Flagstone Reinsurance Holdings, S.A. (Form: 8-K, Received: 05/19/2010 15:05:50)

AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

THIS AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT (this “ Agreement ”) of Flagstone Reinsurance Holdings, S.A., a Luxembourg company (the “ Company ”) amends, restates and replaces the Amended and Restated Shareholders’ Agreement (the “ Prior Agreement ” ) , dated as of November 15, 2006, between Flagstone Reinsurance Holdings Limited (the Bermuda predecessor to the Company) and the investors listed on Exhibit A thereto (the “ Shareholders ”), pursuant to Section 6.4 of the Prior Agreement which permits the Company to make the amendments contained herein.

SUMMARY

The Company has filed a Registration Statement on Form S-1, Registration No. 333-138182 (the “ Registration Statement ”), with the U.S. Securities and Exchange Commission under the U.S. Securities Act of 1933, as amended (the “ Securities Act ”) to register an underwritten initial public offering of its common shares.

The Company and the Shareholders were parties to a Shareholders’ Agreement dated as of December 20, 2005, as amended by Amendment No. 1 thereto dated as of February 1, 2006 (the “ Shareholders’ Agreement ”), and the Company and the Shareholders amended and restated and replaced the Shareholders’ Agreement in its entirety with the Prior Agreement, effective simultaneously with the closing of the initial public offering contemplated by the Registration Statement (the “ Effective Time ”).

The Company changed its place of organization from Bermuda to Luxembourg on May 17, 2010 through a redomestication. In connection with such redomestication, the Company is amending, restating and replacing the Prior Agreement with this Agreement.

The Company and the Shareholders therefore agree, effective as of the Effective Time, that the Shareholders’ Agreement is hereby amended and restated as follows:

ARTICLE I

DEFINITIONS

In this Agreement, the following terms have the following meanings:

“ Act ” means the Luxembourg Law of 1915, as amended on Commercial Companies.

“ Articles ” means the Company’s Articles of Incorporation dated May [●], 2010.

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For the purpose of this definition, the term “control” (including, with correlative meaning, the terms “controlling,” “controlled by,” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Board ” means the board of directors of the Company from time to time duly appointed or elected in accordance with the Articles.

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

“ Confidential Information ”, as to each Shareholder, means all information as to the practice, business dealings or affairs of the Company, its Affiliates or their respective customers and clients which may come to the knowledge of such Shareholder by reason of his status as a Shareholder or as a director, officer or employee of the Company or any of its Affiliates; provided, however, that Confidential Information shall not include information which the Shareholder possessed prior to entering into this Agreement or that is or becomes publicly available other than by a breach by such Shareholder of this Agreement.

“ Effective Time ” has the meaning set forth in the Summary of this Agreement.

“ Equity Securities ” means any shares of the share capital of the Company, any securities convertible into or exchangeable for shares of the share capital of the Company, and any options, warrants, and other rights to purchase or otherwise acquire from the Company shares of such share capital, or securities convertible into or exchangeable for shares of such share capital.

“ Flagstone ” means Flagstone Reassurance Suisse SA (successor to Flagstone Reinsurance Limited), a Subsidiary of the Company.

“ Person ” means any individual or entity.

“ Register ” and “ Registration ” mean registration under the Securities Act of an offering of securities.

“ Registrable Securities ” shall mean all shares of Equity Securities held by a Shareholder party to this Agreement unless (i) they have been effectively registered under Section 5 of the Securities Act and disposed of pursuant to such an effective registration statement, or (ii) all of such shares may be freely sold and transferred during a three-month period pursuant to Rule 144 under the Securities Act (excluding Rule 144(k)) or any successor rule.

“ Registration Expenses ” shall mean all expenses incurred by the Company in complying with Article IV (“Registration”) of this Agreement, including, without limitation, all federal and state registration, qualification and filing fees and expenses, printing, messenger and delivery expenses, fees and disbursements of counsel and accountants for the Company, Blue Sky fees and expenses (which fees and expenses shall be deemed to include all fees and expenses of the Company arising out of filings required by, and all other costs and expenses incident to compliance with, state securities laws, rules and regulations), application and filing fees and expenses in connection with securities exchanges and the expense of any special audits or comfort letters incident to or required by any such registration.

“ Registration Statement ” has the meaning set forth in the Summary of this Agreement.

“ Representatives ” means the Representatives of the Underwriters named in Schedule A to the Underwriting Agreement executed in connection with the initial public offering of the Company’s common shares.

“ Securities Act ” has the meaning set forth in the Summary of this Agreement.

“ Shareholders’ Agreement ” has the meaning set forth in the Summary of this Agreement.

“ Shares ” means shares of the Company, par value $0.01 per share.

“ Subsidiary ” means any entity of which a majority of the Voting Power in electing the board of directors or equivalent body are, at the time as of which any determination is being made, owned by the Company, either directly or indirectly through Subsidiaries.

“ Transfer ” means, with respect to the Shares, to sell, assign, give, pledge, charge, encumber, create a trust over, or otherwise dispose of, either voluntarily or involuntarily and with or without consideration, the Shares or any voting rights or other interest therein.

“ Underwriting Agreement ” means the agreement among the Company and the Representatives relating to the initial public offering of the Company’s Shares.

“ Voting Shares ” of any entity means the shares of share capital of the entity or other equity interests of the entity entitled to vote for the election of directors of such entity or comparable governing body of such entity.

“ Voting Power ” of any Person means the total number of votes which may be cast by the Shareholders of the total number of outstanding Voting Shares of such Person.

ARTICLE II

MATTERS RELATING TO THE SHAREHOLDERS

2.1 Unanimous Shareholder Approval . In addition to any vote of the Shareholders required by the Act or the Articles, none of the actions listed below shall be taken by the Company without approval by the Board and the holders of all of the Shares then in issue:

(a) amending the voting rights of the Shares; or

(b) amending the dividend rights of the Shares.

ARTICLE III

MARKET STAND-OFF

3.1 Lock-Up Agreement .

Each Shareholder agrees to (i) execute and deliver the lock-up letter agreement (the “ Lock-Up Agreement ”) in substantially the form attached hereto as Exhibit B in accordance with the terms of the Underwriting Agreement and (ii) unless otherwise consented to in writing by the Company and the other Shareholders, abide by the terms of the Lock-Up Agreement for the period specified therein (the “ Lock-Up Period ”).

ARTICLE IV

REGISTRATION

4.1 Demand Registrations .

(a) Requests for Registration . On or after the day following the last day of the Lock-Up Period, the holders of Registrable Securities representing at least ten million Shares of the Company, which number of Shares is subject to adjustment in the sole discretion of Board in the event of a share split, consolidation or similar event, may request registration under the Securities Act of all or any portion of such Registrable Securities (the “ Initial Demand Registration ”). Following the Initial Demand Registration, the holders of Registrable Securities representing at least five million Shares of the Company, which number of Shares is subject to adjustment in the sole discretion of Board in the event of a share split, consolidation or similar event, may request registration under the Securities Act of all or any portion of such Registrable Securities (each a “ Subsequent Demand Registration ”; together with the Initial Demand Registration, the “ Demand Registrations ”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all holders of Registrable Securities and, subject to paragraph (c) below, will include in such registration, in addition to the Registrable Securities that are requested to be registered pursuant hereto, all other Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

(b) Long Form Registrations . The holders of Registrable Securities shall be entitled to request no more than five Demand Registrations pursuant to this Section, up to three of which may be requested within the period beginning the day after the last day of the Lock-Up Period and ending twenty four months thereafter. All Demand Registrations shall be underwritten registrations.

(c) Marketing Limitation in Demand Registrations . The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such registration. In the event the managing underwriter(s) of a Demand Registration advise the Shareholders seeking registration of Registrable Securities pursuant to this Section in writing that market factors (including, without limitation, the aggregate number of shares of Shares requested to be Registered, the general condition of the market, and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of Shares to be offered to the public, the managing underwriter(s) may reduce the number of Registrable Securities requested to be included in such registration to the number that in the opinion of such managing underwriter(s) (expressed in writing) can be sold without adverse effect. Any such reduction in the number of Registrable Securities to be included in a registration shall be effected with respect to the Shareholders pro rata in proportion to the total number of Registrable Securities owned by each Shareholder at the time of such registration.

(d) Restrictions on Demand Registrations . The Company may postpone, for up to three months (from the date of the request), the filing or the effectiveness of a registration statement for a Demand Registration if there exists at such time material nonpublic information relating to the Company that the Company’s Board believes (in good faith) should not be publicly disclosed, or if an underwritten public offering is contemplated in which Registrable Securities would be included; provided, however, that in such event, the holders of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall be treated as if it had never been made in the first instance, and the Company will pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only once in any 12-month period.

(e) Selection of Underwriters . The holders of a majority of the Registrable Securities initially requested to be included in a Demand Registration will have the right to select the investment bankers and managing underwriter(s) to administer the offering under such Demand Registration, subject to the Company’s approval, which will not be unreasonably withheld.

4.2 Piggyback Registration .

(a) Notice . Subject to the terms of this Agreement, in the event the Company chooses at any time no less than three months following the Effective Time to Register any of its Shares on a form that is suitable for a Registration involving Registrable Securities, the Company will: (i) promptly give each Shareholder written notice (the “ Company Notice ”) thereof, and (ii) include in such Registration (and any related qualification under Blue Sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request delivered to the Company by any Shareholder within 15 days after delivery of the Company Notice.

(b) Underwriting in Piggyback Registration . If the Company Notice relates to an underwritten public offering, the Company shall so advise the Shareholders in the Company Notice. In such event the right of any Shareholder to Registration shall be conditioned upon the inclusion of such Shareholder’s Registrable Securities in such underwritten public offering to the extent provided in this Section. All Shareholders proposing to distribute their securities through such underwriting shall (together with the Company and any other Shareholders participating in such offering) enter into an underwriting agreement for such offering. The Company shall select the underwriter(s).

(c) Marketing Limitation in Piggyback Registration . In the event the managing underwriter(s) of a Piggyback Registration advise the Shareholders seeking registration of Registrable Securities pursuant to this Section in writing that market factors (including, without limitation, the aggregate number of shares of Shares requested to be Registered, the general condition of the market, and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of shares to be offered to the public, the managing underwriter(s) may reduce the number of Registrable Securities to be Registered by the Shareholders to the number that in the opinion of such managing underwriter(s) (expressed in writing) can be sold without adverse effect; provided, however, that the managing underwriter(s) shall in no event reduce the number of Registrable Securities to be registered by the Shareholders to less than 25% of the aggregate number of Shares to be offered in such offering. Any such reduction in the number of Registrable Securities to be included in such Registration shall be effected with respect to the Shareholders pro rata in proportion to the total number of Shares owned by each Shareholder at the time of such registration.

(d) Withdrawal in Piggyback Registration . If any Shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter delivered at least 7 business days prior to the effective date of the Registration Statement as disclosed to such Shareholder by the Company.

4.3 Blue Sky . In the event of any Registration of Registrable Securities pursuant to this Article, the Company shall use commercially reasonable efforts to qualify the securities covered by the Registration Statement under the Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the distribution of such securities; provided, however, that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

4.4 Indemnities . In the event of any Registration of Registrable Securities pursuant to this Article:

(a) Indemnity by the Company . The Company will indemnify and hold harmless, to the fullest extent permitted by law (including the Act), any Shareholder and any underwriter for such Shareholder, and each person, if any, who controls the Shareholder or such underwriter, from and against any and all losses, damages, claims, liabilities, joint or several, costs and expenses (including any amounts paid in any settlement effected with the Company’s consent) to which the Shareholder or any such underwriter or controlling person may become subject under applicable law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the registration statement or included in the prospectus, as amended or supplemented, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they are made, not misleading, and the Company will reimburse the Shareholder, such underwriter and each such controlling person of the Shareholder or the underwriter, promptly upon demand, for any reasonable legal or any other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; provided, however, that the Company will not be liable to any such Shareholder, underwriter or controlling person in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based solely upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing by such Shareholder, such underwriter or such controlling persons in writing specifically for inclusion therein; provided, further, that this indemnity shall not be deemed to relieve any underwriter of any of its due diligence obligations; provided, further, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the selling Shareholder, the underwriter or any controlling person of the selling Shareholder or the underwriter, and regardless of any sale in connection with such offering by the selling Shareholder. Such indemnity shall survive the transfer of securities by a selling Shareholder.

(b) Indemnity by the Selling Shareholders . Each Shareholder participating in a registration hereunder will, severally and not jointly, indemnify and hold harmless the Company, any underwriter for the Company, and each person, if any, who controls the Company or such underwriter, from and against any and all losses, damages, claims, liabilities, costs or expenses (including any amounts paid in any settlement effected with the selling Shareholder’s consent) to which the Company or any such controlling person and/or any such underwriter may become subject under applicable law or otherwise, insofar as such losses, damages, claims, liabilities (or actions or proceedings in respect thereof), costs or expenses arise out of or are based solely on (i) any untrue or alleged untrue statement of any material fact contained in the registration statement or included in the prospectus, as amended or supplemented, or (ii) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, and each such Shareholder will reimburse the Company, any underwriter and each such controlling person of the Company or any underwriter, promptly upon demand, for any reasonable legal or other expenses incurred by them in connection with investigating, preparing to defend or defending against or appearing as a third-party witness in connection with such loss, claim, damage, liability, action or proceeding; provided, however, that the indemnity in this subsection (b) is limited in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in strict conformity with written information furnished by such Shareholder specifically for inclusion therein. The foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement (or alleged untrue statement) or omission (or alleged omission) made in the preliminary prospectus but eliminated or remedied in the amended prospectus at the time the registration statement becomes effective or in the final prospectus, such indemnity agreement shall not inure to the benefit of the Company or any underwriter, or any of their controlling persons, if a copy of the final prospectus was not furnished to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act; provided, further, that this indemnity shall not be deemed to relieve any underwriter of any of its due diligence obligations; provided, further, that the indemnity agreement contained in this subsection shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Shareholders, as the case may be, which consent shall not be unreasonably withheld. In no event shall the liability of a Shareholder exceed the gross proceeds (net of underwriting discounts and commissions) from the offering received by such Shareholder.

(c) Indemnity Procedures . Promptly after receipt by an indemnified party of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party will, if a claim thereof is to be made against the indemnifying party, promptly notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than hereunder. In case such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided however, that if the defendants in any action include both the indemnified party and the indemnifying party and there is a conflict of interests which would prevent counsel for the indemnifying party from also representing the indemnified party, the indemnified party or parties shall have the right to select one separate counsel to participate in the defense of such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action and within 15 days after written notice of the indemnified party’s intention to employ separate counsel pursuant to the previous sentence, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. The indemnifying party shall give the indemnified party at least 20 days (or such shorter period as shall reasonably be required under the circumstances) notice of any proposed settlement, together with true and correct copies of any proposed settlement.

(d) Insufficiency of Indemnities . If the indemnification provided for in this Section is unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) then each indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Shareholders on the other from the offering. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and the Shareholders on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Shareholders on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting Registration Expenses) received by the Company bears to the total net proceeds from the offering received by the Shareholders. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Shareholders on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Shareholders agree that it would not be just and equitable if contributions pursuant to this Section were determined by pro rata allocation (even if the Shareholders were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this Section. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section, (i) no Shareholder shall be required to contribute any amount in excess of the gross proceeds of the offering to such Shareholder, net of underwriting discounts or commissions and (ii) 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. The Shareholders’ obligations in this Section to contribute are several in proportion to their respective underwriting obligations and not joint.

4.5 Obligations of the Company . Whenever required under this Agreement to effect the registration of any Registrable Securities pursuant to this Article, the Company shall as promptly as practicable:

(a) Registration Statement . Prepare and file with the SEC, and if appropriate, with the Registrar of Companies in Bermuda, a registration statement with respect to such Registrable Securities and use commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Shareholders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to ninety days or, if sooner, until the distribution contemplated in such registration statement has been completed.

(b) Amendments . Prepare and file with the SEC, and if appropriate, with the Registrar of Companies in Bermuda, such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement.

(c) Prospectus . Furnish to the Shareholders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(d) Underwriting Agreement . In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Shareholder participating in such underwriting shall also enter into and perform its obligations under such an underwriting agreement. If permitted by the managing underwriter(s), the Shareholders may, at their option, require that any or all of the conditions precedent to the obligations of the underwriters under such underwriting agreement be conditions precedent to the obligations of such Shareholders. If permitted by the managing underwriter(s), the Shareholders shall not be required to make any representations or warranties to or agreement with the Company or the underwriters other than the representations, warranties or agreements regarding the Shareholders, the Shareholders’ right, title and interest in the Registrable Securities and the Shareholders’ intended method of distribution or any other representations or warranties required by law.

(e) Prospectus Notice . Promptly notify each Shareholder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act and/or the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and the Company agrees to prepare and furnish to the Shareholders a post-effective amendment to the registration statement or supplement to the prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the prospectus will not contain an untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances underlying such statements.

(f) Listing . Cause all Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or approved for quotation on the New York Stock Exchange (“ NYSE ”) or such other automated quotation system on which similar securities issued by the Company are then listed or quoted.

(g) Transfer Agent and Registrar . Provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

(h) Legal Opinions and Accountants’ Letters . Furnish, at the request of any Shareholder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Agreement, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Shareholders requesting registration of Registrable Securities and (ii) a letter dated such date and a bring-down letter dated the closing date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Shareholders requesting registration of Registrable Securities.

(i) Stop Orders . Notify a Shareholder the shares of which are registered in the offering when the Registration Statement covering such Shareholder’s Registrable Securities becomes effective, upon the issuance of any stop order by the SEC, or of the receipt of any notification of the suspension of qualification under state securities or Blue Sky laws, the Company hereby agreeing to use commercially reasonable efforts to obtain the withdrawal of any stop order or suspension of qualification.

(j) Earnings Statement Pursuant to Section 11(a) . Otherwise use commercially reasonable efforts to comply with all applicable rules of the SEC, and make available to the Shareholders, as soon as reasonably practicable, an earnings statement covering a period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the SEC thereunder.

4.6 Public Information . At any time and from time to time after the earlier of the close of business on such date as (a) a registration statement filed by the Company under the Securities Act becomes effective, (b) the Company registers a class of securities under Section 12 of the United States Securities Exchange Act of 1934, as amended, or any federal statute or code which is a successor thereto (the “ Exchange Act ”), or (c) the Company issues an offering circular meeting the requirements of Regulation A under the Securities Act, the Company shall undertake to make publicly available and available to the Shareholders pursuant to Rule 144, such information as is necessary to enable the Shareholders to make sales of Registrable Securities pursuant to Rule 144. The Company shall comply with the current public information requirements of Rule 144 and shall furnish thereafter to any Shareholder upon request, a written statement executed by the Company as to the steps it has taken to so comply.

4.7 Information Furnished by Shareholders . It shall be a condition precedent of the Company’s obligations under this Agreement that each Shareholder of Registrable Securities included in any Registration furnish to the Company such information regarding such Shareholder and the distribution proposed by such Shareholder or Shareholders as the Company may reasonably request or as may be required by the Securities Act.

4.8 Registration Expenses . Subject to compliance with the Act, the Company will pay all Registration Expenses in connection with Registrations effected pursuant to this Article.

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS

Each Shareholder represents and warrants to each other Shareholder and the Company as follows:

5.1 Information . Each Shareholder will make information concerning such Shareholder and such Shareholder’s Affiliates which the Company may reasonably request to comply with the requirements of NYSE and/or governmental authorities available to the Company, NYSE and/or appropriate governmental authorities and will make all necessary filings and acquire all necessary consents required by the Company, NYSE and/or appropriate governmental authorities.

5.2 Protection of the Company’s Employees . Each Shareholder undertakes with each other Shareholder and with the Company that he will not:

(a) At any time incite any employee of the Company or Flagstone to terminate a contract of employment with the Company or Flagstone or seek to interfere, or interfere, with the relationship between the Company or Flagstone and any of its employees, or

(b) Employ any employee of the Company or Flagstone during the term of such employment or for a period of six months thereafter, or at any time when he is a participant in the PSU Plan of the Company.

5.3 Protection of the Company’s Confidential Information . Each Shareholder undertakes with each other Shareholder and with the Company that he will not at any time:

(a) reveal Confidential Information to any third party who is not a Shareholder or an employee of the Company; provided, however, that each Shareholder may reveal such information to its legal and financial advisers, and its beneficial owners who are subject to confidentiality arrangements with it, or as may be required by law or by any regulatory authority, or

(b) remove from the Company any Confidential Information or interfere in any way with the ability of the Company to use any such Confidential Information.

ARTICLE VI

MISCELLANEOUS

6.1 Share Certificate Legends . Prior to the Effective Time, the Company shall cause all share certificates representing Shares to bear an appropriate legend referring to the fact that the Shares were sold without registration under the Securities Act and are subject to this Agreement; provided, however, that such legend shall be omitted from any share certificate representing Shares that have been duly transferred without registration in accordance with Rule 144.

6.2 PFIC and RPII . The Company shall use its best efforts to (a) avoid being deemed a “passive foreign investment company” under the Code and (b) avoid any situation in which the Shareholders would be required to include “related person insurance income” of the Company under the Code.

6.3 Financial Statements . Prior to the Effective Time, Company will provide to each Shareholder (i) an unaudited quarterly financial report no later than 45 days from the end of the first three fiscal quarters of each year and (ii) an audited annual financial report no later than 120 days from the end of the Company’s fiscal year, in each case prepared in accordance with United States Generally Accepted Accounting Principles.

6.4 Entire Agreement; Amendments . This Agreement and the schedules to this Agreement and the documents referred to in this Agreement and to be delivered pursuant to this Agreement constitute the entire agreement among the parties pertaining to the subject matter of this Agreement, and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, with respect to the subject matter of this Agreement, and there are no warranties, representations or other agreements between the parties in connection with the subject matter of this Agreement, except as specifically set forth herein or therein. This Agreement may be amended from time to time upon the written consent of the Company, which may be authorized by the approval of nine Directors; provided, however, that any amendment to this Agreement that materially affects any Shareholder in a manner that is disparate from other Shareholders shall require such Shareholder’s approval; provided, further, that any amendment to Section 2.1 shall require the approval of all Shares then in issue.

6.5 Expenses . Except as otherwise provided in this Agreement, whether or not the transactions contemplated by this Agreement are consummated, each of the parties hereto shall pay the fees and expenses of their respective counsel, investment bankers, financial advisors, accountants and other experts and the other expenses incident to the negotiation and preparation of this Agreement and the consummation of the transactions contemplated hereby.

6.6 Governing Law . This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York.

6.7 Jurisdiction .

(a) Dispute Resolution . Except as otherwise specifically provided in this Agreement, in the event of any dispute, controversy or claim arising out of or related to this Agreement or a breach hereof, whether based in contract, tort, or statute, including its interpretation, scope, formation, performance or termination (“ Dispute ”), the parties shall settle such Dispute in accordance with the following:

(i) Discussions . The parties shall first use their best efforts to settle the Dispute by consulting and negotiating with each other in good faith to reach a just and equitable solution satisfactory to all parties;

(ii) Litigation . If the Dispute is not resolved through friendly discussions within 60 days of the date of the Dispute, the Dispute shall be finally resolved by litigation in New York County in Federal District Court or, absent Federal jurisdiction, in New York State Supreme Court, and the parties hereby consent to the personal jurisdiction of any such court.

(b) Consent to Service . In connection with any litigation involving any Dispute, the parties agree to accept service of process by mail to the Notice addresses set forth in this Agreement.

6.8 Assignment . This Agreement and each Shareholder’s rights and obligations hereunder may be assigned only to one or more persons who become the record holders of Shares transferred by such Shareholder; provided, however, that in any or all of such cases such assigning party nonetheless shall remain responsible for the performance of all of its obligations hereunder. Subject to the preceding sentence, this Agreement shall be binding upon the parties hereto and their respective successors and assigns.

6.9 Notices . All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given when delivered personally or by messenger or by overnight delivery service, or when received via telecopy or other electronic transmission, in all cases addressed to the Person for whom it is intended at his address set forth below or to such other address as a Party shall have designated by notice in writing to the other Party in the manner provided by this Section.

If to the Company:	Flagstone Reinsurance Holdings, S.A. 37 Val St André L-1128 Luxembourg, Grand Duchy of Luxembourg Attention: William Fawcett Facsimile: (866) 550-9460
with a copy to:	Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019 Attention: Sarkis Jebejian, Esq. Facsimile: (212) 474-1188

If to a Shareholder, to the address of such Shareholder as it shall appear on the records of the Company.

6.10 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

6.11 Severability . Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

6.12 No Third Parties; No Reliance . Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person, other than the parties hereto and their permitted successors or assigns, any rights or remedies under or by reason of this Agreement. No third party is entitled to rely on any of the representations, warranties and agreements contained in this Agreement, and the parties assume no liability to any third party because of any reliance on the representations, warranties and agreements of the parties contained in this Agreement.

6.13 Exhibits and Schedules; Construction of Certain Provisions . The exhibits and schedules referred to in this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if they had been set forth in their entirety herein.

6.14 Headings . The Article and Section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. They do not define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.

6.15 Counterparts; Execution by Facsimile . This Agreement and any consents required hereunder may be executed in one or more counterparts, and by any Shareholder on separate counterparts, each of which as so executed and delivered shall be deemed an original, but all of which together shall constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement as to any Shareholder hereto to produce or account for more than one such counterpart executed and delivered by such Shareholder. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the Shareholders and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

6.16 Binding Provisions . Except as herein otherwise provided to the contrary, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, personal representatives, successors and permitted assigns.

6.17 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

6.18 Conflict . In the event that any provision of this Agreement conflicts with any provision of the Articles of the Company, the terms of this Agreement shall prevail, and each Shareholder shall vote all of the Shares that it holds of record, and shall take all actions necessary, to ensure at all times that the Articles of the Company do not conflict with any provision of this Agreement.

6.19 Term . If the Effective Time shall not have occurred on or before the first anniversary of this Agreement, this Agreement shall terminate without becoming effective and shall have no effect on the Shareholders’ Agreement. This Agreement shall terminate at such time as no Registrable Securities remain in issue.

***********************

[Remainder of Page Intentionally Left Blank - Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

FLAGSTONE REINSURANCE HOLDINGS, S.A.,
By	/s/ David Brown
	Name: David Brown
	Title: Chief Executive Officer

Exhibit A

Shareholders

Exhibit B

Form of Lock-Up Agreement

(attached)

LEHMAN BROTHERS INC.

CITIGROUP GLOBAL MARKETS INC.

As Representatives of the Several Underwriters,

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, NY 10019

Citigroup Global Markets Inc.

388 Greenwich Street

New York, NY 10013

[ ], 2006

Ladies and Gentlemen:

As an inducement to execute the Underwriting Agreement, pursuant to which an offering will be made that is intended to result in the establishment of a public market for the common shares (the “Securities”) of Flagstone Reinsurance Holdings Limited, a Bermuda company, and any successor (by merger or otherwise) thereto, (the “Company”), the undersigned hereby agrees that during the period specified in the following paragraph (the “Lock-Up Period”), the undersigned will not, directly or indirectly (1) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Securities or securities convertible into or exchangeable for Securities, or sell, grant options, rights or warrants with respect to any shares of Securities or securities convertible into or exchangeable for Securities, (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Securities, whether any such transaction described in clause (1) or (2) is to be settled by delivery of Securities or other securities, in cash or otherwise, (3) make any demand for or exercise any right or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any shares of Securities or securities convertible into or exercisable or exchangeable for Securities or any other securities of the Company or (4) publicly disclose the intention to do any of the foregoing.

The Lock-Up Period will commence on the date of this Lock-Up Agreement and continue and include the date 180 days after the public offering date set forth on the final prospectus used to sell the Securities (the “Public Offering Date”) pursuant to the Underwriting Agreement; however, if

(1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or material news or a material event relating to the Company occurs, or

(2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the initial Lock-Up Period,

then in each case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the occurrence of the material news or material event, as applicable, unless the Representatives waive, in writing, such extension.

The undersigned hereby acknowledges and agrees that written notice of any extension of the Lock-Up Period pursuant to the previous paragraph will be delivered by the Representatives to the Company (in accordance with Section 12 of the Underwriting Agreement) and that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Lock-Up Agreement during the period from the date of this Lock-Up Agreement, up to and including the 34 th day following the expiration of the initial Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as may have been extended pursuant to the previous paragraph) has expired.

Any Securities received upon exercise of options granted to the undersigned will also be subject to this Agreement. Any Securities acquired by the undersigned in the open market will not be subject to this Agreement. A transfer of Securities to an affiliate, family member or trust may be made, provided the transferee agrees to be bound in writing by the terms of this Agreement prior to such transfer, and no filing by any party (donor, donee, transferor or transferee) under the Exchange Act shall be required or shall be voluntarily made in connection with such transfer.

In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of shares of Securities if such transfer would constitute a violation or breach of this Agreement.

This Agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned. This Agreement shall lapse and become null and void if the Public Offering Date shall not have occurred on or before , 2006. This agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,

[Name of shareholder]

AMENDED AND RESTATED

FLAGSTONE REINSURANCE HOLDINGS, S.A.

PERFORMANCE SHARE UNIT PLAN

17 th May 2010

Schedule of Amendments

DOCUMENT REVISION HISTORY

Version	Date	Summary of Changes	Section	Approved by
Amendment 1	7/4/06	Conforming Amendments	Various	Board of Directors
Amendment 2	16/6/06	Various technical changes	Various	Board of Directors
Amendment 3	16/11/06	Amended & Restated	Various	Shareholders
Amendment 4	20/07/07	Amended & Restated	Various	Board of Directors
Amendment 5	16/05/08	Amended & Restated	Various	Board of Directors and Shareholders
Amendment 6	11/12/09	Additional Language	Section 6
Amendment 7	25/2/10	Additional language on retirement provisions, modification of total PSU’s available and inclusion of a clawback provision in the event of restatement	Sections 4, 6 and 16	Board of Directors and Shareholders
Amendment 8	17/5/10	Changes to reflect the Company’s move from Bermuda to Luxembourg	Various	Board of Directors

Page 2 of 13

Flagstone Reinsurance Holdings, S.A.

Performance Share Unit Plan

1.	PURPOSE

The purpose of this Plan is to advance the interests of the Company and its shareholders by providing PSUs as incentive compensation to certain key Employees of the Company and its subsidiaries, as well as , at the discretion of the Compensation Committee, employees of companies that provide operational support or other services to the Company.

2.	DEFINITIONS

2.1.	“ Adverse Change in the Plan ” is defined in paragraph 12.

2.2.	“Affiliates” includes any company 50% or more owned, directly or indirectly, by the Company.

2.3.	“ Board ” means the Board of Directors of the Company.

2.4.	“ Change in Control ” is defined in paragraph 9.

2.5.	“ Common Shares ” shall mean common shares of the Company.

2.6.	“ Company ” means Flagstone Reinsurance Holdings, S.A..

2.7.	“ Compensation Committee ” means the Compensation Committee of the Board.

2.8.	“ Constructive Termination ” is defined in paragraph 11.

2.9.

“ Employee ” means any person, including officers, employed by the Company or any Subsidiary of the Company. Such term shall also include directors of the Company or any Subsidiary of the Company. Such term shall also include, at the discretion of the Compensation Committee, employees of companies that provide operational support or other services to the Company. A person shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, any Subsidiary or any successor.

2.10.

“ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended.

2.11.

“ Hostile Takeover Termination ” is defined in paragraph 13.

2.12.

“Inter Vivos Designee” means any person or body of persons corporate or unincorporate, association, trust, partnership or similar entity or arrangement designated by an Employee to hold such PSUs granted to the Employee under the Plan and receive payments under the Plan during the life of the Employee.

Page 3 of 13

2.13.

“ Maximum Award ” shall mean the maximum number of Common Shares that an Employee would be entitled to receive if all of the performance goals set forth in a particular PSU were satisfied over the Performance Period(s) set forth in such PSU.

2.14.

“ Performance Period(s) ” means the period(s) during which an employee must perform pursuant to the grant of a PSU; provided, however, that any such period must end on December 31 of the relevant fiscal year.

2.15.

“ Plan ” means this Flagstone Reinsurance Holdings, S.A. Performance Share Unit Plan.

2.16.

“ PSU ” means a Performance Share Unit.

2.17.

“ Retire ” means to resign from the Company to be Retired.

2.18.

“ Retired “ means not acting as an Employee, Officer, Director, or consultant to any insurance or reinsurance firm. The Committee may waive this provision at its sole discretion with respect to Clause 6.3.2, if it determines in its sole discretion that the Employee is not competing in any way with the Company or Affiliates.

2.19.

“ Subsidiary ”, as used herein, has the meaning assigned to the term “subsidiary company” in the Companies Act, 1981 of Bermuda.

2.20.

“ Termination Without Cause ” is defined in paragraph 10.

2.21.

“Term of Service” means the time between

2.21.1.

the date the Employee’s continuous employment with the Company or one or more Affiliates commenced, with the term of service of each employee of an Affiliate deemed to commence at the latest of December 20, 2005, or the date of acquisition of 50% or more by the Company of the ownership interest, or the date of the Employee’s actual commencement of service

and

2.21.2.

any date of separation from service, including for resignation, termination for Cause or not for Cause, or retirement.

3.	ADMINISTRATION OF THE PLAN

3.1.

Administration . The Plan shall be administered by the Compensation Committee. No member of the Compensation Committee shall be an Employee of the Company eligible to receive PSUs under the Plan or shall have been eligible within one year prior to his appointment to receive PSUs under the Plan or to receive awards under any other plan of the Company or any of its subsidiaries under which participants are entitled to acquire shares, share options or share appreciation rights of the Company or any of its subsidiaries.

Page 4 of 13

3.2.

Powers of the Administrator . The Compensation Committee shall have exclusive authority to select the Employees to be granted PSUs, to determine the number of PSUs to be granted and the terms (including the performance goals and Performance Period(s)) of such PSUs and to prescribe the form of the instruments embodying such PSUs. The Compensation Committee shall be authorized to interpret the Plan and the PSUs granted under the Plan, to establish, amend and rescind any rules and regulations relating to the Plan and to make any other determinations which it believes necessary or advisable for the administration of the Plan. The Compensation Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any PSU grant instrument in the manner and to the extent the Compensation Committee deems desirable to carry it into effect. Any decision of the Compensation Committee in the administration of the Plan, as described herein, shall be final and conclusive. The Compensation Committee may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Compensation Committee. No member of the Company shall be liable for anything done, or for any failure to act, by him or by any other member of the Compensation Committee in connection with the Plan, except for his own willful misconduct or as expressly provided by statute.

AWARDS

4.1.	Type of Awards Under the Plan . Awards under the Plan shall be limited to PSUs.

4.2.

Maximum Number of PSUs and Maximum Number of Common Shares that may be Issued Pursuant to PSUs Under the Plan . The maximum number of PSUs that may be granted under the Plan shall not exceed 5,600,000 PSUs. The maximum number of PSUs that may be granted under the Plan to any one Employee shall be half the maximum number of PSUs that may be granted under the Plan to all Employees. The aggregate Maximum Awards that shall be issuable under the Plan shall not exceed 11,200,000 Common Shares. If a PSU is forfeited or otherwise cancelled, or if an Employee does not achieve the Maximum Award pursuant to a PSU, the Common Shares underlying such PSU shall become available for future grant under PSUs pursuant the Plan (unless the Plan has terminated).

5.	RIGHTS WITH RESPECT TO PSUs

5.1.

An Employee to whom PSUs are granted (and any person succeeding to such employee’s rights pursuant to the Plan) shall have no rights as a shareholder with respect to any Common Shares issuable pursuant thereto until such Employee’s name is entered into the Register of Members of the Company. Except as provided in paragraph 14, no adjustment shall be made for divide nds, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) the record date for which is prior to the date such share certificate is issued.

Page 5 of 13

6. PSUs

The grant of PSUs to an Employee will entitle him to receive, without payment to the Company, all or a portion of the Maximum Award, as determined by the Compensation Committee, if the terms and conditions specified herein and in the PSU are satisfied. Payment in respect of a PSU shall be made as provided in subparagraph 6.6. Each grant of PSUs shall be subject to the following terms and conditions:

6.1.	The Compensation Committee shall determine the number of PSUs to be granted to each Employee. PSUs may be issued in different classes or series having different terms and conditions.

6.2.

Subject to subparagraph 6.6, at the end of the Performance Period(s) specified in the grant of a PSU, an Employee shall be entitled to receive the Maximum Award if the performance objectives set forth in the grant of such PSU are attained in full. If the performance objectives specified in the grant are attained in part but not in full, the Compensation Committee, in its sole discretion, shall determine the percentage of the Maximum Award, if any, to which the Employee is entitled under the PSU.

6.3.

PSUs shall be cancelled if the Employee’s continuous employment with the Company or any of its subsidiaries or with any company that provides operational support or other services to the Company shall terminate for any reason prior to the end of the Performance Period(s), unless such termination results in Related Employment (as defined in paragraph 8), and except as otherwise specified in this subparagraph 6.3 or in subparagraphs 6.4 or 6.5. Notwithstanding the foregoing and without regard to subparagraph 6.2:

6.3.1.

if an Employee shall, while employed by the Company or any of its subsidiaries or by any company that provides operational support or other services to the Company or while engaged in Related Employment, die or become disabled (within the meaning of paragraph 7) prior to the end of the Performance Period(s), the PSUs granted to such Employee shall be cancelled at the end of the next ending Performance Period and he, or his legal representative, as the case may be, shall become entitled to receive a cash payment (determined in accordance with subparagraph 6.6) in respect of the Common Shares he would have received had he been in continuous employment with the Company through the end of such Performance Period and had the performance objectives, if any, that were imposed been achieved; or

6.3.2.

if an Employee shall retire then:

6.3.2.1.

If at the time of their retirement the Employee is 65 years old or older, the PSUs shall not be cancelled on the Employee’s official retirement date, but they shall continue to vest and the Employee shall receive payments in cash or stock at the discretion of the Compensation Committee on schedule as described in subparagraph 6.6 or

Page 6 of 13

6.3.2.2.

If at the time of their early retirement, the sum of the Employee’s age plus years of service for the Company or any of its affiliates is greater than or equal to 65 (sixty-five), the PSUs shall not be cancelled on the Employee’s official retirement date, but shall continue to vest and the Employee shall receive payments in cash or stock at the discretion of the Compensation Committee on schedule as described in subparagraph 6.4, as they would have received had they been in continuous employment with the Company on that date, provided only that the Employee remains Retired on each vesting date. This early retirement provision will not apply where any conflicting provisions exist in an individual’s employment contract;

6.3.2.3.

if at the time of their retirement the Employee does not meet the criteria under section 6.3.2.2 and is less than 65 years old and their retirement occurs before 24 months have elapsed since the grant of the PSUs, the PSUs shall be cancelled and the Employee shall become entitled to receive a cash payment (determined in accordance with subparagraph 6.6) in respect of one-ninth of the Common Shares they would have received had they been in continuous employment with the Company through the end of the next Performance Period and had the performance objectives, if any, that were imposed been achieved, or

6.3.2.4.

if at the time of their retirement the Employee does not meet the criteria under section 6.3.2.2 and is less than 65 years old and their retirement occurs after 24 months or more have elapsed since the grant of the PSUs, the PSUs shall be cancelled and the Employee shall become entitled to receive a cash payment (determined in accordance with subparagraph 6.6) in respect of two-ninths of the Common Shares they would have received had they been in continuous employment with the Company through the end of the next Performance Period and had the performance objectives, if any, that were imposed been achieved.

6.4.	If within 24 months after a Change in Control of the Company as defined in paragraph 9 and prior to the end of a Performance Period:

6.4.1.

there is a Termination Without Cause, as defined in paragraph 10, of the employment of an Employee;

6.4.2.

there is a Constructive Termination, as defined in paragraph 11, of the employment of an Employee; or

Page 7 of 13

6.4.3.

there occurs an Adverse Change in the Plan, as defined in paragraph 12, in respect of an Employee, then:

6.4.3.1.

the Employee shall become entitled to receive:

6.4.3.1.1.

The Maximum Award multiplied by a fraction the numerator of which is the number of full months which have elapsed since the date of the PSU grant to the end of the first month in which occurs one of the events described in clauses 6.4.1, 6.4.2 or 6.4.3 and the denominator of which is the total number of months in the Performance Period(s), plus

6.4.3.1.2.

If the number of Common Shares determined pursuant to subclause (1) above is less than the Maximum Award (such difference being referred to herein as the “Deficiency”), the Employee shall receive Common Shares equal to all or a portion of such Deficiency as follows:

6.4.3.1.2.1.

if the Compensation Committee shall have determined, prior to the Change in Control and based on the most recent performance status reports, that the performance objectives for the particular grant were being met at the date of the determination, the Employee shall receive Common Shares equal to the full Deficiency, and

6.4.3.1.2.2.

if the determination of the Compensation Committee was that the performance objectives for the particular grant were not being met at the date of such determination, the Compensation Committee shall at the time of such determination have also made a determination as to the percentage of the Deficiency as to which the Employee is entitled to receive Common Shares, but in no event shall such percentage be less than fifty percent (50%).

6.4.3.2.

Payment of any amount in respect of PSUs as described above in this subparagraph 6.4 shall be made as promptly as possible after the occurrence of one of the events described in clauses 6.4.1 through 6.4.3.

6.5.

Notwithstanding any other provision in the Plan, in the event of a Hostile Takeover Termination, the Employee shall immediately become entitled to the Maximum Award with respect to all PSUs granted to such Employee. Such Maximum Award shall be payable, in the sole discretion of the Compensation Committee, either by issuance of Common Shares or in cash based on the market price per Common Share as of the close of trading on the date of a Hostile Takeover Termination.

Page 8 of 13

6.6.

Payment of any amount due to an Employee in respect of the PSUs shall be made by the Company as promptly as practicable or shall be deferred to such other time or times as the Compensation Committee shall determine, and may be made in cash, by issuance of Common Shares, or partly in cash and partly by issuance of Common Shares as determined by the Compensation Committee. The amount of cash, if any, to be paid in lieu of issuance of Common Shares shall be determined based on the market price per Common Share as of the close of trading on the date on which an Employee becomes entitled to payment, whether or not such payment is deferred. Such deferred payments may be made by undertaking to pay cash in the future, together with such additional amounts as may accrue thereon until the date or dates of payment, as determined by the Compensation Committee in its sole discretion. In the case of issuance of Common Shares to an Employee, such Employee’s services rendered to the Company shall be deemed to constitute full payment to the Company of the par value of such Common Shares.

7.	DISABILITY
For the purposes of this Plan, an Employee shall be deemed to be disabled if the Compensation Committee shall determine that the physical or mental condition of the Employee is such as would entitle him to payment of monthly disability benefits under any disability plan of the Company or a Subsidiary in which he is a participant.

8.	RELATED EMPLOYMENT

For the purposes of this Plan, Related Employment shall mean the employment of an Employee by an employer which is neither the Company nor a Subsidiary provided: (i) such employment is undertaken by the individual and continued at the request of the Company or a Subsidiary; (ii) immediately prior to undertaking such employment, the individual was an officer or employee of the Company or a Subsidiary, or was engaged in Related Employment as herein defined; and (iii) such employment is recognized by the Compensation Committee, in its sole discretion, as Related Employment for the purposes of this paragraph 8. The death or disability of an individual during a period of Related Employment as herein defined shall be treated, for purposes of this Plan, as if the death or onset of disability had occurred while the individual was an officer or employee of the Company.

9.

For purposes of this Plan, a “Change in Control of the Company” shall occur if:

9.1.

Any person or group (within the meaning of Section 13(d) and 14(d)(2) of the Exchange Act), excluding the initial subscribers to the Company, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of fifty percent (50%) or more of the Company’s then outstanding shares; or

9.2.	the business of the Company for which the participant’s services are principally performed is disposed of by the Company pursuant to a sale or other disposition of all or substantially all of the business or business related assets of the Company (including shares of a Subsidiary of the Company).

Page 9 of 13

10.	TERMINATION WITHOUT CAUSE

For purposes of this Plan, “Termination Without Cause” shall mean a termination of the Employee’s employment with the Company or a Subsidiary by the Company or the Subsidiary other than for (i) disability as described in paragraph 7 or (ii) Cause. “Cause” shall mean (a) a material breach by the Employee of any contract between the Employee and the Company or a Subsidiary; (b) the willful and continued failure or refusal by the Employee to perform any duties reasonably required by the Company or a Subsidiary, after notification by the Company or the Subsidiary of such failure or refusal, and failing to correct such behaviour within 20 days of such notification; (c) commission by the Employee of a criminal offence or other offence of moral turpitude; (d) perpetration by the Employee of a dishonest act or common law fraud against the Company or a Subsidiary or a client of either; or (e) the Employee willfully engaging in misconduct which is materially injurious to the Company or a Subsidiary, including without limitation, the disclosure of any trade secrets, financial models, or computer software to persons outside the Company or a Subsidiary without the consent of the Company or a Subsidiary. Notwithstanding anything herein to the contrary, if the Employee’s employment with the Company or a Subsidiary shall terminate due to a Change in Control of the Company as described in paragraph 9, where the purchaser, as described in such paragraph, formally assumes the Company’s obligations under this Plan or places the Employee in a similar or like plan with no diminution of the value of the grants, such termination shall not be deemed to be a “Termination Without Cause.”

11.	CONSTRUCTIVE TERMINATION

For purposes of this plan, a “Constructive Termination” shall mean a termination of employment with the Company or a Subsidiary at the initiative of the Employee that the Employee declares by prior written notice delivered to the Secretary of the Company to be a Constructive Termination by the Company or a Subsidiary and which follows (a) a material decrease in his salary or (b) a material diminution in the authority, duties or responsibilities of his position with the result that the Employee makes a determination in good faith that he cannot continue to carry out his job in substantially the same manner as it was intended to be carried out immediately before such diminution. Notwithstanding anything herein to the contrary, Constructive Termination shall not occur within the meaning of this paragraph 11 until and unless 30 days have elapsed from the date the Company receives such written notice without the Company curing or causing to be cured the circumstance or circumstances described in this paragraph 11 on the basis of which the declaration of Constructive Termination is given.

12.	ADVERSE CHANGE IN THE PLAN

For purposes of this plan, an “Adverse Change in the Plan” shall mean:

12.1.

termination of the Plan pursuant to subparagraph 18(a);

12.2.

amendment of the Plan pursuant to paragraph 17 that materially diminishes the value of PSU grants, either to individual Employees or in the aggregate, unless there is substituted concurrently authority to grant PSUs of comparable value to individual Employees in the Plan or in the aggregate, as the case may be; or,

Page 10 of 13

12.3.

in respect of any holder of a PSU a material diminution in his rights held under such PSU (except as may occur under the terms of the PSU as originally granted) unless there is substituted concurrently a PSU grant with a value at least comparable to the loss in value attributable to such diminution in rights.

13.	HOSTILE TAKEOVER TERMINATION

For purposes of this plan, a “Hostile Takeover Termination” shall mean an Adverse Change in the Plan as described in paragraph 12 or any termination (including, but not limited to, a Termination Without Cause as described in paragraph 10 or a Constructive Termination as described in paragraph 11) of an Employee’s employment with the Company or a Subsidiary of the Company at any time following a Change in Control of the Company, as described in paragraph 9, that was opposed by the two Board members nominated by Haverford (Bermuda) Ltd.

14.	DILUTION AND OTHER ADJUSTMENTS

14.1.

In the event of any change in the issued and outstanding Common Shares of the Company by reason of any share split, share dividend, recapitalization, merger, consolidation, reorganization, amalgamation, combination or exchange of Common Shares or other similar event, and if the Compensation Committee shall determine, in its sole discretion, that such change equitably requires an adjustment in the number or kind of Common Shares that may be issued pursuant to PSUs under the Plan pursuant to paragraph 6 or in any measure of performance, then such adjustment shall be made by the Compensation Committee and shall be conclusive and binding for all purposes of the Plan.

14.2.

Upon the declaration by the Board of Directors of the Company of a dividend in specie or in kind in favor of the holders of Common Shares in the Company, the Compensation Committee shall determine, in its sole discretion, if such dividend equitably requires an adjustment in the number or kind of PSUs that may be issued to an Employee under the Plan in lieu of a dividend payment.

15.	DESIGNATION OF BENEFICIARY/INTER VIVOS DESIGNEE BY EMPLOYEE

15.1.

An Employee may name in writing to the Compensation Committee, or such other person as the Compensation Committee may designate from time to time to receive such instructions, a beneficiary to receive any payment to which he may be entitled in respect of PSUs under the Plan in the event of his death. An Employee may change his beneficiary from time to time in the same manner. If no designated beneficiary is living on the date on which any amount becomes payable to an Employee’s executors or administrators, the term “beneficiary” as used in the Plan shall include such person or persons.

15.2.

An Employee may name in writing to the Compensation Committee, or such other person as the Compensation Committee may designate from time to time such instructions, one or more Inter Vivos Designees and successor Inter Vivos Designees who shall be given the rights to all past, present and future grants or series of PSUs or to one or more specific grants or series of PSUs. An Employee may change the designation of any Inter Vivos Designee in the same manner and such designation shall revoke and supersede all earlier designations. In the event an Employee does not notify the Compensation Committee designating one or more Inter Vivos Designees, or no Inter Vivos Designee survives the Employee, the PSUs and any payment of shares in place of cash shall be given to the Employee.

Page 11 of 13

16.	MISCELLANEOUS PROVISIONS

16.1.

No employee or other person shall have any claim or right to receive a grant of PSUs under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving an employee any right to be retained in the employ of the Company or any Subsidiary.

16.2.

An Employee’s rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of an Employee’s death), including but not limited to, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no such right or interest of any Employee in the Plan shall be subject to any obligation or liability or such Employee.

16.3.

No Common Shares shall be issued hereunder unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable laws and Luxembourg law.

16.4.

In the event the Company is required to make a financial restatement due to a material misstatement, any grant based upon the erroneous financial statement shall be void.

16.5.

The Company and its subsidiaries shall have the right to deduct from any payment made under the Plan any taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of the Company to issue Common Shares upon payment of a PSU that the Employee pay to the Company, upon its demand, such amount as may be required by the Company for the purpose of satisfying any liability to withhold taxes. If the amount requested is not paid, the Company may refuse to issue Common Shares.

16.6.

The Company reserves the right to withhold shares or deduct from the Employee payroll any taxes or social benefit costs to the Employee or the Company associated with the vesting or fulfillment of the PSUs.

16.7.

The expenses of the Plan shall be borne by the Company. However, if a grant of PSUs is made to an employee of a Subsidiary:

16.7.1.

if such grant results in payment of cash to the Employee, such Subsidiary shall pay to the Company an amount equal to such cash payment; and

16.7.2.

if the grant results in the issuance to the Employee of Common Shares, such Subsidiary shall pay to the Company an amount equal to fair market value thereof, as determined by the Compensation Committee, on the date such Common Shares are issued.

Page 12 of 13

16.8.

The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure any payment under the Plan.

16.9.

By accepting any grant or other benefit under the Plan, each Employee and each person claiming under or through him shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Compensation Committee.

17.

AMENDMENT

The Plan may be amended at any time and from time to time by the Board, but no amendment which increases the aggregate number of Common Shares which may be issued pursuant to the Plan or the class of employees eligible to participate shall be effective unless and until the same is approved by the shareholders of the Company. For the avoidance of doubt, any action taken by the Compensation Committee pursuant to paragraph 14 does not require shareholder approval. No amendment of the Plan shall adversely affect any right of any Employee with respect to any previous grant without such Employee’s written consent.

18.	TERMINATION

This Plan shall terminate upon the earlier of the following dates or events to occur:

18.1.

the adoption of a resolution of the Board terminating the Plan; or

18.2.

ten years from the date the Plan is initially or subsequently approved and adopted by the shareholders of the Company in accordance with paragraph 18 hereof.

No termination of the Plan shall alter or impair any of the rights or obligations of any person, without his consent, under any previous grant under the Plan.

19.	SHAREHOLDER ADOPTION

Material amendments to the Plan shall be submitted to the shareholders of the Company for their approval or adoption to the extent required by the New York Stock Exchange. Such amendments to the Plan shall not be effective unless and until such amendments have been so approved and adopted by the shareholders in the manner required by the laws of Luxembourg.

20.	GOVERNING LAW

The Plan shall be governed by and construed and interpreted in accordance with the laws of Luxembourg.

Page 13 of 13

Luxembourg				98-0481623
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

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))

Exhibit No.		Description______________________________________________
3.1		Articles of Incorporation of Flagstone Reinsurance Holdings, S.A.
4.1		First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Reinsurance Holdings, S.A., a Luxembourg company (as successor to Flagstone Reinsurance Holdings Limited, a Bermuda company), Flagstone Reinsurance Holdings Limited and The Bank of New York Mellon Trust, successor in interest to JPMorgan Chase Bank, National Association, as Trustee
4.2		First Supplemental Indenture, dated as of May 17, 2010, among Flagstone Finance S.A., a Luxembourg Company, Flagstone Reinsurance Holdings, S.A., a Luxembourg company (as successor to Flagstone Reinsurance Holdings Limited, a Bermuda company), and Wilmington Trust Company, a Delaware banking corporation, as Trustee
4.3		Amended and Restated Warrant dated May 17, 2010
4.4		Specimen Share Certificate
10.1		Amended and Restated Shareholders’ Agreement between Flagstone Reinsurance Holdings, S.A. and the investors listed on Exhibit A thereto, dated as of May 17, 2010
10.2		Flagstone Reinsurance Holdings, S.A. Performance Share Unit Plan, as amended and restated, dated May 17, 2010
10.3		Flagstone Reinsurance Holdings, S.A. Restricted Share Unit Plan, as amended and restated, dated May 17, 2010
99.1		Press Release
99.2		Press Release

	FLAGSTONE REINSURANCE HOLDINGS, S.A.

	By:	/s/ William F. Fawcett
		Name: William F. Fawcett
		Title: General Counsel
Date: May 19, 2010

FLAGSTONE REINSURANCE HOLDINGS LIMITED

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

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 FINANCE S.A.

By:	/s/ Rene Dubois
	Name:	Rene Dubois
	Title:	Duly Authorized Agent

WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Trustee

By:	/s/ W. Thomas Morris, I
	Name:	W. Thomas Morris, I
	Title:	Vice President

	FLAGSTONE REINSURANCE HOLDINGS, S.A.

[Affix Seal]	By:	/s/ David Brown
		Name: David Brown
		Title: Chief Executive Officer

By:	/s/ Mark Byrne
	Name: Mark Byrne
	Title: Director, Haverford (Bermuda) Ltd.

COMMON SHARES		COMMON SHARES

NUMBER FSR			SHARES
Flagstone Reinsurance Holdings, S.A. Société Anonyme Registered address: 37 Val St. André L1128, Luxembourg R.C.S. Luxembourg: [to be allocated]
ORGANIZED AND EXISTING IN ACCORDANCE WITH THE LAWS OF LUXEMBOURG		CUSIP L 3466 T104


THIS IS TO CERTIFY THAT

is the registered holder of

FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF PAR VALUE US$0.01 EACH OF FLAGSTONE REINSURANCE HOLDINGS S.A. transferable on the books of the Company by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all of the provisions of the Articles of Incorporation of the Company and all amendments thereof, to all of which the holder by acceptance hereof assents, and shall be transferable in accordance therewith. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.

Witness the facsimile signatures of its duly authorized officers.




COUNTERSIGNED AND REGISTERED:

THE BANK OF NEW YORK (NEW YORK, NY)


BY	TRANSFER AGENT AND REGISTRAR

	AUTHORIZED SIGNATURE	DEPUTY CHAIRMAN AND DIRECTOR	CHAIRMAN AND DIRECTOR

Flagstone	Reinsurance Holdings, S.A.
	Société Anonyme Registered Address: 37 Val St André L-1128, Luxembourg R.C.S. Luxembourg [to be allocated]

TEN COM	–	as tenants in common	UNIF GIFT MIN ACT-		Custodian
TEN ENT	–	as tenants by the entireties		(Cust)		(Minor)
				under Uniform Gifts to Minors Act
JT TEN	–	as joint tenants with right of survivorship and not as tenants in common
				(State)

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE


(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)




	shares

	X
		NOTICE:	Assignor: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement, or any change whatever.


THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.		Assignee: Signature of person accepting the Shares

2.01	General – Whenever the following terms are used in the Plan with the first letter capitalized, they shall have the meanings specified below unless the context clearly indicates to the contrary or as provided under Section 7 of the Plan.

2.02	“ Account ” of a Participant means his or her individual account, if any, or the account of a Director’s employer, as established in accordance with Section 6.

2.03	“ Beneficiary ” means the person or persons designated by a Participant, on a form provided by the Plan Administrator, to receive payments under the Plan in the event of the Participant’s death.

2.04	“ Board ” means Board of Directors of the Company.

2.05	“ Cause ” shall mean (a) a material breach by a Participant of any contract between the Participant and the Company or a Subsidiary; (b) the willful and continued failure or refusal by the Participant to perform any duties reasonably required by the Company or a Subsidiary, after notification by the Company or the Subsidiary of such failure or refusal, and failure to correct such behaviour within 20 days of such notification; (c) commission by the Participant of a criminal offence or other offence of moral turpitude; (d) perpetration by the Participant of a dishonest act or common law fraud against the Company or a Subsidiary or a client of either; or (e) the Participant willfully engaging in misconduct which is materially injurious to the Company or a Subsidiary, including without limitation, the disclosure of any trade secrets, financial models, or computer software to persons outside the Company or a Subsidiary without the consent of the Company or a Subsidiary.

2.06	“ Compensation Committee ” means the Compensation Committee of the Board of Directors of the Company.

2.07	“ Common Stock ” means shares of the Company.

2.08	“ Company ” means Flagstone Reinsurance Holdings, S.A.

2.09	“ Director ” means a member of the board of directors of the Company or its Subsidiaries.

2.10	“ Disability ” means a condition by which the Compensation Committee has determined that the physical or mental condition of the Participant is such as would entitle him to receive payment of monthly benefits under any disability plan of the Company or a Subsidiary in which the individual participates.

2.11	“ Employee ” means an employee of the Company or its Subsidiaries.

2.12	“ Grant Certificate ” means a certificate evidencing the credit of or grant to a Participant of a Restricted Share Unit under the Plan (sample attached as Appendix 5).

2.13	“ Inter Vivos Designee ” means any person or body of persons corporate or unincorporate, association, trust, partnership or similar entity or arrangement designated by a Participant, on a form provided by the Plan Administrator, to hold such RSUs granted to the Participant under the Plan and receive payments under the Plan during the life of the Participant.

2.14	“ Participant ” means any Employee, officer, or Director, except for Management Directors, of the Company or its Subsidiaries who (1) are eligible for RSU credits or grants under the Plan and (2) the Compensation Committee decides pursuant to its authority under Section 3.01 of the Plan to grant or credit an RSU award.

2.15	“ Plan ” means the Flagstone Reinsurance Holdings, S.A. Employee Restricted Share Unit Plan, as it may be amended from time to time.

2.16	“ Plan Administrator ” means the Compensation Committee, or the person or persons appointed by the Compensation Committee to serve under Section 4 of the Plan.

2.17	“ Restricted Share Unit ” (or “ RSU ”) means a right to receive a payment, in cash or in actual Common Stock of the Company, of the value of Common Stock of the Company, subject to the terms of this Plan and the respective Grant Certificate.

2.18	“ Subsidiary ” means a subsidiary of the Company.

3.02	The RSUs will normally be settled by delivery of Common Stock, but can be settled to the Participant on distribution in cash, by issuance of shares of Common Stock, or partly in cash and partly by issuance of shares of Common Stock as determined by the Compensation Committee; provided that Participants who are UK domiciled for tax purposes may only receive distributions by issuance of shares of Common Stock.

3.03	The amount of cash, if any, to be paid in lieu of issuance of shares of Common Stock under the Plan shall be determined based on the net book value per share of Common Stock (or market value, if the Company’s shares are freely tradable on an exchange) as of the date on which a Participant becomes entitled to payment, whether or not such payment is deferred.

6.02	A Director who is a Participant in the Plan shall elect no later than December 31 of the year prior to the year with respect to which the compensation is earned (or for the first year of the Plan, no later than the last day of the month prior to the Plan’s effective date), the dollar amount or percentage of compensation for such year to be converted into RSUs and credited to his/her Account pursuant to the written terms of the Plan and the Grant Certificate.

6.03	Upon a grant or credit of an award of RSUs under the Plan, as applicable, a Participant’s Account shall be credited with the amount of such grant or credit.

6.04	Actual shares of Company Common Stock or cash (as determined by the Committee), equal in amount to the number of RSUs that have vested, will be distributed to the Participant upon the earlier of the following: (a) separation from service other than for cause, (b) satisfaction of the applicable vesting period(s), (c) a specific date, or (d) such other time as the Committee may in its sole discretion determine (collectively, the “Distribution Dates”). The Company shall deliver the shares of Common Stock of the Company and/or cash to the Participant as soon as administratively feasible after the identified date of distribution.

6.05	Grants of RSUs under the Plan will normally fully vest on the date that is specified in the applicable Grant Certificate, subject to the following:

	6.05.1	Upon a Participant’s death or Disability, he/she shall become fully vested in all RSUs that have been credited or granted under the Plan.

	6.05.2	Except as otherwise provided herein, the unvested RSU’s of Participants who are Employees or Officers shall be canceled upon notice of termination from the Employer to the Employee or the notice of resignation of the Employee.

	6.05.3	Notwithstanding 6.06.2, at the discretion of the Compensation Committee, vesting of RSUs that are granted under the Plan may continue for Employees who separate from service with the Company after at least five years’ service.

	6.05.4	If an Employee is terminated for Cause all of his RSU’s will be automatically canceled.

	6.05.5	The RSU’s of a Director shall normally vest on the date noted on the Grant Certificate, unless accelerated under 6.04.1, and regardless of whether that Director continues to serve. The Compensation Committee can cancel the RSU’s of a Director, whether vested or not, if that director engages in action deemed to be materially hostile to the interests of the Company, as judged by the Board of Directors.

7.01	The Plan has special provisions which apply variously to citizens, residents, domiciliaries, of certain countries, or employees of Company subsidiaries located in certain countries. These provisions form part of this Plan and are attached as Appendix 4.

7.02	The Company may extend or amend Appendix 4 from time to time in order to accommodate the development of the Company in new countries, to maintain the most tax-favorable status available in various countries under the applicable laws and further modifications/amendments carried out from time to time. Such technical amendments require the approval of the Management Compensation Committee of the Company, and the Chairman of the Compensation Committee.

8.01	Participants shall be responsible for all individual tax consequences of the RSU grants under the Plan. Where feasible, the Plan will be interpreted and administered to provide favorable tax treatment to the Participant, subject to the compliance with the applicable laws of their respective jurisdiction.

8.02	The Company reserves the right to withhold shares or deduct from the Participant payroll any taxes or social benefit costs to the Participant or the Company associated with the vesting or fulfillment of the RSUs.

15.01	In the event of any change in the issued and outstanding shares of Common Stock of the Company by reason of any share split, share dividend, recapitalization, merger, consolidation, reorganization, amalgamation, combination or exchange of shares of Common Stock or other similar event, and if the Compensation Committee shall determine, in its sole discretion, that such change equitably requires an adjustment in the number or kind of shares of Common Stock of the Company that may be issued pursuant to RSUs under the Plan pursuant to paragraph 6, then such adjustment shall be made by the Compensation Committee and shall be conclusive and binding for all purposes of the Plan.

15.02	Upon the declaration by the Board of Directors of the Company of a dividend in specie or in kind in favor of the holders of Common Shares in the Company, the Compensation Committee shall determine, in its sole discretion, if such dividend equitably requires an adjustment in the number or kind of RSUs that may be issued to a Participant under the Plan in lieu of a dividend payment.

16.01	If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

16.02	Except by will or the laws of descent and distribution and/or succession, a Participant’s rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of Participant’s death), including but not limited to, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no such right or interest of any Participant in the Plan shall be subject to any obligation or liability or such Participant; provided that Directors shall be permitted to assign their rights under the Plan to their employer or an affiliate of their employer, as approved by the Compensation Committee.

16.03	Except to the extent specifically set forth in the Grant Certificate, the Participant’s rights under the Plan shall be governed in all aspects by the terms of the Plan, including the provisions that authorize the Plan Administrator to administer and interpret the Plan and that provide that the Plan Administrator’s decisions, determinations, and interpretations with respect to the Plan are final and conclusive on all persons affected hereby. Additionally, this Plan shall be construed in accordance with, and governed by the laws of Luxembourg.

	Primary Inter Vivos Designee Name:

	Secondary Inter Vivos Designee Name:

1.	Each grant and credit of RSUs shall comply with the minimum requirements of Code Section 409A,

2.	Any action that may be taken (and, to the extent possible, any action actually taken) by the Company or the Participant shall not be taken (or shall be void and without effect), if such action violates the requirements of Section 409A.

3.	The definitions contained within this Plan and the respective Grant Certificate shall be interpreted and construed to comply with the minimum requirements of Section 409A.

1.	The aggregate number of RSUs which may be granted to Indian Participants under this Plan shall not exceed 300,000 or as decided by the Compensation Committee, and subject to the provisions of Section 3.01 hereof. RSU credits or grants subject to increase in accordance with the terms of the plan pursuant to the approval received from the Board of Directors/Shareholders of the Company

2.	The RSUs will be actually paid to the Indian Participants in accordance with the Section 3.02 and 3.03 of the Plan.

3.	The approval of the Board of the Company to the Plan was accorded on 16 June 2006. The assent of the Board of the Company, approving the adoption of the Plan including this Appendix, for the Indian Subsidiary was accorded on 16 June 2006. The assent of the board of directors of the Indian Subsidiary approving the adoption of the Plan including this Appendix, for the Indian Subsidiary was accorded on [___].

4.	Participation in the Plan and the grant of Awards shall be awarded to such Indian Participant providing bona fide services to or for, one or more Indian Subsidiary as may be selected by the Board or such Compensation Committee as designated by the Board, in consultation with the board of directors of the Indian Subsidiary, from time to time. The Board may also grant RSUs to individuals in connection with hiring, retention or otherwise, prior to the date the individual first performs services for an Indian Subsidiary, provided that such RSUs shall not become vested or exercisable prior to the date the individual first commences performance of such services. Provided, however, that an Employee who is a Promoter or belongs to the Promoter Group or a director who either by himself or through his relative or through any body corporate, directly or indirectly holds more than 10% of the outstanding shall not be eligible to participate in the Plan

5.	For purposes of the above paragraph (4)

		i.		the person or persons who are in over-all control of the Indian Subsidiary;
		ii.		the person or persons who are instrumental in the formation of the Indian Subsidiary or programme pursuant to which shares of the Indian Subsidiary may be offered to the public;
		iii.		the person or persons who are named in the offer document (inviting subscription from the public to the shares of the Indian Subsidiary) as promoter(s), in the event the Indian Subsidiary decided to offer shares to the public.

		i.		an immediate relative of the Promoter (i.e. spouse of that person, or any parent, brother, sister or child of the person or of the spouse); and,

		ii.		persons whose shareholding is aggregated for the purpose of disclosing in the offer document (inviting subscription from the public to the shares of the Indian Subsidiary) “shareholding of the promoter group”

6.	All defined terms that are not otherwise defined under this Appendix shall have the meaning attributed to them under the provisions of the Plan.

7.	Except to the extent as set forth in this Appendix and where not contrary to the meaning or intention herein, the provisions of the Plan shall apply to the Indian Participants granted the RSU.

	RSU Holder	«Column1»

	Restricted Share Units	«Column2»

	RSU Series	[●]

	Grant Date	[●]

	Vesting Date	[Normal Vesting: Grants of these RSUs under the Plan will fully vest on the date that is two years after the Grant Date immediately above, except as may be modified by section by the terms of the RSU Plan, and in particular section [6.05]. -or- [The Participant is a Director and is fully and immediately vested in RSUs that are credited to his/her Account under the Plan.]