities.

(b) Money for Security Payments to be Held in Trust .

(i) If the Company shall at any time act as its own Paying Agent with respect to the Securities, it will, on or before each due date of the principal of and any premium or interest (including any Additional Interest) on the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium or interest (including Additional Interest) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Holders in writing of its failure so to act.

(ii) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, and the Company will promptly notify the Holders of its failure so to act.

(iii) Any money deposited with any Paying Agent, or then held by the Company in trust for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid upon request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , that such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

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(c) Statement as to Compliance . The Company shall deliver to the Holders, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate covering the preceding calendar year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Note Purchase Agreement (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

“ Officers’ Certificate ” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President, the General Counsel or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company.

(d) Waiver of Covenants . The Company may omit in any particular instance to comply with any covenant or condition contained in this Note Purchase Agreement if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 14. Redemption .

(a) Optional Redemption . The Company may, at its option, on any Interest Payment Date, on or after September 15, 2011, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest (to the extent legally enforceable), through but excluding the date fixed as the Redemption Date (the “ Optional Redemption Price ”); provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authorities with respect to such redemption if then required.

(b) Special Event Redemption . Prior to September 15, 2011, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest (to the extent legally enforceable), through but excluding the date fixed as the Redemption Date (the “ Special Redemption Price ”), provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority with respect to such redemption if then required. “ Special Event ” means the occurrence of an Investment Company Event or a Tax Event. “ Investment Company Event ” means the receipt by the Company of an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or

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regulatory authority, there is more than an insubstantial risk that the Company is or, within ninety (90) days of the date of such opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the Original Issue Date. “ Tax Event ” means the receipt by the Company of an opinion of counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “ Administrative Action ”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the Original Issue Date, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or that the Company will be subject to more than a de minimis amount of other taxes, duties or other governmental charges.

(c) Election to Redeem . The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Note Purchase Agreement or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Note Purchase Agreement or the Securities, the Company shall furnish the Holders with an Officers’ Certificate and an opinion of counsel evidencing compliance with such restriction or condition. “ Board of Directors ” means the board of directors of the Company or any duly authorized committee of that board of directors.

(d) Selection of Securities to be Redeemed . If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Company from the Outstanding Securities not previously called for redemption, provided , that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

The provisions of Section 14(d) shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(e) Notice of Redemption . Notice of redemption shall be given not later than the thirtieth (30 ^th ) day, and not earlier than the sixtieth (60 ^th ) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part. With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state: (i) the Redemption Date; (ii)

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the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated); (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to he redeemed, in whole or in part, at the election of the Company shall be given by the Company in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

(f) Deposit of Redemption Price . Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption, the Company will deposit with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

(g) Payment of Securities Called for Redemption . If any notice of redemption has been given, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to but excluding the Redemption Date. On presentation and surrender of such Securities at the place of payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to but excluding the Redemption Date. Upon presentation of any Security redeemed in part only, the Company shall execute and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same, Stated Maturity and other terms. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from and including the Redemption Date at the rate prescribed therefor in the Security.

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SECTION 15. Subordination of Securities .

(a) Securities Subordinate to Senior Debt . The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt. “ Senior Debt ” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Note Purchase Agreement or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding that the obligations under such instrument are not superior in right of payment to the Securities issued under this Note Purchase Agreement; provided , however , that if the Company is subject to the regulation and supervision of any Applicable Insurance Regulatory Authority, the Company shall have received the approval of each appropriate Applicable Insurance Regulatory Authority prior to issuing any such obligation if then required; and provided , further , that Senior Debt shall not be deemed to include (i) any other debt securities and guarantees in respect of such debt securities issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “ financing entity ”) in connection with the issuance by such financing entity of equity securities or other securities that are treated as equity capital for regulatory capital purposes guaranteed by the Company pursuant to an instrument that ranks pari passu with or junior in right of payment to the Securities, or (ii) subordinated debt securities issued by the Company, whether denominated in U.S. dollars or Euro, including the Floating Rate Deferrable Interest Subordinated Notes due 2036 issued by the Company pursuant to the Indenture (between the Company and JPMorgan Chase Bank, National Association, as Trustee) and the Purchase Agreement (between the Company and the Purchasers named therein), each dated as of even date herewith. “ Debt ” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Note Purchase Agreement or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

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(b) No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(i) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for redemption or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

(ii) In the event of a bankruptcy, insolvency or other proceeding described in the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full. In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations.

(iii) If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and

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transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

(iv) The Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Note Purchase Agreement to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(v) These subordination provisions shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Note Purchase Agreement.

(vi) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

(c) Payment Permitted If No Default . Nothing contained herein or elsewhere in this Note Purchase Agreement or in any of the Securities shall prevent the Company, at any time, except during the pendency of the conditions described above or of any Proceeding, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities.

(d) Subrogation to Rights of Holders of Senior Debt . Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions hereof (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities would be entitled except for these subordination provisions, and no payments made pursuant to these subordination provisions to the holders of Senior Debt by Holders of the Securities, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

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(e) Provisions Solely to Define Relative Rights . These subordination provisions are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained herein or elsewhere in this Note Purchase Agreement or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Note Purchase Agreement, including filing and voting claims in any Proceeding, subject to the rights, if any, of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to such Holder.

(f) No Waiver of Subordination Provisions . No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Note Purchase Agreement, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing sentence, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided herein or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

(g) Notice to Holders . The Company shall give prompt written notice to the Holders of any fact known to the Company that would prohibit the making of any payment in respect of the Securities.

(h) Reliance on Judicial Order or Certificate of Liquidating Agent . Upon any payment or distribution of assets of the Company, the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto.

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SECTION 16. No Recourse Against Others .

No director, officer, employee, incorporator, Affiliate or stockholder of the Company shall have any liability for any obligations of the Company under the Securities or the Note Purchase Agreement or for a claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Securities by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Securities.

SECTION 17. Form of Securities .

Any Security issued hereunder shall be substantially in the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT OR BY REGULATION S UNDER THE SECURITIES ACT.

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING SUCH SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR” (WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT), FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (V) TO A PERSON THAT IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATION S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, ACTING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE PERSONS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS NEITHER A U.S. PERSON (AS DEFINED IN REGULATIONS S) NOR A U.S. RESIDENT (WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT) OR (VI) PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR

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ANY OTHER APPLICABLE JURISDICTION AND IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE NOTE PURCHASE AGREEMENTREFERRED TO HEREIN AND, IN THE CASE OF (III) OR (VI), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO IT AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN €100,000 AND INTEGRAL MULTIPLES OF €1,000 IN EXCESS THEREOF. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN €100,000 AND MULTIPLES OF €1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ ERISA ”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “ CODE ”) (EACH A “ PLAN ”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1, OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR OTHER PLAN TO WHICH TITLE 1 OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER

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SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

FLAGSTONE REINSURANCE HOLDINGS LIMITED

Floating Rate Deferrable Interest Subordinated Note due 2036


No.________________		€ [___________]

Flagstone Reinsurance Holdings Limited, a limited liability exempted company organized and existing under the laws of Bermuda (hereinafter called the “ Company ,” which term includes any successor Person under the Note Purchase Agreement hereinafter referred to), for value received, hereby promises to pay to [__________], or registered assigns, the principal sum of [________________] Million Euro (€[________]) on September 15, 2036 (subject to the Business Day Convention), unless redeemed prior to such date in accordance herewith and with the Note Purchase Agreement. The Company further promises to pay interest on said principal sum from August 23, 2006, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 15, June 15, September 15 and December 15 of each year, commencing December 15, 2006, or if any such day is not a Business Day, on the next succeeding Business Day (and additional interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after any such Interest Payment Date, other than a Maturity date until such next succeeding Business Day), in each case, with the same force and effect as if made on the Interest Payment Date, at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to EURIBOR plus 3.54% (the “Interest Rate”), together with Additional Amounts, if any, as provided in Section 10 of Schedule 2 to the Note Purchase Agreement, until the principal hereof is paid or duly provided for or made available for payment; provided , further , that any overdue principal, premium, if any, or Additional Amounts and any overdue installment of interest shall bear Additional Interest at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to EURIBOR plus 3.54% (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. Notwithstanding the foregoing, in no event shall interest accrue hereon at a rate that is higher than the maximum rate permitted by New York Law, as the same may be modified by United States Law of General Application.

The amount of interest payable for any interest period shall be computed and paid on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, other than a Maturity date shall, as provided in the Note Purchase Agreement, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, notice whereof shall be given to Holders of Securities

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not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Note Purchase Agreement.

So long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of this Security, to defer the payment of interest on this Security for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), no interest shall be due and payable. No Extension Period shall end on a date other than an Interest Payment Date, and no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly on an Interest Payment Date, equal to EURIBOR plus 3.54%; compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on this Security, together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) consecutive quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security and (iv) no Event of Default has occurred and is continuing. The Company shall give the Holder of this Security written notice of its election to begin any such Extension Period at least five (5) Business Days prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral.

During any such Extension Period, the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock or make any guarantee payments with respect to the foregoing, (ii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, (2) a dividend reinvestment or stockholder stock purchase plan and/or (3) the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of an exchange or conversion of any class or series of the Company’s capital stock for any class or series of the Company’s capital stock or of any class or series of the

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Company’s indebtedness for any class or series of the Company’s capital stock, (c) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan, or the redemption or repurchase of rights pursuant thereto or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (iii) enter into any contracts with shareholders holding more than 10% of the outstanding shares of common stock of the Company other than on an arm’s-length-basis and in the ordinary course of business.

Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the European Union as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and other payments of interest shall be made by wire transfer at such place and to such account at a banking institution in the European Union as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

The indebtedness evidenced by this Security is, to the extent provided in the Note Purchase Agreement, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Note Purchase Agreement with respect thereto. Each Holder of this Security, by accepting the same, agrees to and shall be bound by such provisions. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Note Purchase Agreement by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (the “ Securities ”) issued under the Note Purchase Agreement, dated as of August 23, 2006 (the “ Note Purchase Agreement ”), between the Company and Merrill Lynch International to which Note Purchase Agreement reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the holders of Senior Debt and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. All terms used in this Security that are defined in the Note Purchase Agreement shall have the meanings assigned to them in the Note Purchase Agreement.

The Company may, on any Interest Payment Date, on or after September 15, 2011 and subject to the terms and conditions of the Note Purchase Agreement, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred

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percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date; provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority then required.

Prior to September 15, 2011, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, and in accordance with the Note Purchase Agreement, redeem the Securities, in whole but not in part, subject to the terms and conditions of the Note Purchase Agreement at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption Price”), provided , that the Company shall have received the prior approval of any Applicable Insurance Regulatory Authority with respect to such redemption if then required.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Calculation Agent from the Outstanding Securities not previously called for redemption, by such method as the Calculation Agent shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

The Note Purchase Agreement permits, with certain exceptions as herein and therein provided, the Company at any time to modify in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities. The Note Purchase Agreement also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Note Purchase Agreement and certain past defaults under the Note Purchase Agreement and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Note Purchase Agreement and no provision of this Security or of the Note Purchase Agreement shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Note Purchase Agreement and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof

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or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in minimum denominations of €100,000 and any integral multiple of €1,000 in excess thereof. As provided in the Note Purchase Agreement and subject to certain limitations herein and therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

The Company and any agent of the Company may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this________day of____________ ,20____.


	Flagstone Reinsurance Holdings Limited

	By:

		Name:
		Title:

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Schedule 3

DETERMINATION OF EURIBOR

With respect to the Securities, the Euro-zone inter-bank offered rate (“ EURIBOR ”) shall be determined by the Calculation Agent with the following provisions (in each case rounded to the nearest .000001%):

1. On the second Business Day prior to an Interest Payment Date (except with respect to the first interest payment period, such date shall be two (2) Business Days prior to the Closing Date) (each such day, a “ EURIBOR Determination Date ”), EURIBOR for any given Security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent, at which deposits in Euro are offered by the Calculation Agent to prime banks in the Euro-zone interbank market for three month Eurodollar deposits that appears on Reuters Telerate Page 248, or such other page as may replace such Page 248, as of 11:00 a.m. (Brussels time) on such EURIBOR Determination Date.

(2) If, on any EURIBOR Determination Date, such rate does not appear on Reuters Telerate Page 248 or such other page as may replace such Page 248, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the Euro-zone interbank market for three month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (Brussels time) on the EURIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any EURIBOR Determination Date, at least two of the Reference Banks provide such quotations, EURIBOR shall equal such arithmetic mean of such quotations. If, on any EURIBOR Determination Date, only one or none of the Reference Banks provide such quotations, EURIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant EURIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal Brussels offices of leading banks in the Euro-zone interbank market; provided that, if the Calculation Agent is required but is unable to determine a rate in accordance with the foregoing, EURIBOR shall be EURIBOR as determined on the previous EURIBOR Determination Date.

(3) As used herein: “ Reference Banks ” means four major banks in the Euro-zone interbank market selected by the Calculation Agent; and “ EURIBOR Business Day ” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in Brussels.

Sch. 3 - 1

ANNEX A-I

Pursuant to Section 2(b)(i) of the Note Purchase Agreement. Sidley Austin LLP, special New York counsel for the Company, shall deliver an opinion substantially in the following form:

Ladies and Gentlemen:

This opinion is being furnished to you pursuant to Section 2(b)(i) of the Note Purchase Agreement, dated August 23, 2006 (the “Purchase Agreement”), between Flagstone Reinsurance Holdings Limited, a Bermuda company (the “Company”), and Merrill Lynch International (the “Purchaser”), relating to the issuance and sale by the Company to the Purchaser of €13,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036 (the “Securities”). Capitalized terms used but not otherwise defined herein shall have the meaning assigned to such terms in the Purchase Agreement.

As special U.S. counsel to the Company, we have examined and relied upon originals or copies of such agreements. instruments, certificates, records and other documents and have made such examination of law as we have deemed necessary or appropriate for the purpose of this letter, including the following:

1. Copy of the Memorandum of Association of the Company, certified to be a true copy as of a recent date by the Registrar of Companies in Bermuda.

2. Copy of the Bye-Laws of the Company. as amended, certified as of the date hereof by the Secretary of the Company to be a true and correct copy.

3. Certificate of a recent date of the Registrar of Companies in Bermuda certifying the due incorporation and good standing of the Company under the laws of Bermuda.

4. Copies, certified by the Secretary of the Company to be true and complete copies, of resolutions adopted by the Board of Directors of the Company at a meeting held on August 12, 2006 relating to the issuance and sale of the Securities.

5. Executed counterparts of the Purchase Agreement.

6. Copies, certified by the Secretary of the Company to be full, true and correct specimens, of the certificates representing the Securities.

In connection with this letter, we have assumed, without independent investigation or verification, the genuineness of signatures of all persons signing any document, the legal capacity of all natural persons, the authority of all persons signing any document on behalf of parties thereto, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies or by facsimile or other means of electronic transmission or obtained by us through sites on the internet, the authenticity of the originals of such latter documents and the truth and accuracy of all matters set forth in all documents. As to all facts relevant to the opinions set forth herein, we have relied, without independent investigation or verification, on the existence and the

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consequences of those facts upon certificates and oral or written representations or other statements of governmental authorities, public officials, officers and other representatives of the Company and their accountants and counsel and others.

Based upon the foregoing, but subject to the assumptions, limitations, qualifications and exceptions referred to herein, we are of the opinion that:

a. the Securities, when duly executed and delivered by the Company to the Purchaser against payment of the consideration therefor specified in the Purchase Agreement, will constitute valid and legally binding obligations of the Company, entitled to the benefit of the Purchase Agreement and enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally or by general principles of equity (regardless of whether considered in a proceeding in equity or at law), and except further as enforcement thereof may be limited by (1) requirements that a claim with respect to any of the Securities (or a foreign currency judgment in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law or (2) governmental authority to limit, delay or prohibit the making of payments outside of the United States of America;

b. assuming the truth and accuracy of the respective representations and warranties, and compliance with the respective agreements of the Company and the Purchaser under the Purchase Agreement, it is not necessary in connection with the Company’s offer, sale and delivery of the Securities to the Purchaser to register the same under the Securities Act of 1933, as amended, under the circumstances contemplated in the Purchase Agreement (it being understood that we express no opinion as to any reoffer or resale of Securities by any Purchaser);

c. the Company is not required to register as an investment company under the Investment Company Act of 1940, as amended; and

d. except for authorizations, approvals, consents, orders, filings, registrations or qualifications that may be required by applicable securities laws, no filing, registration or qualification with, or authorization, approval, consent or order of, any U.S. federal or New York state court or governmental body or authority is required to be made or obtained by the Company under the federal laws of the United States of America or New York state law in connection with the transactions contemplated by the Purchase Agreement.

The foregoing opinions are subject to the following assumptions, limitations, qualifications and exceptions:

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	A.	This letter is limited to matters arising under the federal laws of the United States of America and the laws of the State of New York, and we express no opinion as to the laws of any other jurisdiction or as to the municipal laws, or the laws, rules or regulations of any local agencies, of or within the State of New York. In rendering the foregoing opinions, we have relied exclusively, with your permission, as to all matters of Bermuda law, without independent investigation or verification, upon the opinion of Attride-Sterling & Woloniecki, dated the date hereof, and this letter is subject to the assumptions, limitations, qualifications and exceptions referred to therein.

	B.	With respect to any instrument or agreement that we have reviewed (each, an “Instrument”), we have assumed, to the extent relevant to the opinions expressed herein, that (i) each party thereto (if not a natural person) has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, (ii) each party thereto has full right, power and authority to execute, deliver and perform its obligations under each Instrument to which it is a party, (iii) each party thereto has duly authorized, executed and delivered each Instrument to which it is a party and (iv) except to the extent otherwise specified in clause (a) or (b) above with respect to the Note Purchase Agreement and the Securities of the Company, each Instrument is a valid, legally binding and enforceable agreement or obligation of each party thereto.

The opinions expressed herein are given as of the date hereof, and we undertake no obligation to update or supplement this letter if any applicable law changes after the date hereof or if we become aware of any fact or other circumstance that changes or might change any opinion expressed herein after the date hereof or for any other reason.

This letter is rendered solely to, and is for the benefit of, the parties to whom it is expressly addressed in connection with the matters described herein; accordingly, this letter may not be copied or relied upon by, or be quoted or delivered to, any other person or entity (including, without limitation, any person or entity who acquires Securities from the Purchaser) or be relied upon or used by the Purchaser for any other purpose, in any case without our express prior written consent.


	Very truly yours,

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ANNEX A-II

Pursuant to Section 2(b)(ii) of the Note Purchase Agreement, Attride-Sterling & Woloniecki, special Bermuda counsel for the Company shall deliver an opinion in substantially the following form:

To: Merrill Lynch International
Merrill Lynch Finance Centre
2 King Edward Street
London, EC1A 1HQ
England

Attention: Andrew Bellis

Dear Sirs,

Flagstone Reinsurance Holdings Limited – Issuance and sale of Floating Rate Deferrable Interest Subordinated Notes due 2036

We have acted as special legal counsel in Bermuda to Flagstone Reinsurance Holdings Limited (the “Company”) in connection with the issuance and sale by the Company of up to Thirteen Million Euros in aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036 (the “Securities”).


1.	For the purpose of giving this opinion, we have reviewed the following documents:

	1.1	An executed copy of the purchase agreement (“Purchase Agreement”) between the Company and Merrill Lynch International (the “Purchaser”) relating to the sale and purchase of the Securities;

	1.2	A copy of the form of security (“Security Instrument”) to be issued pursuant to the Purchase Agreement in respect of the Securities;

(the Purchase Agreement and the Security Instrument are sometimes collectively referred to in this opinion as the “Operative Documents”)

	1.3	A copy of the memorandum of association and the bye-laws of the Company each certified by the Assistant Secretary of the Company on 22 August, 2006;

	1.4	The minutes of meetings of the board of directors of the Company held on 12 August, 2006 certified by the Assistant Secretary of the Company on 22 August, 2006; and

	1.5	Certificates of Compliance from the Bermuda Ministry of Finance in respect of the Company (dated 21 August, 2006), Flagstone Reinsurance Limited (“FRL”) (dated 21 August, 2006) and Mont Fort Re Ltd. (“MFRL”) (dated 22 August,

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		2006) and from the Bermuda Monetary Authority in respect of FRL (dated 17 August, 2006) and MFRL (dated 22 August, 2006); and

	1.6	Such other documents (and made such enquiries as to questions of Bermuda law) in relation thereto as we have deemed necessary in order to render the opinions given below.

2.	We have assumed for the purposes of this opinion letter:

	2.1	the capacity, power and authority of each of the parties (other than the Company) to enter into and perform its respective obligations under the Operative Documents and the due authorisation, execution and the delivery of the Operative Documents by each of the respective parties thereto (other than the Company) in the form of the execution copies examined by us;

	2.2	the genuineness and authenticity of all signatures on all documents which we have examined;

	2.3	the authenticity of all documents submitted to us as originals, and the conformity to authentic originals of all documents produced to us as copies of such documents and the conformity to authentic original documents of all documents and other documentation submitted to us as certified, conformed, notarised, faxed or photostatic copies; wherever we have reviewed draft documents we have assumed that the documents were executed in all material respects in the form of such drafts;

	2.4	that each of the documents and other documentation which was received by electronic means is complete, intact and in conformity with the transmission as sent;

	2.5	the accuracy and completeness of all factual representations contained in the Operative Documents;

	2.6	that there is no provision of the law of any jurisdiction, other than Bermuda, which would have any implication in relation to the opinions expressed herein;

	2.7	that the resolutions set forth in the Minutes are in full force and effect, have not been rescinded and that there is no matter affecting the authority of the directors to effect entry by the Company into the Operative Documents, not disclosed by the Constitutional Documents or the Minutes, which would have any adverse implication in relation to the opinions expressed herein

	2.8	the validity and binding effect under the laws of the State of New York (the “Foreign Laws”) of the Operative Documents, which are expressed to be governed by such Foreign Laws in accordance with their respective terms;

	2.9	the validity and binding effect under the Foreign Laws of the submission by the Company pursuant to the Purchase Agreement to the non-exclusive jurisdiction of

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		the courts of any state or federal court located within New York County, State of New York, USA (“Foreign Courts”); and

	2.10	that at the time of entering into the Operative Documents, the Company is, and after entering into the Operative Documents, will be able to pay its liabilities as they become due.

3.	Based upon and subject to the foregoing, and further subject to the reservations set out below and to any matters not disclosed to us, we are of the opinion that:

	3.1	Each of the Company, FRL and MFRL respectively is duly incorporated with limited liability and each of the Company, FRL and MFRL respectively is existing in good standing under the laws of Bermuda (meaning that each of the Company, FRL and MFRL respectively has not failed to make any filing with any Bermuda governmental authority or to pay any Bermuda government fee or tax which might make any of the Company, FRL and MFRL respectively liable to be struck off the Register of Companies and thereby cease to exist under the laws of Bermuda).

	3.2	The entry into the Operative Documents and the execution and delivery of the Operative Documents by the Company and the performance by the Company of its respective obligations thereunder are within the corporate powers of the Company and have been duly authorised by the Company. The Operative Documents have been duly executed and delivered by or on behalf of the Company.

	3.3	The Operative Documents constitute the legal, valid and binding obligations of the Company, enforceable in Bermuda in accordance with their respective terms.

	3.4	The execution and delivery by the Company of the Operative Documents and the performance by the Company of its respective obligations thereunder will not conflict with the memorandum of association or bye-laws of the Company or violate or breach any Bermuda law, regulation, order or decree.

	3.5	It is not necessary to ensure the enforceability in Bermuda of any of the Operative Documents that they be registered in any register kept by, or filed with, any governmental authority or regulatory body in Bermuda. However, to the extent that any of the Operative Document, creates a charge over assets of the Company, it may be desirable to ensure the priority in Bermuda of the charge that it be registered in the Register of Charges in accordance with Section 55 of the Companies Act 1981. On registration, to the extent that Bermuda law governs the priority of a charge, such charge will have priority in Bermuda over any unregistered charges and over any subsequently registered charges, in respect of the assets which are the subject of the charge. A registration fee of $515 will be payable in respect of the registration.

		While there is no exhaustive definition of a charge under Bermuda law, a charge includes any interest created in property by way of security (including any

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		mortgage, assignment, pledge, lien or hypothecation). As the Operative Documents are governed by the Foreign Laws, the question of whether they create such an interest in property would be determined under the Foreign Laws.

	3.6	The submission to the jurisdiction of the Foreign Courts in the Purchase Agreement is not contrary to Bermuda law and would be recognised by the courts of Bermuda as a legal, valid and binding submission to the courts of the Foreign Laws if such submission is legal, valid and binding under the Foreign Laws.

	3.7	The choice of the Foreign Laws as the governing law of each of the Operative Documents constitutes a valid choice of law and would be recognized and given effect to in any action brought before a court of competent jurisdiction in Bermuda, except for those laws (i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or (iii) the application of which would be inconsistent with public policy, as such term is interpreted under the laws of Bermuda.

	3.8	No authorisation, order, consent, approval, licence, qualification, validation or formal exemption from, or any filing, declaration or registration with any court, governmental or municipal authority or other public body of Bermuda is required in connection with the execution, delivery, and/or performance by the Company of its obligations under the Operative Documents or the enforceability or admissibility in evidence of the Operative Documents.

	3.9	The Purchaser will not be deemed to be resident, domiciled or carrying on business by reason only of the execution, performance and/or enforcement of the Operative Documents.

4.	The term “enforceable” when used in this opinion means that the obligation is of a type which the courts of Bermuda enforce. It does not mean that those obligations will be enforced in all circumstances in accordance with the terms of the Operative Documents. For example, the obligations of the Company (a) will be subject to the laws from time to time in effect relating to bankruptcy, insolvency, liquidation, possessory liens, rights of set off, reorganisation, amalgamation, moratorium or any other laws or legal procedures, whether of a similar nature or otherwise, generally affecting the rights of creditors; (b) will be subject to statutory limitation of the time within which proceedings may be brought; (c) will be subject to general principles of equity and, as such, specific performance and injunctive relief, being equitable remedies, may not be available where damages are considered to be an adequate remedy; (d) may not be given effect to by a Bermuda court to the extent they are to be performed in a jurisdiction outside Bermuda and such performance would be illegal under the laws of that jurisdiction; (e) may not be given effect to by a Bermuda court, whether or not it is applying the Foreign Laws, if and to the extent they constitute the payment of an amount which is in the nature of a penalty and not in the nature of liquidated damages.

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5.	Notwithstanding any contractual submission to the jurisdiction of specific courts, a Bermuda court has inherent discretion to stay or allow proceedings in the Bermuda courts.

6.	We express no opinion as to the enforceability of any provision contained in the Operative Documents which provides for the payment of a specified rate of interest on the amount of a judgment after the date of judgment or which purports to fetter the statutory powers of the Company.

7.	We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other than Bermuda. This opinion is to be governed by and construed in accordance with the laws of Bermuda and is limited to and is given on the basis of the current law and practice in Bermuda.

8.	This opinion is solely for your benefit and is not to be relied upon for any purpose other than the matters referred to in this opinion or by any other person nor quoted or referred to in any public document nor filed with any governmental agency or person, without our prior written consent, except as may be required by law or regulatory authority. Further, this opinion speaks as of its date and is strictly limited to the matters stated herein and we assume no obligation to review or update this opinion if applicable law or the existing circumstances should change.

Yours faithfully,

ATTRIDE-STIRLING & WOLONIECKI

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ANNEX A-III

Pursuant to Section 2(b)(iii) of the Purchase Agreement, the Company shall provide an Officer’s Certificate, in substantially the following form:

FLAGSTONE REINSURANCE HOLDINGS LIMITED

CERTIFICATE

I, Anthony M. Philip, a Barrister and Attorney of the Supreme Court of Bermuda, and being the duly elected, qualified and acting Secretary of Flagstone Reinsurance Holdings Limited, a Bermuda company (the ^- Company”), do hereby certify pursuant to Section 2(b) (iii) of the Note Purchase Agreement (“Note Purchase Agreement”) between the Company and Merrill Lynch International as set out below. Terms used in this certificate shall, unless the context otherwise requires, have the meanings respectively ascribed thereto in the Note Purchase Agreement.


	(i) Each of the Company and its subsidiaries, Flagstone Reinsurance Limited (“FRL”) and Mont Fort Re Ltd (“MFRL”) (“FRL and MFRL collectively referred to in this certificate as the “Significant Subsidiaries”) has full corporate power and authority to own or lease its properties and to conduct its business as such business is currently conducted in all material respects;

	(ii) All outstanding shares of the Significant Subsidiaries have been duly authorized and validly issued, and are fully paid and nonassessable and owned of record and beneficially, directly or indirectly, by the Company;

	(iii) The issuance of the Securities is not subject to any contractual preemptive rights known to me;

	(iv) To the best of my knowledge, there is no action, suit or proceeding before or by any government, governmental authority, arbitrator or court, domestic or foreign, now pending or threatened against or affecting the Company or any Significant Subsidiary that could adversely affect the consummation of the transactions contemplated by the Operative Documents or could have a Material Adverse Effect;.

	(v) The Company is registered under the Bermuda Companies Act 1981 (“Companies Act”) as an exempted company and the objects set out in its Memorandum of Association permit it amongst other things to hold shares in insurance companies; FRL is registered under the Companies Act as an exempted company and licensed under the Bermuda Insurance Act 1978 (“Insurance Act”) and MFRL is registered under the Companies Act as an exempted company, licensed under the Insurance Act and registered as a segregated accounts company under the Segregated Accounts Companies Act 2000 and the capital reserves accounts of the Company and its Significant Subsidiaries are in compliance with all applicable regulatory authorities with jurisdiction over such entities;

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	(vi) Neither the Company nor any Significant Subsidiaries of the Company is in breach or violation of, or default under, with or without notice or lapse of time or both, its memorandum of association, bye-laws or other governing documents or instruments; the execution, delivery and performance of the Operative Documents by the Company and the consummation by the Company of the transactions contemplated by the Operative Documents will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation or imposition of any lien, charge and encumbrance upon any assets or properties of the Company or any Significant Subsidiary under any agreement, indenture, mortgage or instrument that the Company or any Significant Subsidiary of the Company is a party to or by which it may be bound or to which any of its assets or properties may be subject

	(vii) To the best of my knowledge, neither the Company nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”) has directly or indirectly (except for actions made by any recipient of this certificate, as to which the Company makes no representation), made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities being issued pursuant to this transaction under the Securities Act, engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities, or engaged, nor will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.

IN WITNESS WHEREOF, the undersigned has executed this certificate as of this ______ day of August, 2006.




	Name:	Anthony M. Philip
	Title:	Secretary

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ANNEX B

Pursuant to Section 2(c) of the Note Purchase Agreement, Sidley Austin LLP, special tax counsel for the Company, shall deliver an opinion to the effect that:


	for United States federal income tax purposes. the Securities will constitute indebtedness of the Company.

In rendering such opinions, such counsel may (A) state that its opinion is limited to the federal laws of the United States and (B)rely on matters or statements of fact, to the extent such counsel deems appropriate, as set forth on certificates of responsible officers of the Company and public officials.

ANNEX C

Officer’s Financial Certificate

The undersigned, the [Chairman/Vice Chairman/Chief Executive Officer/President/ Vice President/Chief Financial Officer/Treasurer/Assistant Treasurer], hereby certifies, pursuant to Section 6(h) of the Note Purchase Agreement, dated as of August 23, 2006, among Flagstone Reinsurance Holdings Limited (the “Company”) and Merrill Lynch International, that, as of [date], [20__], the Company, if applicable, and its Subsidiary Insurance Companies (as defined below) had the following ratios and balances:

[For the Company, if applicable, and each Subsidiary Insurance Company (as defined below) provide:]

[INSURANCE COMPANY]
As of [Quarterly/Annual Financial Date], 20_


NAIC Risk Based Capital Ratio (authorized control level)		______	%
Total Policyholders’ Surplus	$	______
Consolidated Debt to Total Policyholders’ Surplus		______	%
Total Assets	$	______
NAIC Class 1 & 2 Rated Investments to Total Fixed Income Investments		______	%
NAIC Class 1 & 2 Rated Investments to Total Investments		______	%
Return on Policyholders’ Surplus		______	%
Net Premiums Written	$	______
[For Property & Casualty Companies also provide:]
[Expense Ratio]		______	%
Loss and LAE Ratio		______	%
Combined Ratio		______	%
Net Premiums Written (annualized) to Policyholders’ Surplus		______	%]

* A table describing the quarterly report calculation procedures is provided on page __

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The following is a complete list as of [Quarterly/Annual Financial Date] of the Company’s subsidiaries which conduct insurance or reinsurance business (the “Subsidiary Insurance Companies”):

[List of Subsidiary Insurance Companies]

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended [date], 20__ (provided, that prior to the Certificate given with respect to fiscal year ending December 31, 2008, the Company shall only be required to provide such statement for each year in which it has been in existence and all required Statutory Financial Statements (as defined in the Note Purchase Agreement) for the year ended [date], 20__]

[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating for Significant Subsidiaries and other subsidiaries (if readily available), financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and all required Statutory Financial Statements (as defined in the Note Purchase Agreement), if any, for the fiscal quarter ended [date], 20__, to the extent applicable.]

The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [____ quarter interim] [annual] period ended [date], 20__, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).

The Statutory Financial Statements fairly present in all material respects in accordance with Applicable Accounting Principles as defined in the Note Purchase Agreement) the financial position of the subject insurance company and have been prepared in accordance with Applicable Accounting Principles.

IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this ______ day of __________, 20__.


	FLAGSTONE REINSURANCE HOLDINGS LIMITED

	By:

	Name:

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Definitions for quarterly Officer’s Financial Certificate


ITEM		Definition/Formula

NAIC Risk Based Capital Ratio-P&C		Total Adjusted Capital/Authorized Control Level Risk-Based Capital
NAIC Risk Based Capital Ratio-Life		( Total Adjusted Capital-Asset Valuation Reserve ) /Authorized Control Level Risk-Based Capital
Total Capital and Surplus-Life		Common Capital Stock + Preferred Capital Stock +Aggregate Write-Ins for other than special surplus funds + Surplus Notes +Gross Paid-In and Contributed Surplus + Aggregate Write-Ins for Special Surplus Funds + Unassigned Funds ( Surplus ) – Treasury Stock
Total Capital and Surplus-P&C		Aggregate Write-Ins for Special Surplus Funds + Common Capital Stock + Preferred Capital Stock + Aggregate Write Ins for other than special surplus funds + Surplus Notes +Gross Paid-In and Contributed Surplus + Unassigned Funds ( Surplus ) – Treasury Stock
Total Class 1 &2 Rated Investments to Total Fixed Income Investments		( Total Class 1 + Total Class 2 Rated Investments ) /Total Fixed Income Investments
Total Class 1 & 2 Rated Investments to Total Investments		( Total Class 1 + Total Class 2 Rated Investments ) /Total Investments
Total Assets		Total Assets
Return on Policyholders’ Surplus		Net Income/Policyholders’ Surplus
Expense Ratio		Other Underwriting Expenses Incurred/Net premiums Earned
Loss and LAE Ratio		( Losses Incurred + Loss Expenses Incurred ) /Net Premiums Earned
Combined Ratio		Expense Ratio + Loss and LAE Ratio
Net Premiums Written (annualized) to Policyholders’ Surplus		Net Premiums Written/Policyholders’ Surplus

D-3

Exhibit 4.14

AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 (this “ Amendment ”) is dated as of November 30, 2012, among FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED, a Bermuda exempted company (the “ Successor Company ”) and the Noteholders named herein.

W I T N E S S E T H :

WHEREAS, Flagstone Reinsurance Holdings Limited, a Bermuda exempted company (the “ Predecessor Company ”), and Merrill Lynch International (the “ Purchaser ”) have heretofore executed and delivered that certain Note Purchase Agreement, dated as of August 23, 2006 (including all annexes, exhibits and schedules thereto, the “ Note Purchase Agreement ”), pursuant to which the Predecessor Company issued and sold to the Purchaser €13,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036 (the “ Securities ”);

WHEREAS, on May 17, 2010, the Predecessor Company changed its place of incorporation from Bermuda to Luxembourg in a redomestication (the “ Redomestication ”) and the Predecessor Company thereby discontinued its existence as a Bermuda exempt company and continued its existence as Flagstone Reinsurance Holdings, S.A., a Luxembourg société anonyme (the “ Company ”);

WHEREAS, as a result of the Redomestication, the Company succeeded to and possessed all of the rights, privileges, powers and franchises of the Predecessor Company and subject to all of the restrictions, disabilities and duties of the Predecessor Company, including all of the obligations of the Predecessor Company under the Securities and Note Purchase Agreement;

WHEREAS, Section 11 of the Note Purchase Agreement provides, in part, that the Note Purchase Agreement, including the Schedules and the Securities, may not be modified, amended, altered or supplemented, except upon prior written consent of the Holders of at least a majority of the Outstanding Securities (the “ Consent ”);

WHEREAS, the Successor Company has requested that the Noteholders amend certain provisions of the Note Purchase Agreement on the terms and conditions set forth in this Amendment;

WHEREAS, the Successor Company, pursuant to Section 12 of Schedule 2 to the Note Purchase Agreement, has delivered to the Holders, or caused to be delivered to the Holders on its behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating that the Merger complies with Section 12 of Schedule 2 to the Note Purchase Agreement, as amended hereby, and that all conditions and covenants provided for in the Note Purchase Agreement, as amended hereby, relating to the Merger have been complied with; and

WHEREAS, all things necessary (a) to ratify the succession under the Note Purchase Agreement of the Predecessor Company to the Company, (b) to authorize the assumption by the Successor Company of the Company’s obligations under the Note Purchase Agreement and (c) to make this Amendment when executed by the parties hereto a valid and binding amendment of the Note Purchase Agreement have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Note Purchase Agreement.

2. Ratification of Company Succession. The Noteholders hereby ratify the succession under the Note Purchase Agreement of the Predecessor Company to the Company pursuant to the Redomestication.

3. Successor Company Assumption of Obligations. The Successor Company hereby expressly assumes, from and after the date hereof, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Note Purchase Agreement on the part of the Company to be performed or observed.

4. Successor Company Succession and Substitution. The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this Amendment, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Note Purchase Agreement, and the Company shall be discharged from all obligations and covenants under the Note Purchase Agreement and the Securities.

5. Representations and Warranties. The Noteholders hereby represent and warrant that they collectively hold a majority of the Outstanding Securities.

6. Amendments to Note Purchase Agreement.

(a) Section 11 of the Note Purchase Agreement is hereby amended by deleting such Section in its entirety and replacing it with the following:

Section 11. Amendments. Except as otherwise provided in Section 12 of Schedule 2 to this Note Purchase Agreement, this Note Purchase Agreement, including the Schedules, and the Securities, may not be modified, amended, altered or supplemented without the prior written consent of the Holders of at least a majority of the Outstanding Securities.

(b) Section 13 of this Note Purchase Agreement is hereby amended by deleting the third and fourth sentences of such Section, which shall be replaced with the sentence: “Except as otherwise provided by Section 12 of Schedule 2, none of the rights or obligations of the Company under this Note Purchase Agreement may be assigned without the prior written consent of the Holders of at least a majority of the Outstanding Securities.”

(c) Section 12(a)(i) of Schedule 2 to the Note Purchase Agreement is hereby amended by (i) adding “, Luxembourg” after the phrase “the Cayman Islands” and by deleting the phrase “the successor shall expressly assume by note purchase agreement substantially and substantively in the same form as this Note Purchase Agreement”, which shall be replaced with the phrase “the successor shall expressly assume by an amendment hereto.”

7. Effectiveness and Operativeness. By executing this Amendment, each of the Noteholders shall be deemed to have delivered their Consent to this Amendment. This Amendment shall be deemed to have become effective, and the provisions provided for in this Amendment shall be deemed to have become operative, immediately upon consummation of the Merger, provided, that:

(a) the Noteholders shall have executed one or more counterparts of this Amendment and shall have received a counterpart of this Amendment executed by the Successor Company; and

(b) the Noteholders shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Amendment.

8. Ratification. Except as expressly amended hereby, the Note Purchase Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Amendment shall form a part of the Note Purchase Agreement for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

9. Applicable Law. THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

10. Counterparts. The parties hereto may sign any number of copies of this Amendment. Each signed copy shall be an original, but all of them together represent the same agreement.

11. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.


	FLAGSTONE REINSURANCE HOLDINGS (BERMUDA) LIMITED

	By:	/s/ David A. Brown

		Name: David A. Brown
		Title: Director

[Signature Page to Amendment No. 1]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.


Dekania Europe CDO II, plc, as a Noteholder

By: Dekania Capital Management, LLC

	By:	/s/ Daniel G. Cohen

		Name: Daniel G. Cohen
		Title: President

Dekania Europe CDO III, plc, as a Noteholder

By: Cohen & Company Financial, LTD

	By:	/s/ Daniel G. Cohen

		Name: Daniel G. Cohen
		Title: Director

[Signature Page to Amendment No. 1]

Exhibit 4.15

AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT

THIS AMENDMENT NO. 2 (this “ Amendment ”) is dated as of November 30, 2012, among VALIDUS UPS, LTD., a Bermuda exempted company (the “ Successor Company ”), VALIDUS HOLDINGS, LTD., a Bermuda exempted company (the “ Guarantor ”), and the Noteholders named herein.

W I T N E S S E T H :

WHEREAS, Flagstone Reinsurance Holdings (Bermuda) Limited, a Bermuda exempted company (the “ Company ”) (as successor in interest to Flagstone Reinsurance Holdings, S.A., a Luxembourg société anonyme ) and Merrill Lynch International (the “ Purchaser ”) have executed and delivered that certain Note Purchase Agreement, dated as of August 23, 2006, between the Company and the Purchaser, as amended by Amendment No. 1, dated as of November 30, 2012 (together, the “ Note Purchase Agreement ”), providing for the issuance of its floating rate, unsecured junior subordinated deferrable interest notes (the “ Securities ”);

WHEREAS, the Company has heretofore issued €13,000,000 aggregate principal amount of Floating Rate Deferrable Interest Subordinated Notes due 2036 under the Note Purchase Agreement (the “ Outstanding Notes ”);

WHEREAS, in connection with the consumation of the transactions contemplated by the Merger Agreement, the Successor Company will assume all of the obligations of the Company under the Indenture and the Securities, and the Guarantor will provide full and unconditional guarantees (the “ Guarantees ”) of the obligations of the Successor Company under the Note Purchase Agreement and the Securities on the terms and conditions set forth herein and therein;

WHEREAS, Section 12(a)(i) of Schedule 2 to the Note Purchase Agreement provides, in part, that the Company may transfer all or substantially all of its properties and assets as an entirety to another Person provided that (a) (i) the Successor Company is an entity organized and existing under the laws of the United States of America or any State or Territory thereof, the District of Columbia, Bermuda, the Cayman Islands, Luxembourg or any country, which is a member state of the Organization for Economic Cooperation and Development and (ii) the Successor Company expressly assumes, by an amendment thereto executed and delivered to the Holders, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Note Purchase Agreement on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and (c) an Officers’

Certificate and an Opinion of Counsel have been delivered to the Holders, each stating that such transfer and all conditions precedent in the Note Puchase Agreement relating to such transfer has been complied with.

WHEREAS, Section 11 of the Note Purchase Agreement provides, in part, that the Company may amend the Note Purchase Agreement as provided in Schedule 2 to the Note Purchase Agreement or upon the prior written consent of the Holders of at least a majority of the Outstanding Securities;

WHEREAS, the Successor Company, pursuant to Section 12(a)(i) of the Note Puchase Agreement, has delivered to the Holders, or caused to be delivered to the Holders on their behalf, an Opinion of Counsel and an Officers’ Certificate, dated as of the date hereof, stating that the Merger complies with Section 12 of Schedule 2 to the Note Purchase Agreement and that all conditions and covenants provided for in the Note Purchase Agreement relating to the Merger have been complied with; and

WHEREAS, all things necessary (a) to authorize the assumption by the Successor Company of the Company’s obligations under the Note Purchase Agreement, (b) to authorize the Guarantor’s Guarantees of the obligations of the Successor Company under the Note Purchase Agreement and the Securities and (c) to make this Amendment when executed by the parties hereto a valid and binding amendment of the Note Purchase Agreement have been done and performed.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Definitions. Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Note Puchase Agreement.

2. Assumption of Obligations. The Successor Company hereby expressly assumes, from and after the date hereof, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of the Note Purchase Agreement on the part of the Company to be performed or observed.

3. Succession and Substitution. The Successor Company, from and after the date hereof, by virtue of the aforesaid assumption and the delivery of this Amendment, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Note Purchase Agreement, and the Company shall be discharged from all obligations and covenants under the Note Purchase Agreement and the Securities.

4. Amendment to Note Purchase Agreement.

Section 12 of Schedule 2 to the Note Purchase Agreement is hereby amended by adding the following paragraph immediately after subsection (iii):

“Notwithstanding the foregoing, where the Company proposes to consolidate or amalgamate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to a Person that is a direct or indirect wholly-owned subsidiary of the Guarantor, such Person’s assumption of the obligations hereunder and the release of the Company of its obligations hereunder, shall be effective immediately upon

delivery to the Holders of (A) an amendment to this Note Purchase Agreement pursuant to Section 12(a)(i) which shall be executed by such Person and the Guarantor (but shall not require execution by any Holder), and (B) an officers’ certificate and opinion of counsel pursuant to and in accordance with Section 12(a)(iii).”

5. Guarantee.

The following Sections 18.1 through and including Section 18.8 shall be added immediately after Section 17 of Schedule 2 to the Note Purchase Agreement, and shall hereinafter be deemed a part of the Note Purchase Agreement and applicable to the Outstanding Notes. The following definition shall apply to Section 18 of the Note Purchase Agreement, as amended hereby: “ Guarantor ” shall mean Validus Holdings, Ltd., a Bermuda exempted company.

Section 18.1. Guarantees.

(a) With respect to each series of Securities to which this Section 18 is expressly made applicable, the Guarantor hereby unconditionally and irrevocably guarantees to each Holder and its successors and assigns (i)(a) the full and punctual payment of principal and interest (including any Additional Interest) on the Securities of such Holder when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company to the Holders under this Note Purchase Agreement and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Note Purchase Agreement and the Securities and (ii) in the case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal (all of the foregoing being hereinafter collectively called the “ Guarantees ”).

(b) The Guarantor waives presentation to, demand of, payment from and protest to the Company of any of the Guarantees and also waives notice of protest for nonpayment. The Guarantor waives notice of any default under the Securities or the Guarantees. The Guarantees hereunder shall not be affected by (i) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Note Purchase Agreement, the Securities or any other agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Note Purchase Agreement, the Securities or any other agreement; (iv) the release of any security held by any Holder for the Guarantees or any of them; (v) the failure of any Holder to exercise any right or remedy against any other guarantor of the Guarantees or (vi) any change in the ownership of the Guarantor.

(c) The Guarantor further agrees that its Guarantees hereunder constitute a guarantee of payment, performance and compliance when due (and not a guarantee of collection).

(d) The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or failure to enforce the provisions of any Security or this Note Purchase Agreement, or any waiver, modification, consent or indulgence granted to the Company with respect thereto (unless the same shall also be provided the Guarantor), by the Holder of any Security, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or

guarantor; provided that, notwithstanding the foregoing, no such waiver, modification, indulgence or circumstance shall, without the consent of the Guarantor, increase the principal amount of a Security or the interest rate thereon or increase any premium payable upon redemption thereof. The Guarantees shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantees or otherwise. Without limiting the generality of the foregoing, the Guarantor covenants that the Guarantees shall not be discharged or impaired or otherwise affected by the failure of any Holder to assert any claim or demand or to enforce any remedy under this Note Purchase Agreement, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Guarantor or would otherwise operate as a discharge of the Guarantor as a matter of law or equity.

(e) The Guarantor further agrees that the Guarantees shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal, premium, if any, or interest on any Security is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

(f) In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against the Guarantor by virtue hereof, upon the failure of the Company to pay the principal of, premium on, if any, or interest on any Security when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other obligation under the Securities, the Guarantor hereby promises to and will, upon receipt of written demand by the Holders, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such obligations under such Securities, (ii) accrued and unpaid interest on such obligations under such Securities (but only to the extent not prohibited by law) and (iii) all other monetary obligations with respect to such Securities of the Company to the Holders.

(g) The Guarantor will be subrogated to all rights of the Holders against the Company in respect of any amount paid by the Guarantor pursuant to the provisions of the Guarantees; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of, premium on, if any, and interest on such Securities shall have been paid in full. The Guarantor further agrees that, as between it, on the one hand, and the Holders, on the other hand, (x) the maturity of the obligations with respect to the Securities hereby may be accelerated as provided herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations with respect to such Securities, and (y) in the event of any declaration of acceleration of such obligations as provided herein, the Guarantees (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Article XIII .

(h) The Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by any Holder in enforcing any rights under this Section 18 .

Section 18.2. Successors and Assigns.

This Section 18 shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Holders and, in the event of any transfer or assignment of rights by any Holder, the rights and privileges conferred upon that party in this Note Purchase Ageement and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Note Purchase Agreement.

Section 18.3. No Waiver.

Neither a failure nor a delay on the part of either the Holders in exercising any right, power or privilege under this Section 18 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Section 18 at law, in equity, by statute or otherwise.

Section 18.4. Modification.

No modification, amendment or waiver of any provision of this Section 18 , nor the consent to any departure by the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Holders of at least a majority of the Outstanding Securities, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstances.

Section 18.5. Notation of Guarantees Not Required.

The Guarantor hereby agrees that the Guarantees set forth in this Section 18 shall remain in full force and effect notwithstanding the absence on any Security of a notation relating to the Guarantees.

Section 18.6. Benefits Acknowledged.

The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Note Purchase Agreement and that the guarantees and waivers made by it pursuant to its Guarantees are knowingly made in contemplation of such benefits.

Section 18.7. Release of Guarantees.

Provided that no notice that an Event of Default has occurred and is continuing has been delivered to the Holders, the Guarantees shall be automatically and unconditionally released and discharged, and no further action by the Guarantor or the Company is required for the release of the Guarantees, upon the Company delivering to the Holders an Officers’ Certificate stating that the Guarantees are released in full.

Section 18.8 Limitation on Guarantor Liability.

The Guarantor, and by its acceptance of Securities, each Holder, hereby confirms that it is the intention of all such parties that the Guarantees of the Guarantor not constitute a fraudulent transfer

or conveyance for purposes of Title 11, U.S. Code or any similar federal, state or foreign law for the relief of debtors, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state or foreign law to the extent applicable to the Guarantees. To effectuate the foregoing intention, the Holders and the Guarantor hereby irrevocably agree that the obligations of the Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of the Guarantor that are relevant under such laws and after giving effect to any collections from, result in the obligations of the Guarantor under its Guarantees not constituting a fraudulent conveyance or fraudulent transfer under applicable law.

6. Subordination of Guarantees.

The following Sections 19.1 through and including Section 19.12 shall be added as a new Section 19 of the Note Purchase Agreement, and shall hereinafter be deemed a part of the Note Purchase Agreement and applicable to the Outstanding Notes.

Section 19.1. Securities Subordinate to Senior Debt of the Guarantor.

The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Section 19 , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities pursuant to the Guarantees are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor.

Section 19.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.

or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities pursuant to the Guarantees shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

Section 19.3. Payment Permitted If No Default.

Nothing contained in this Section 19 or elsewhere in this Note Purchase Agreement or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 19.2 or of any Proceeding referred to in Section 19.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Guarantees or (b) the application of any moneys deposited hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities pursuant to the Guarantees or the retention of such payment by the Holders, if, at the time of such application by the Holders, they did not have knowledge (in accordance with Section 19.8 ) that such payment would have been prohibited by the provisions of this Section 19 , except as provided in Section 19.8 .

Section 19.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.

Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Guarantor pursuant to the provisions of this Section 19 (equally and ratably with the holders of all indebtedness of the Guarantor that by its express terms is subordinated to Senior Debt of the Guarantor to substantially the same extent as the Guarantees are subordinated to the Senior Debt of the Guarantor and are entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Guarantor) to the rights of the holders of such Senior Debt of the Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities would be entitled under the Guarantees except for the provisions of this Section 19 , and no payments made pursuant to the provisions of this Section 19 to the holders of Senior Debt of the Guarantor by Holders of the Securities, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.

Section 19.5. Provisions Solely to Define Relative Rights.

The provisions of this Section 19 are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities under the Guarantees on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Section 19 or elsewhere in this Note Purchase Agreement or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor under the Guarantees, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any

premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities under the Guarantees and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Note Puchase Agreement, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Section 20 of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to such Holder.

Section 19.7. No Waiver of Subordination Provisions.

No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Note Purchase Agreement, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

Without in any way limiting the generality of paragraph (a) of this Section 19.7 , the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Section 19 or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.

Section 19.8. Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Guarantor referred to in this Article 19 , the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 19 .

7. Representations and Warranties. The Noteholders hereby represent and warrant that they collectively hold a majority of the Outstanding Securities.

8. Effectiveness and Operativeness. By executing this Amendment, each of the Noteholders shall be deemed to have delivered their Consent to this Amendment. This Amendment shall be

deemed to have become effective, and the provisions provided for in this Amendment shall be deemed to have become operative, immediately upon consummation of the Merger, provided, that:

(a) the Noteholders shall have executed one or more counterparts of this Amendment and shall have received a counterpart of this Amendment executed by the Successor Company; and

(b) the Noteholders shall have received the Officers’ Certificate and Opinion of Counsel described in the recitals of this Amendment.

9. Ratification of Note Purchase Agreement. Except as expressly amended hereby, the Note Purchase Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Amendment shall form a part of the Note Purchase Agreement for all purposes, and every Holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.

10. Governing Law. THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

11. Counterparts. The parties hereto may sign any number of copies of this Amendment. Each signed copy shall be an original, but all of them together represent the same agreement.

12. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction thereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.


	VALIDUS UPS, LTD.

	By:	/s/ Jeffrey D. Sangster

		Name: Jeffrey D. Sangster
		Title: Chief Financial Officer

	VALIDUS HOLDINGS, LTD.

	By:	/s/ Joseph E. Consolino

		Name: Joseph E. Consolino
		Title: President and Chief Financial Officer

[Signature Page to Amendment No. 2]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.


Dekania Europe CDO II, plc, as a Noteholder

By: Dekania Capital Management, LLC

	By:	/s/ Daniel G. Cohen

		Name: Daniel G. Cohen
		Title: President

Dekania Europe CDO III, plc, as a Noteholder

By: Cohen & Company Financial, LTD

	By:	/s/ Daniel G. Cohen

		Name: Daniel G. Cohen
		Title: Director

[Signature Page to Amendment No. 2]

Exhibit 4.16

Execution Version

NEITHER THIS WARRANT NOR THE SHARES OF VALIDUS HOLDINGS, LTD. (THE “COMPANY”) ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE REGISTERED HOLDER OF THIS WARRANT HAS AGREED THAT IT WILL NOT SELL, PLEDGE OR OTHERWISE TRANSFER THIS WARRANT EXCEPT TO AFFILIATES AND THAT NO SALE, PLEDGE OR OTHER TRANSFER OF THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE WITHOUT REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED.

IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF IS RESTRICTED BY, AND THE RIGHTS ATTACHING TO THESE SECURITIES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED HEREIN AND IN THE MEMORANDUM OF ASSOCIATION AND BYE-LAWS OF THE COMPANY, AS THEY MAY BE AMENDED FROM TIME TO TIME, WHICH ARE AVAILABLE FOR EXAMINATION AT THE REGISTERED OFFICE OF THE COMPANY.

VALIDUS HOLDINGS, LTD.

series f
SHARE PURCHASE WARRANT

Warrant No. F-1

This certifies that, for value received,

Leyton Limited

or its permitted assigns, are entitled, subject to the terms and conditions hereinafter set forth, to purchase the number of units of merger consideration (“ Units ”), set forth herein for the purchase price per Unit equal to the Exercise Price (as defined herein).

Upon delivery of this warrant (this “ Warrant ”) with the Purchase Form attached hereto duly executed, together with payment of the Exercise Price for the Units thereby purchased, at the registered office of Validus Holdings, Ltd., a Bermuda exempted company (the “ Company ”), or at such other address as the Company may designate by notice in writing to the registered holder hereof (the “ Holder ”), the Holder shall be entitled to be registered on the Register of Members of the Company as the holder of the Shares (as defined herein) so purchased and to receive a Share certificate or Share certificates for the Shares so purchased. All Shares issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens and charges with respect thereto.

This Warrant is subject to the following terms and conditions:

Section 1. Underlying Units; Exercise Price

1.1 Number of Units . Subject to adjustment in accordance with the provisions of Section 8 hereof, this Warrant shall be exercisable for 630,194 units of merger consideration (“ Units ”), with each such Unit consisting of (1) 0.1935 duly authorized, validly issued, fully paid and non-assessable voting common shares, par value $0.175 per share, of the Company (the “ Shares ”) and (2) an amount in cash equal to US$2.00, without interest.

1.2 Exercise Price . This Warrant shall be exercisable for a price of $13.96 per Unit (the “ Exercise Price ”).

1.3 Legend . The Shares issuable upon exercise of this Warrant shall be in such form, and shall include such legends and restrictions on transfer, as the Company shall deem necessary or appropriate at the time of exercise in order to comply with the Company’s Memorandum of Association and Bye-Laws, as amended from time to time, and applicable law and regulation.

Section 2. Term of Warrant; Conditions on Exercise

2.1 Term . Subject to the terms of this Warrant, the Holder shall have the right, at any time during the period (such period, the “ Term ”) commencing on 12:00 a.m., New York time, on 1 December, 2013 and ending at 5:00 p.m., New York time, on 31 December, 2013 (the “ Termination Date ”), to purchase from the Company the number of Units to which the Holder may at the time be entitled to purchase pursuant to this Warrant, upon surrender to the Company at its registered office of this Warrant certificate, together with the Purchase Form attached hereto duly completed and signed, and upon payment to the Company of the aggregate Exercise Price for the number of Units in respect of which this Warrant is then being exercised. Payment of the aggregate Exercise Price shall be made on the date of exercise in cash, or by certified or cashier’s check, or a combination thereof. This Warrant shall terminate and expire to the extent not fully exercised on or prior to the Termination Date.

Section 3. Exercise of Warrant

3.1 Exercise . Upon surrender of this Warrant and payment of the Exercise Price the Company shall (1) cause the issue of the Shares purchased upon the exercise of this Warrant to be registered in the Register of Members of the Company and shall issue and cause to be delivered with all reasonable dispatch, to or upon the written order of the Holder and (subject to the restrictive legends on the first page of this Warrant) in such name or names as the Holder may designate, a certificate or certificates for the number of full Shares so purchased upon the exercise of this Warrant, together with cash, as provided in Section 9 hereof, in respect of any fractional Shares otherwise issuable upon such surrender and (2) cause to be delivered with all reasonable dispatch to the Holder, or upon the written order of the Holder to such person or persons as the Holder may designate, an amount in cash equal to US$2.00 per Unit, without interest, for the number of Units so purchased upon the exercise of this Warrant, together with cash in lieu of fractional shares in the amount calculated pursuant to Section 9. The rights of purchase represented by this Warrant shall be exercisable, at the election of the Holder, either in full or from time to time in part and, in the event that this Warrant is exercised in respect of fewer than all of the Units at any time prior to the date of expiration of this Warrant, a new Warrant certificate to purchase the remaining Units will be issued.

Section 4. Transferability and Form of Warrant

4.1 Registration . This Warrant is numbered and registered in the books of the Company. The Company shall be entitled to treat the Holder as the sole owner of this Warrant for all purposes and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person, and shall not be liable for any registration of transfer of this Warrant which is to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration of transfer.

4.2 Transfer . This Warrant shall not be transferable by the Holder other than to an Affiliate (as such term is defined in the Company’s Bye-Laws). In addition, this Warrant shall be transferable only in the books of the Company maintained at its registered office and subject to the restrictive legends on the first page of this Warrant and to the Memorandum of Association and Bye-Laws of the Company, as amended from time to time, upon delivery of this Warrant either duly endorsed by the Holder or by the Holder’s duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases of transfer by an attorney, the original letter of attorney, duly approved, or an official copy thereof, duly certified, shall be deposited and remain with the Company. In case of transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced, and may be required to be deposited and remain with the Company in its discretion. Upon any registration of transfer, the Company shall execute and deliver a new Warrant to the person entitled thereto.

Section 5. Payment of Taxes

The Company will pay all documentary stamp duties and taxes, if any, attributable to the initial issuance of Shares upon the exercise of this Warrant; provided that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in such issuance.

Section 6. Mutilated or Missing Warrant

In case the certificate evidencing this Warrant shall be mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue and deliver in exchange and substitution for and upon cancellation of this certificate if it is mutilated, or in lieu of and substitution for this certificate if it is lost, stolen or destroyed, a new Warrant certificate of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of this Warrant and indemnity, if requested, also satisfactory to the Company. Applicants for such substitute Warrant certificate shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe.

Section 7. Purchase by the Company

The Company shall have the right, except as limited by law, other agreements or herein, to purchase or otherwise acquire this Warrant at such times, in such manner and for such consideration as it may deem appropriate and as shall be agreed with the Holder of this Warrant in its sole discretion.

Section 8. Adjustment of Exercise Price and Number of Shares

8.1 Adjustments. The Exercise Price and the number and kind of Shares per Unit purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the happening of certain events, as follows:

(a) In case the Company shall (i) pay a dividend in Shares or make a distribution in Shares, (ii) subdivide its issued Shares, (iii) consolidate its issued Shares into a smaller number of Shares or (iv) issue by reclassification of its Shares other securities of the Company, the number of Shares or other securities of the Company purchasable upon exercise of this Warrant shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive the kind and number of Shares or other securities of the Company per Unit which he would have owned or have been entitled to receive immediately following any such event had he fully exercised this Warrant immediately prior to any such event or any record date with respect thereto. An adjustment made pursuant to this paragraph (a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

(b) In case the Company shall issue rights, options or warrants to all or substantially all holders of its Shares, without any charge to such holders, entitling them to subscribe for or purchase Shares at a price per Share which is lower at the record date mentioned below than the then current book value of the Company (“ Book Value ”) per Share, the number of Shares thereafter purchasable upon the exercise of this Warrant immediately prior thereto shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive the number of Shares per Unit determined by multiplying the number of Shares per Unit theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the number of Shares outstanding on the date of issuance of such rights, options or warrants plus the number of additional Shares offered for subscription or purchase, and of which the denominator shall be the number of Shares outstanding on the date of issuance of such rights, options or warrants plus the number of Shares which the aggregate offering price of the total number of Shares so offered would purchase at such Book Value. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective retroactively immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants.

(c) In case the Company shall distribute to all or substantially all holders of its Shares evidences of its indebtedness or assets (excluding cash dividends or distributions out of earnings) or rights, options or warrants or convertible securities containing the right to subscribe for or purchase Shares (excluding those referred to in paragraph (b) above), then in each such case the number of Shares purchasable per Unit upon the exercise of this Warrant immediately prior thereto shall be adjusted so that upon exercise of this Warrant the Holder of this Warrant shall be entitled to receive, for the same Exercise Price, the number of Shares determined by multiplying the number of Shares theretofore purchasable upon exercise of this Warrant by a fraction, of which the numerator shall be the then current Book Value of the Company on the date of such distribution, and of which the denominator shall be such current Book Value of the Company, less the then fair value (as determined by the Board of Directors of the Company, whose determination shall be conclusive) of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible securities, as

applicable. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution.

(d) No adjustment in the number of Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least 1 percent in the number of Shares purchasable per Unit upon the exercise of this Warrant; provided that any adjustments which by reason of this paragraph (d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(e) Whenever the number of Shares per Unit purchasable upon the exercise of this Warrant is adjusted as herein provided, the Exercise Price per Unit payable upon exercise of this Warrant shall, as and to the extent necessary to result in an equitable adjustment to this Warrant, be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Shares purchasable per Unit upon the exercise of this Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Shares so purchasable per Unit immediately thereafter.

(f) When the number of Shares purchasable per Unit upon the exercise of this Warrant or the Exercise Price is adjusted as herein provided, the Company shall promptly mail to the Holder by first class mail, postage prepaid, notice of such adjustment or adjustments setting forth the number of Shares purchasable per Unit upon the exercise of this Warrant and the Exercise Price of such Units after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made.

(g) For the purpose of this subsection 8.1, the term “Shares” shall mean (i) the class of shares designated as the Shares of the Company on the date of this Warrant, or (ii) any other class of shares resulting from successive changes or reclassifications of such shares consisting solely of changes in par value. In the event that at any time, as a result of an adjustment made pursuant to this subsection 8.1, the Holder shall become entitled to purchase any shares of the Company other than Shares, thereafter the number of such other shares so purchasable upon exercise of this Warrant, and the Exercise Price, shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Shares contained in paragraphs (a) through (f), inclusive, above, and the provisions of Sections 2 and 3 and subsections 8.2 through 8.4, inclusive, with respect to the shares shall apply on like terms to any such other shares.

(h) Upon the expiration of any rights, options, warrants or conversion privileges, if any thereof shall not have been exercised, the number of Shares purchasable per Unit upon exercise of this Warrant and payment of the Exercise Price, to the extent this Warrant shall not then have been exercised, shall, upon such expiration, be readjusted and shall thereafter be such as they would have been had it been originally adjusted (or had the original adjustment not been required, as the case may be) on the basis of (1) the only Shares so issued were the Shares, if any, actually issued or sold upon the exercise of such rights, options, warrants or conversion rights and (2) such Shares, if any, were issued or sold for the consideration actually received by the Company for the issuance, sale or grant of all of such rights, options, warrants or conversion rights, whether or not exercised; provided that no such readjustment shall have the effect of increasing the Exercise Price by an amount in excess of the amount of the adjustment initially

made in respect of the issuance, sale or grant of such rights, options, warrants or convertible rights.

8.2 Adjustment for Cash Dividends . In case the Company shall pay a dividend in cash or make a distribution in cash in respect of the Shares, the Exercise Price per Unit payable upon exercise of this Warrant shall be adjusted and reduced by the amount of such dividend payment. This section shall be effective as of the date of effectiveness of this Warrant pursuant to Section 15 hereof.

8.3 No Adjustment in Certain Cases . No adjustments shall be made pursuant to this Section 8, in connection with the issuance of any Shares (or securities convertible into Shares) as consideration for the acquisition by the Company of assets or equity interests in any business entity.

8.4 Preservation of Purchase Rights upon Reclassification, Consolidation, etc . In case of any consolidation of the Company with or amalgamation or merger of the Company into another legal entity or in case of any sale or conveyance to another legal entity of the property, assets or business of the Company as an entirety or substantially as an entirety, the Company or such successor or purchasing entity, as the case may be, shall execute an agreement with the Holder that the Holder shall have the right thereafter upon payment of the Exercise Price in effect immediately prior to such action to purchase upon exercise of this Warrant the kind and amount of Units and other securities and property which he would have owned or have been entitled to receive after the happening of such consolidation, amalgamation, merger, sale or conveyance had this Warrant been exercised immediately prior to such action. Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8. The Company shall mail an executed copy of any such agreement by first class mail, postage prepaid, to the Holder. The provisions of this subsection 8.4 shall similarly apply to successive consolidations, mergers, sales, or conveyances.

Section 9. Fractional Interests

The Company shall not be required to issue fractional Shares on the exercise of this Warrant. If any fraction of a Share would, except for the provisions of this Section 9, be issuable on the exercise of this Warrant (or specified portion thereof), the Company shall pay an amount in cash, without interest, in lieu of any fractional share to which the Holder may be entitled in an amount equal to the product of (a) the fractional Share interest to which the Holder would otherwise be entitled hereunder multiplied by (b) the closing price of Shares on the New York Stock Exchange (“ NYSE ”) or applicable trading market, on the day of exercise or, if such day is not a trading day on the NYSE or applicable trading market, the most recent trading day prior to such day of exercise.

Section 10. No Right to Vote as Shareholders; Notices to Holder

Nothing contained in this Warrant shall be construed as conferring upon the Holder or the Holder’s transferees the right to vote or to consent or to receive notice as shareholders in respect of any meeting of shareholders for the election of directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur:

(a) any action which would require an adjustment pursuant to subsection 8.1 or 8.4, or

(b) a dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation, amalgamation, merger, or sale of all or substantially all of its property, assets, and business as an entirety) shall be proposed;

the Company shall in each such case give notice in writing of such event to the Holder as provided in Section 11 hereof. Failure to publish or mail such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any such action.

Section 11. Notices

(a) Any notice to the Company pursuant to this Warrant shall be in writing and shall be deemed to have been duly given if delivered or mailed certified mail, return receipt requested, to the Company at 29 Pembroke Road, Pembroke HM08, Bermuda, Attn: General Counsel. The Company may from time to time change the address to which such notices are to be delivered or mailed hereunder by notice to the Holder in accordance with paragraph (b) below.

(b) Any notice pursuant to this Warrant by the Company to the Holder shall be in writing and shall be deemed to have been duly given upon receipt by the Holder, if mailed, or upon confirmation of delivery at the Holder’s address, in the books of the Company if sent by courier.

Section 12. Supplements and Amendments

The Company may from time to time supplement or amend this Warrant, without the approval of the Holder, in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem necessary or desirable and which shall not be inconsistent with the provisions of this Warrant and which shall not adversely affect the interest of the Holder. Any other amendment to this Warrant may be made only by a written instrument executed by the Company and the Holder.

Section 13. Successors

All the covenants and provisions of this Warrant by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and permitted assigns hereunder.

Section 14. Applicable Law

This Warrant shall be deemed to be a contract made under the laws of Bermuda and for all purposes shall be construed in accordance with the laws thereof.

Section 15. Effectiveness

This Warrant shall be deemed to be effective at the Final Effective Time as such term is defined in the Agreement and Plan of Merger (the “ Merger Agreement ”), dated as of August 30, 2012, by and among Flagstone Reinsurance Holdings, S.A., a Luxembourg société anonyme , Flagstone Reinsurance Holdings (Bermuda) Limited, a Bermuda exempted company, the

Company and Validus UPS, Ltd., a Bermuda exempted company, and shall be void and of no force or effect in the event the Merger Agreement is terminated pursuant to its terms prior to the Final Effective Time. This Warrant supersedes and replaces in their entirety any warrants previously issued to Leyton Limited by Flagstone Reinsurance Holdings, S.A. or any of its predecessors.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its authorized representative.

Date: 30 November, 2012

validus holdings, ltd.

By:	/s/ Robert F. Kuzloski
	Name: Robert F. Kuzloski
	Title: Executive Vice President & General Counsel

ATTEST:

By:	/s/ David Brown
		Name: David Brown
		Title: Director, Leyton Limited

ACKNOWLEDGED AND AGREED:

FLAGSTONE REINSURANCE HOLDINGS, S.A.

By:	/s/ William Fawcett
		Name: William Fawcett
		Title: General Counsel and Corporate Secretary

validus holdings, ltd.

series f
SHARE PURCHASE WARRANT

PURCHASE FORM

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, ______________ units of merger consideration (the “ Units ”) provided for therein, and requests that certificates for the Shares (as defined in the Warrant) be issued in the name of:

(Please Print or Type Name, Address and Social Security Number)

and, if said number of Units shall not be all the Units purchasable hereunder, that a new Warrant Certificate for the balance of the unpurchased Units be registered in the name of the undersigned Warrantholder as below indicated and delivered to the address stated below:

(Please Print)

Dated:

Name of Warrantholder:

Address:



Signature:

Note: The above signature must correspond with the name as written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever.

Signature Guaranteed:

(Signature must be guaranteed by a bank or trust company having an office or correspondent in the United States or by a member firm of a registered securities exchange or the Financial Industry Regulatory Authority, Inc.)

Validus Holdings, Ltd.

29 Richmond Road

Pembroke, HM 08 Bermuda

VALIDUS COMPLETES ACQUISITION OF FLAGSTONE REINSURANCE HOLDINGS, S.A.

Transaction Strengthens Validus’ Leading Property Catastrophe Reinsurance and Short-tail Specialty
Reinsurance Platform

Pembroke, Bermuda – November 30, 2012 – Validus Holdings, Ltd. (“Validus”) (NYSE: VR) today announced that it has completed its acquisition of Flagstone Reinsurance Holdings, S.A. (“Flagstone”) (NYSE: FSR), strengthening Validus’ leading property catastrophe reinsurance and short-tail specialty insurance platform.

Ed Noonan, Validus’ Chairman and Chief Executive Officer, stated, “The acquisition of Flagstone solidifies our position as one of the largest catastrophe reinsurance underwriters in the world, with a $4 billion shareholder’s equity base. Our ability to combine deep research and analytical skills with responsive underwriting through our traditional reinsurance, sidecars and top layer facility continues to differentiate us with clients and brokers. The addition of the Flagstone portfolio gives us the ability to meaningfully expand our business. We are underway integrating the Flagstone portfolio and will be well-situated to serve our brokers and clients on a combined basis for the January 1 renewal season.”

Pursuant to the merger agreement with Flagstone, former shareholders of Flagstone will receive $2.00 in cash and 0.1935 Validus voting common shares for each Flagstone share. Effective as of prior to the opening of trading today, Flagstone shares have ceased trading.

About Validus Holdings, Ltd.

Validus Holdings, Ltd. is a provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (“Validus Re”) and Talbot Holdings Ltd. (“Talbot”). Validus Re is a Bermuda based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyd’s insurance market through Syndicate 1183.

This press release may include forward-looking statements, both with respect to Validus and Flagstone and their industry, that reflect their current views with respect to future events and financial performance. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may,” “would” and similar statements of a future or forward-looking nature identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Validus’ and Flagstone’s control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements. Validus believes that these factors include, but are not limited to, the following: 1) unpredictability and severity of catastrophic events; 2) issues relating to claims and coverage that may emerge from changing industry practices or changing legal, judicial, social or other environmental conditions; 3) rating agency actions; 4) adequacy of Validus’ and Flagstone’s risk management and loss limitation methods; 5) competition in the insurance and reinsurance markets; 6) cyclicality of demand and pricing in the insurance and reinsurance markets; 7) adequacy of Validus’ and Flagstone’s respective loss reserves; 8) the estimates and judgments that Validus and Flagstone use in preparing their respective financial statements, which are more difficult to make than if Validus and Flagstone were mature companies; 9) retention of key personnel; 10) potential conflicts of interest with Validus’ and Flagstone’s respective officers and directors; 11) continued availability of capital and financing; 12) potential loss of business from one or more major insurance or reinsurance brokers; 13) the credit risk that each of Validus and Flagstone assume through their dealings with their respective insurance and reinsurance brokers; 14) Validus’ and Flagstone’s respective ability to implement, successfully and on a timely basis, complex infrastructure, distribution capabilities, systems, procedures and internal controls, and to develop accurate actuarial data to support the business and regulatory and reporting requirements; 15) the risk that Validus and Flagstone could be bound to policies that contravene their respective underwriting guidelines by managing general agents and other third parties who support certain of their businesses; 16) availability of reinsurance and retrocessional coverage; 17) the effect on Validus’ and Flagstone’s investment portfolios of changing financial market conditions including inflation, interest rates, liquidity and other factors; 18) the impact of currency fluctuations on Validus’ and Flagstone operating results; 19) the impact of heightened European sovereign debt risk on Validus’ and Flagstone’s fixed income portfolios; 20) the integration of Flagstone or other businesses Validus may acquire or new business ventures Validus may start; 21) the legal,

regulatory and tax regimes under which Validus and Flagstone operate; and 22) acts of terrorism or outbreak of war, as well as management’s response to any of the aforementioned factors.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors included in Validus’ most recent reports on Form 10-K and Form 10-Q and the risk factors included in Flagstone’s most recent reports on Form 10-K and Form 10-Q and other documents of Validus and Flagstone on file with the Securities and Exchange Commission (“SEC”). In addition to the risks described above, risks and uncertainties relating to the proposed mergers are more fully discussed in the definitive proxy statement/prospectus that was filed with the SEC on October 23, 2012. Any forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Validus will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Validus or its business or operations. Each forward-looking statement speaks only as of the date of the particular statement and, except as may be required by applicable law, Validus undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The contents of any website referenced in this press release are not incorporated by reference herein. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Contacts :

Investors:
Validus Holdings, Ltd.
Jon Levenson, Executive Vice President
+1-441-278-9000

or
Media:
Brunswick Group
Greg Faje / Beau Allen
+1-212-333-3810